TaxTMI 
TaxTMI 
2012 (9) TMI 448
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.... 2) Being aggrieved, the revenue has formulated the following question of law for consideration of this Court. Whether on the facts and circumstances of the case and in law, the Tribunal was right in allowing the assessee's claim u/s. 36(1)(vii) read with Section 36(2) of the Income Tax Act, 1961? 3) The respondent-assessee is a statutory corporation established u4nder the SIDBI Act, 1989.The respondent-assessee is engaged in the business of promotion, financing and development of the Small Scale Industry to meet the emerging challenges of the liberalized economy. The income of the respondent-assessee was exempted from payment of income tax by virtue of Section 50 of the SIDBI Act, 1989 which reads as under: Section 50 of the S....
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.... disallowed and added back to the respondent's income. 6) In appeal, the Commissioner of Income Tax (Appeals) by an order dated 17/3/2006 upheld the order of the Assessing officer by holding that the deduction under Section 36(1)(vii) of the Act is available subject to the satisfaction of Section 36(2) of the Act. Therefore, according to the CIT(Appeals) this deduction of bad debts would only be available when the debt being sought to be written off was taken into consideration in computing the income of the respondent-assessee in an earlier assessment year. However, as the respondent-assessee was not liable to tax upto the assessment year 2001-02 there was no occasion for the respondent-assessee including the amount now attributable to ....
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....resents money lent in the ordinary course of the business of banking or money lending which is carried on by the assessee;" 9) While challenging the impugned order Mr. Vimal Gupta Counsel appearing for the revenue submits as under: a) In terms of Section 14A of the Act any expenditure incurred for earning an income which is exempted from tax will not be allowed as deduction. The bad debt was an expenditure incurred in earning income for the earlier years when such income was not subjected to tax in view of Section 50 of the SIDBI Act. and b) In view of Section 50 of the SIDBI Act no income earned by the respondent-assessee were offered for tax. Consequently, Section 36(1)(vii) of the Act would not apply as the respondent-assessee f....
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.... income. Section 50 of SIDBI Act,1989 only exempts payment of income tax. It does not provide that such income of the SIDBI Bank will not be a part of the total income. This would happen in cases of income specified in Section 10 and 10A of the Act. Even otherwise this issue was not raised before the authorities and cannot be now urged in an appeal under Section 260A of the Act. 12) It is not disputed that the respondent-assessee carried on business of banking and the amounts being written off as bad debts was the money lent in the ordinary course of its business. In terms of Section 36(1)(vii) of the Act the assessee is entitled to claim deduction of an amount of debt or part thereof written off as irrevocable in the year in which busin....