ITAT directs fresh review of bad debt disallowance under Section 36 for advances to movie producers

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....The ITAT remanded the matter to the AO for fresh adjudication regarding the disallowance of bad debts written off on advances made by the appellant to movie producers. The tribunal held that the AO's summary acceptance of the returned income without discussing the disallowance issue was insufficient. While advances given in the normal course of business and subsequent written off losses are deductible under section 36, the appellant failed to produce evidence that interest income on such advances was previously offered as business income. Therefore, the connection between the advances and business activities requires verification. The appeal was allowed for statistical purposes, directing the AO to re-examine the nature of the loans and related tax treatment of interest income to determine the deductibility of the bad debts.....