TaxTMI 
TaxTMI 
2021 (3) TMI 692
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....nal' for brevity) for the assessment year 2012-13. 2.The appeal was admitted on 04.03.2020 on the following substantial questions of law: "1.Whether the Tribunal was right in deleting the addition of Rs. 5 Crores made by the Assessing Officer as disallowance of bad debts u/s.36[1][vii] read with Section 36[2] holding even though said sum was not a bad debt but was allowable as deduction on loss suffered in the course of its business of real estate without appreciating the fact that the amount represented only a interest free loan obtained by Sandhya Mulchandani for purchase of her house property and therefore, the loan given was no incidental to its business of real estate? 2.Whether the Tribunal was right in not considering the fa....
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....ing Officer pointed out that in the profit and loss account, the assessee has returned a sum of Rs. 5 Crores and the same was claimed as expenditure under the head "bad debts written off" and details were called for. The assessee submitted that it was unrecovered and unsecured loan of Rs. 5 Crores given to Ms.Sandhya Mulchandani in the Financial Year 2009-10. The Assessing Officer noticed that the said person has taken interest free loan of Rs. 5 Crores to purchase a residential property at Delhi and she has not repaid the same and she intends to repay it as per the letter. Further the Assessing Officer found that the transaction has taken place in the year 2009-10 and the assessee has claimed the said amount as bad debts in the written of....
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....ssee that the assessee under bonafide belief extended the loan of Rs. 5 Crores and the same has become irrecoverable and therefore, the loan amount is written off as bad debts. The Tribunal pointed out that though in strict parlance the loss suffered by the assessee cannot be considered as bad debts arising of trade debts, it is certainly a loss suffered by the assessee during the course of its business of real estate if such advance is not recoverable. Further the Tribunal pointed out that there is no bar on the revenue to scrutinize the case of Ms.Sandhya Mulchandani and examine the possibility whether the loan amount of Rs. 5 Crores can be treated as income in her hands because the assessee had written off the same in its books of accoun....
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....nue. 7.Per contra, Mr.Anand Sashidharan, learned counsel for the respondent placed on record an affidavit filed on behalf of the respondent/assessee sworn to by its partner dated 15.02.2021. On a perusal of the affidavit, it is seen that on account of the subsequent development in the matter, there is no revenue application and therefore, the revenue at this point of time cannot seek for restore the order of the Assessing Officer dated 24.02.2015. For better appreciation, the relevant paragraphs in the affidavit are quoted herein below: "8.The Respondent received a Notice under sub section (6) of section 133 of the Income Tax Act, 1961 bearing Notice No.ITBA/AST/S/133(6)/2019- 20/1017470357(1) dated 20.08.2019 issued by the Deputy Commis....