2021 (1) TMI 283

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.... Act, 1961(hereinafter referred to as "the Act") dated 19/02/2016 relevant to Assessment Year (AY) 2013-14. 2. The assessee has raised the following grounds of appeal:- 1. Whether, on facts and in circumstances of the case and in law, Ld.AO has erred in disallowing interest of Rs. 171,801/- under section 40(a)(ia) of the income tax act 1961? 2. Whether, on facts and in circumstances of the case and in law, Ld.AO has erred in disallowing bad debt of Rs. 450,000/- under section 36(1)(viii) of income tax act 1961? 3. Without prejudice to ground of appeal no. 2, whether, on facts and in circumstances of the case and in law, Ld.AO has erred otherwise also in not allowing bad debt of Rs. 450,000/- as business loss? ....

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.... be entitled to produce such evidences as may be considered necessary to defend its case for non-deduction of TDS. The Assessing Officer shall be entitled to make such enquiry from the payee (Bajaj Finance Ltd.) as may be considered expedient to ascertain whether there is any loss of Revenue by such non-deduction. Needless to say, the Assessing Officer shall delete the disallowance of amount carried out under s. 40(a)(ia) where it is found that the payee concerned has included the receipt obtained from the assessee for the purposes of computation of total income in its return. In other words, disallowance under s. 40(a)(ia) of the Act will not survive in the hands of assessee where deductee has also included the corresponding income in its ....

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.... period and also repaid through banking channel in the same financial year in respect of loans taken from Sarojben Shah (Rs. 4 lakhs), Wonder world (INC) (Rs. 6 lakhs) and Satnam Electric & Service Centre (Rs. 2,91,000). It was further pointed out that loans of Rs. 10 lakhs obtained from S. Kumar Computers Pvt. Ltd. has also been repaid in the next financial year. Additional evidences in the form of bank statement was filed to prove the factum of repayment. It was contended that this important fact has been totally overlooked by the Revenue. The Ld.AR for the assessee strongly asserted that where the loans obtained has been duly repaid, the assessee does not stand to benefit at all and consequently pleaded that the bonafides of the transact....

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....r in accordance with law. 10. At this juncture, it will be relevant to note the pertinent observations of the Hon'ble Supreme Court in the case of CIT vs. Smt. P.K. Noorjahan (1999) 237 ITR 570 (SC) in the context of the expression 'may' with reference to Section 69 of the Act. The Hon'ble Supreme Court in that case observed that the word 'may' should not be read as 'shall'. The Hon'ble Supreme Court held that the expression 'may' indicates that the intention of Parliament in enacting Section 69 (similar to Section 68) was to confer a discretion on the Assessing Officer in the matter of treating the source of investment, which has not been satisfactorily explained by the assessee. In terms of t....