Inter-corporate deposit write-off qualifies as a business loss despite interest being assessed under income from other sources.

Write-off of an inter-corporate deposit was treated as an allowable business loss notwithstanding that interest from the deposit had been assessed under income from other sources. The assessee's memorandum authorised investment through inter-corporate deposits, and the transaction was undertaken under a shareholder resolution. The article notes that an earlier assessment year had treated the comparable deposit loss as deductible in computing taxable income, with that position affirmed by the High Court. It states that the same treatment applied for the relevant year, allowing deduction of the written-off deposit as a business loss.

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Issues: Whether the write-off of an inter-corporate deposit was allowable as a business loss despite interest from the deposit having been assessed as income from other sources.

Analysis: The assessee's memorandum authorised investment through inter-corporate deposits, and the activity had been undertaken pursuant to the requisite shareholder resolution. In the assessee's own earlier assessment year, the deposit loss had been held to be a business loss deductible in computing taxable income; that determination had also been affirmed by the High Court. The same position governed the relevant assessment year.

Conclusion: The inter-corporate deposit written off was allowable as a business loss and deduction in computing taxable income; the questions of law were answered in favour of the assessee and against the Revenue.

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