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2022 (10) TMI 274 - ITAT AHMEDABADDisallowance as bad debts as well as business loss//loss incidental to business - HELD THAT:- It is pertinent to note that though the assessee has stated that the intention of the assessee to give advances to its subsidiary for making capital and subsidy but the intention was to control the operation of the GTL and to oversee that the manufacturing cost of the yarn clearer remained below its import cost which has to be economical/cost effective for the assessee. Thus, the advances were intended to have a smooth running of manufacturing activities of the assessee company taking into account the cost effectives while investing in the equity shares of GTL. Thus, the same cannot be stated as advance given for acquisition of capital and hence it was rightly treated as bad debt as well as business loss/loss incidental to business by the assessee when GTL became defunct and it was impossible to recover the amount on its liquidation. Thus, ground no.1 is allowed. Disallowance of bad debts written off - AR submitted that the amounts were outstanding for more than six years and the details of debts written off giving the names of the debtors and the amounts were submitted during the course of assessment proceedings - HELD THAT:- Only contention of the assessee is that the said debts were outstanding for last more than six years but the assessee has not been able to show as to any correspondence made with the parties for recovering the said amount. There was no efforts made by the assessee to recover the said amount and simplicitor saying that the amount was less than Rs.1 lakh cannot be held as bad debt. In the common parlance of business each and every rupee matters and the businessman always try to recover even if it is not filing any legal action as such. But here intention of recovering the said debts were not shown by the assessee before the Assessing Officer or before the CIT(A) as well as before us. Thus, ground no.3 is dismissed. Long Term Capital Loss in respect of equity shares of subsidiary company - HELD THAT:- No reason why a shareholder who in distribution of assets has not received any deemed consideration in satisfaction of his rights and interests in the holding and has thereby suffered a total loss, cannot claim the benefit of set off or carry forward of the loss suffered by him. Otherwise, a startling and unjust situation may arise where the receipt of even one paise would enable him to claim set off or carry forward of capital loss as worked out under section 48, while, a shareholder who is a shade worse off and gets nothing in the event of such total loss should be denied the effect of section 46(2) read with sections 71 and 74 and be put to a perpetual loss. Therefore, even where the receipt is "nil" on the date of distribution on the liquidation of the company, the case of such shareholder will fall under section and the deemed full value of the consideration for the purpose of section 48 will be regarded as "nil" and on that basis the income chargeable under the head "Capital gains" has to be computed under section 48. Therefore, when the assessee company ensures that the assessee company will not gain any consideration in future as the subsidiary company was in liquidation, the assessee Company has rightly claimed for Long Term Capital Loss. This fact was totally ignored by the CIT(A) as well as by the AO - Thus, the CIT(A) was not right in disallowing the Long Term Capital Loss. Non-granting exemption from the tax payable on Long Terms Capital Gain (LTCG) earned on transfer of land - HELD THAT:- Decision of Hon’ble Gujarat High Court in case of CIT vs. Mitesh Impex [2014 (4) TMI 484 - GUJARAT HIGH COURT] which is apt in the present case wherein it is held that though the assessee did not raise a claim in the return for deduction u/s 80IB & 80HHC, it was entitled to raise the claim before the CIT(A) for the first time. If a claim though available in law is not made either inadvertently or on account of erroneous belief of complex legal position, such claim cannot be shut out for all times to come, merely because it is raised for the first time before the appellate authority without resorting to revising the return before the AO. Courts have taken a pragmatic view and not a technical one as to what is required to be determined in taxable income. Assessment proceedings are not adversarial in nature. In fact in present case, the assessee made a claim during the assessment proceedings itself before the Assessing Officer which was totally ignored by the AO - The decision of Hon’ble Supreme Court in case of Goetz (I) Ltd. [2006 (3) TMI 75 - SUPREME COURT] was not at all considered in its true spirit in the present assessee’s case. Therefore, ground is allowed.
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