2014 (4) TMI 214

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.... amounting to Rs.30 lakhs? 2) Whether, on the facts and circumstances of the case, there is any material or evidence on record to justify the decision of the Income Tax Tribunal that the inter-corporate deposit made by the Appellant is not money lent in the normal course of business?" 3. The entire controversy revolves around appellant- assessee's claim of bad debt of advance of a sum of Rs. 30 lakhs to another Public Company, by name M/s.Peermade Tea Company Limited during financial year 1996-97. It is not in dispute that the accrued interest of Rs. 23,76,274/- (Rupees twenty three lakhs seventy six thousand two hundred seventy four only) was declared as outstanding along with principal amount in the returns of appellant/assessee. Ac....

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.... 30 lakhs as bad debt under Section 36 (1)(vii). So also the first Appellate Authority upholds the opinion of the assessing officer in rejecting the claim of interest portion. This came to be challenged by appellant/assessee before the Tribunal and the Tribunal at paragraphs 12,13 and 14 with reference to principal amount of Rs. 30 lakhs and also interest portion of Rs. 23,76,274/- (Rupees twenty three lakhs seventy six thousand two hundred seventy four only) made following observations:- "12. In the instant case, the assessee has not furnished any material to show that the amount of Rs.30.00 lakhs was advanced in the regular course of business activity of lending money. The agreement, if any, entered between the assessee company and M/s.P....

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....he basis of surrounding circumstances. In the case of Poysha Oxygen (P) Ltd.(supra), the Third Member has held that the fact that it was a single transaction was not an impediment to it being called money-lending business. Hence a single transaction of advancing money could also fall in the category of money lending transaction, provided the intention of the parties are made clear in that regard. In the instant case, as stated earlier, no material was placed before us to show that the amount of Rs.30.00 lakhs was advanced with the intention of lending money in the ordinary course of business and not as investment. The assessee has also not shown that he was carrying on this kind of transactions repeatedly. Hence, in the facts and circumstan....

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....ase of Poysha Oxygen (P) Ltd. Vs. ACIT [(2008) 19 SOT 711 (Delhi) (TM)] held that the object clauses in the Memorandum of  Association are not relevant for considering whether particular activity undertaken by the limited company amounts to business activity or not, therefore, opined that mere terms or object clauses in the Articles of Memorandum of Association cannot form the criterion to consider the said issue and rejected the claim of written of , as bad debt under Section 36(1)(vii) of the Income Tax Act. So far as interest portion is concerned, the account copies of interest received account for previous years right from 1996-97 to 2005- 06 indicate that assessee had subjected accrued interest to tax, therefore, there is some for....