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of <h1>Tribunal upholds CIT decision on bad debts, directs deletion of disallowance under section 14A.</h1> <h3>M/s. Merlin Resources (P) Ltd Versus ITO Ward 8 (1), Kolkata</h3> M/s. Merlin Resources (P) Ltd Versus ITO Ward 8 (1), Kolkata - TMI Issues:Cross appeals against Ld. CIT (A) order - deduction for bad debts written off and disallowance u/s 14A.Bad Debts Written Off:The appellant, a finance and securities company, wrote off a loan given to another company. AO disallowed deduction under section 36(1)(vii) as the debt write-off was based on mutual understanding, not qualifying for deduction. Ld. CIT (A) relied on TRF Ltd. case, allowing the deduction as debts were written off in the books. Revenue appealed, citing CBDT circular. Tribunal upheld Ld. CIT (A)'s decision, dismissing the revenue's appeal based on TRF Ltd. judgment and CBDT circular, directing withdrawal of the revenue's appeal.Disallowance u/s 14A:Appellant offered disallowance of &8377;2,39,165 u/s 14A, but AO invoked Rule 8D, making a higher disallowance of &8377;7,66,226. Ld. CIT (A) confirmed the disallowance. Appellant contended no exempt income was earned, citing Redington (India) Ltd. case. Tribunal agreed, directing AO to delete the disallowance after verifying the claim. Appellant's appeal allowed, and revenue's appeal dismissed.The Tribunal, after considering arguments and relevant material, upheld the Ld. CIT (A)'s decision on the bad debts written off issue, citing TRF Ltd. judgment and CBDT circular, dismissing the revenue's appeal. On the disallowance u/s 14A issue, the Tribunal accepted the appellant's claim of no exempt income earned, directing the AO to delete the disallowance. Appellant's appeal was allowed, while the revenue's appeal was dismissed.
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