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2011 (4) TMI 1165 - MADRAS HIGH COURTWrite off of amounts lent as bad debt - Whether Tribunal was right in holding that the assessee is in the business of money-lending and allowed write off? - whether amounts given to the parties were for the purpose of and incidental to the business of the assessee? - Held that:- Considering the consistent treatment of the transactions of the assessee as one of business in nature and the income therefrom as a business income & as regards the money lent to the close relatives who happened to be the partners of the debtor firm and incidentally the directors of the company too, the Tribunal held that the Department had the knowledge that the directors of the company and the partners of the firm were closely related, yet, AO accepted the bona fides of the claim and allowed the interest arising from the same transaction as a business income, although on the claim of bad debt, he rejected the assessee's contention. The status or relationship between the parties, by itself, is not a ground for rejecting the claim of the assessee, particularly when the Revenue itself had accepted the interest arising out of the same transaction as business income. In the absence of any material at the hands of the Revenue, the Tribunal rightly held that the claim of the assessee could not be rejected. Having regard to the pure finding of fact by the Tribunal, no hesitation in confirming the order of the Tribunal. Considering the amendment introduced to section 36(1)(vii), on and after April 1, 1989, it is not necessary for the assessee to establish that the debt, in fact, had become irrecoverable. See T. R. F. Ltd. v. CIT [2010 (2) TMI 211 - SUPREME COURT]. In favour of assessee.
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