2011 (5) TMI 18

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....find that during the  assessment proceedings, AO noticed that the assessee had made a claim of Rs.10,85,000/- on account of bad debts written off. On enquiry, it was further found that assessee has purchased the debt amount from Rose Mercantile Co. Ltd. and the amount was due from Qualitron Components Ltd. The AO observed that this was not a debt which was originally accounted for by computing the income of previous year and it was not even money lent in the ordinary course of business and, therefore, the claim was not allowable. After discussing various case laws, he disallowed the claim.   3. Before the CIT[A] it was mainly submitted that after the amendment in law w.e.f. 1-4-1989, it was no more a requirement that for claimi....

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....of banking of money lending. Moreover no interest either accrued or received has been debited in P &L account by the appellant in respect of amount of debts of Rs.10,85,000/-. Therefore the Assessing Officer has rightly disallowed the claim of bad debts amounting to Rs.10,85,000/- u/s.36(1)(vii) r.w.s. 36(2) of the I.T. Act. The action of the Assessing Officer is justified and confirmed. The case laws relied upon by the appellant are distinguishable on facts and not applicable in the case of the appellant.   3. As regards alternative claim of the assessee regarding allowing write off of  Rs.10,85,000/- as business loss u/s.37(1) is concerned, the claim of appellant is also not acceptable. Firstly, the amount of Rs.10,85,000/- i....