TaxTMI 
TaxTMI 
2018 (4) TMI 1262
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.... 20.03.2015 for the Assessment Year 2012-13. 2. The only issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in upholding the disallowance of write off of outstanding loan and interest aggregating to Rs. 56,94,685/-, in the facts and circumstances of the case. The interconnected issue is as to whether the Ld. CIT(A) was justified in upholding the treatment of interest income earned during the year in the sum of Rs. 9,02,612/- as income from other sources instead of business income in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee is a limited company having its shares quoted in recognized stock exchange. The ld. AO observed that the assessee is engaged in the bus....
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....oan given to Umesh Jatia was not incidental to the business of the assessee and accordingly held that the conditions prescribed in section 36(1)(vii) of the Act were not satisfied by the assessee. The assessee replied that for the financial year 2011-12 relevant to assessment year 2012-13, the assessee had indeed given fresh loans to several parties to the tune of Rs. 1,86,29,850/-. The opening balance of loans receivable by the assessee from 8 parties was Rs. 1,15,10,793/-. The fresh loans given during the year under appeal to three parties were Rs. 1,86,29,850/-. The loans repaid by various parties during the year were Rs. 2,28,18,599/- thereby levying a closing balance of Rs. 7,70,044/-. Apart from this, the assessee had also given advan....
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....arned Commissioner of Income Tax (Appeals) was wrong in rejecting the appellant's submission that the year's Interest income of Rs. 9,02,612/- should have been assessed as the appellant's business income in stead of including the same under the head 'Income from Other Sources'. 4. That the appellant craves leave to add, alter or withdraw any ground or grounds of appeal before or at the time of Hearing of the Appeal. 4. We have heard the rival submissions and perused the materials available on record. At the outset, we find that the ld. AO had observed that the assessee is not engaged in the money lending business. But on perusal of the financial statements of the assessee, it is revealed that the assessee had given substantial part of ....
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....evident that the borrowed funds were also utilized for the purpose of lending. Hence, it could be safely concluded that the assessee had carried out money lending activities out of own funds as well as borrowed funds. Since the interest income has been offered to tax in the earlier years by the assessee under the head income from business, the requirement of provision of section 36(2) has been duly complied with by the assessee and hence the write off of the same is squarely allowable as deduction u/s 36(1)(vii) of the Act as bad debt. We also find that the principal portion of Rs. 20 lacs loan to Mr. Umesh Jatia was given by the assessee company in the normal course of money lending and hence the write off of the same as irrecoverable in t....
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.... balance outstanding in the name of Mr. Umesh Jatia as bad debt in the books of accounts of the assessee company for the year under appeal. After the decision of Hon'ble Supreme Court in the case of TRF Limited (supra) and after the amendment brought with effect from 01.04.1989 in section 36(1)(vii) of the Act, the assessee need not establish that the debt has become bad. We hold that the lending of money to Mr. Umesh Jatia had been done in the ordinary course of business and since substantial part of the funds were deployed for the lending activity, we hold that the assessee company is engaged in the business of money lending. The ld. DR argued that the assessee company is not a non-banking finance company and lending is not part of its bu....