TaxTMI 
TaxTMI 
2013 (10) TMI 475
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.... for the sake of convenience. The identical disputes raised relate to allowability of loss incurred on account of sale of repossessed assets and disallowance of expenses u/s 14A of the Income Tax Act. 2. We first take up the dispute relating to allowability of loss incurred by the assessee on sale of repossessed assets. The assessee company is engaged in the business of leasing and financing motor cars etc, purchased by the customers. The ownership of the motor cars etc remains in the name of customers who hypothecate the assets to the assessee company against the loans taken. Customers have to pay equated monthly installments towards the amounts due from them to the assessee and on non realization of the equated installments, the assess....
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....business income which had not been accepted by the department. Therefore, the disallowance of claim of loss holding the same as capital in nature was not correct. It was further submitted that loss on termination of lease agreement was also allowable as deduction under the provisions of section 36(1) r.w.s 36(2) of the Income Tax Act. It was explained that the difference between the selling price of the assets repossessed and the non realized equated monthly installments represented nothing but irrecoverable portion of the money lent by the assessee in the course of carrying on the business of financing motor car and the same was allowable as bad debt. Reliance was placed on the decision of Tribunal in case of ACIT Vs. Citicorp Maruti Finan....
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.... regarding allowability of loss incurred by the assessee on sale of repossessed assets. The assessee is engaged in the business of leasing and financing motor cars etc. The assets financed by the assessee such as motor cars remained in the name of customers who hypothecate the same against the loan taken from the assessee. The customers are required to pay equated monthly installments towards the loans taken from the assessee. However in case of non realization of loan, the assessee repossesses the assets and sales them in open market. The profit/loss earned in the process is credited/debited to the profit & loss account. The authorities below have held that the loss earned by the assessee is of capital in nature and could not be allowed as....
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....ad debt. 3. The second dispute raised which is also identical in both the years is regarding disallowance of expenses u/s 14A of the Income Tax Act. AO during the assessment proceedings noted that the assessee had received dividend income of Rs. 295460 in assessment year 2006-07 and Rs. 1,01,769/- in assessment year 2007-08. AO, therefore disallowed the claim of expenses relating to exempt income which were computed by him as per Rule 8D at Rs. 95,501/- and 116940/- for the two years under reference. In appeal CIT(A) confirmed the orders of AO, aggrieved by which the assessee is in appeal before tribunal. 3.1 We have heard both the parties, perused the records and considered matter carefully. The dispute is regarding disallowance of e....