TaxTMI 
TaxTMI 
2015 (11) TMI 1670
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....d. CIT(A) erred in deleting the disallowance of Rs. 77,36,166/- made by the AO on account of loss of foreclosure of loan assets on the basis of judicial pronouncements in the case of assessee for the earlier assessment years without appreciating that the assessee has changed the business model in the A.Y. 2009-10 as the loss claimed by the assessee is on account of loss of foreclosure of loan assets for the A.Y. 2009-10 whereas in the earlier assessment years the loss was on account of loss on sale of repossessed assets? 2. Whether in the facts and circumstances of the case, the Ld. CIT (A) erred in holding that the loss on foreclosure of loan assets is akin to the loss was on account of loss on sale of repossessed assets? ....
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....his amount is written off in profit and loss account and claimed as deduction by the assessee. During assessment proceedings the claim of the assessee was disallowed holding that it is not bad debt but it is a future possible, probable amount saved by assessee from going bad and therefore does not represent unrecovered amount and hence same is not allowable as bad debt u/s 36(1) (vii) rws 36(2) of the Income tax act. 05. Aggrieved the assessee filed an appeal before the learned Commissioner of Income-tax (Appeals), who partly allowed the appeal of the assessee holding that it is allowable as bad debt based on judicial pronouncements which are related to loss arising on account of repossessed vehicles in case of NBFCs. CIT A() also held t....
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....te security available with the assessee, assessee negotiates the outstanding amount with the borrower for repayment. On negotiation it may happen the negotiated amount is most of the times less than the amount of outstanding due from the borrower. Such excess of outstanding over the negotiated amount is written off in the books of accounts of the assessee titled as "loss on foreclosure of loan assets." Such amount is claimed as deduction u/s 36(1) (vii) of the Income tax Act. Provision of section 36 (1) (vii) are as under :- 36. (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28- (vii) subject to the provi....
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.... (vii) of the act any bad debt or part of the bad debt if written off in the books of accounts as irrecoverable, same shall be allowed to the assessee as deduction. It is admittedly written off in the book of accounts of the assessee as " loss on foreclosure of loan assets" . In view of this the assessee satisfies all the conditions of allowabaility of this sum as deduction u/s 36(1) (vii) rws 36(2) of the Income Tax Act. As the sum is written off in the books of accounts by writing of the loan amount of the borrower on negotiation cannot be called a future or probable loss but ascertained and accrued loss in the business of financing. Though the cases relied up on by the assessee relates to the issues of loss on sale of repossessed vehi....