TaxTMI 
TaxTMI 
2007 (5) TMI 352
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....ed in confirming the disallowance of Bad Debts of Rs. 34,10,000. 2. The ld. CIT(A) further erred in holding that in respect of Bad Debts of K.M. Nemani of Rs. 29,10,000, the debt cannot be said to have become bad in view of the pendency of the recovery proceedings. 3. The CIT(A) further erred in holding that the appellant has not carried out any business activity and income earned out of interest is assessable under the head 'Income from other sources' and, therefore bad dept in respect of K.M. Nemani is not allowable under section 36(1)(vii)." 4. The facts in brief, are that the assessee was a member of the Bombay Stock Exchange and sold its membership card (sic) on the assessment year 1995-96 for a consideration of Rs. 1.5 crores....
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....8 wherein the ld. CIT(A) had allowed the claim of the assessee. The assessee also reiterated the submissions made before the Assessing Officer. The ld. CIT(A) however upheld the action of Assessing Officer and recorded his findings as under : "10. After going through the facts of the case for the assessment order and after hearing the arguments of the ld. AR, I find that, the Assessing Officer was justified in holding that, the debts were not representing money lent in normal course of business of money lending, since, the money lending business requires valid license from the concerned authority, and since, in money lending business only, the loans were debts. As held by the Hon'ble Bombay High Court in the case of Chinai & Co. (P.) Ltd....
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....ppellant before the Assessing Officer that, the legal heirs were unable to trace out any document pertaining to the recovery of the loan amount from the said party. Thus, the Assessing Officer was correct in holding that the "so-called" loan given to M/s. Videocon Holding (P.) Ltd., was not proved as bad debts. Accordingly, following judgments of Hon'ble Bombay High Court in the case of Chinai & Co. (P.) Ltd., 206 ITR 616 , as quoted supra, I find that, the Assessing Officer was justified in not allowing the bad debts of Rs. 34,10,000, which were correctly disallowed, rejecting the claim of the appellant." Still aggrieved, the assessee is in appeal before us. 5. The ld. Counsel for the assessee pointed out that the claim of bad debts ....
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.... that basis the assessee met all norms to hold it as engaged in the business of money lending. The ld. Counsel also contended that the assessee was also engaged in the share dealing business and money lending licence was required by the person who was solely carrying on business of money lending. The ld. Counsel also drew our attention to the P & L account wherein the assessee had declared share trading profit at Rs. 20,54,348 and contended that it was having business profits in addition to interest earned and shown the same as business income. 6. The ld. Counsel also contended that the decision of Hon'ble Bombay High Court in the case of Chinai & Co. (P.) Ltd. (supra), had been wrongly applied as in that case, the business had ceased to....
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....substantial sum on sale of BSE membership card in assessment year 1995-96 which has been deployed by the assessee in granting loans and advances on interest. It is also in dispute that the assessee has also carried on share dealing business subsequently in the capacity of sub-broker or a trader for assessment year 1997-98 (sic) the Tribunal rejected the claim of the assessee regarding write off of bad debts for the reason that, in the absence of money lending licence, no other evidence or material was produced to establish that the assessee was carrying on money lending business. The Tribunal also relied on the decision of Hon'ble Jurisdictional High Court in the case of Phalton Sugar Works Ltd. (supra) and followed the same in preference t....
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.... find that the Tribunal in the case of Smt. Gulab Sundri Bapna (supra), relying on the decision of Hon'ble Supreme Court in the case of Sole Trustee, Loka Shaikshana Trust v. CIT [1975] 101 ITR 234 held that regular course of dealings in money lending could not be brushed aside merely for the reason that the assessee was not having any money lending licence. However, the ld. CIT(A) has not dealt with this judgment. We also find that this decision was also not considered by the Tribunal in the earlier assessment year 1997-98. The facts of the present case are almost similar to facts of that case. In the present case also the assessee has entered into number of transactions over the years whereby it has earned interest on loans and advances g....