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2012 (12) TMI 716 - ITAT, BANGALOREWriting off Advances as Bad Debts – nature of the assessee’s business - Held that:- Considering the exact nature of assessee’s business as mentioned in assessment order the assessee is in the financial sector, whereas in the written submissions the assessee has stated that it is in the investment company & if it is found that the assessee is an investment company and the advances made by the assessee to M/s BPL Ltd., and its sister concerns are for the purpose of investments in shares, then the advances written off by the assessee cannot be considered as a trading loss or bad debt but has to be treated as capital loss which is not eligible for deduction u/s 36 or 37 while computing the income from business u/s 28 - As neither the AO nor the CIT(A) has actually gone into this aspect of the issue nor have they examined the correct nature of advance given by the assessee or the purpose of such advances the issue is to be remitted back to the file of the AO for verification - in favour of assessee for statistical purposes. Set off income offered against the disallowance of deduction u/s 36(1)(vii) - Held that:- Unable to accept the contention of the assessee that if the claim of advance written off by the assessee is not accepted, the same analogy has to be applied to the liabilities written back by the assessee. Each claim of the assessee has to be considered independently and in accordance with law. As rightly pointed out by the DR, the nature of the liability and the condition under which the liability has been written back has not bee explained by the assessee and in fact it is the assessee which has treated the same as its income. The claim of the assessee to set off is not permissible until and unless there is clear nexus between the two which is absent in the present case. As the nature of the liability written back has not been examined by any of the authorities below it is desirable to remit issue back to AO for consideration - in favour of revenue for statistical purposes.
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