2013 (2) TMI 526

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..... " B. Whether the Appellate Tribunal is right in law and on facts in not appreciating that the assessee company was engaged in different business, and that the assessee company was not entitled to set off carry forward loss or unabsorbed depreciation in view of the fact that section 72A had no application ? C. Whether the Appellate Tribunal is right in law and on facts in not appreciating the fact that the amalgamated company was engaged in the business of investment and financing and was not a specified bank as per the provisions of section 72A(1) and, therefore, the benefit of carry forward and set off was not available to it? D. Whether the Appellate Tribunal is right in law and on facts in not appreciating the fact that the assessee c .....

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..... o allowance in respect of irrecoverable loans advanced in the ordinary course of business regardless of the method of accounting employed. The reason is that money is the stock in trade or the circulating capital of a banker or moneylender. The loss of stock in trade is always a trading loss irrespective of the method of accounting employed. After the amalgamation the nature of the debt remaining the same. It would be open for the assessee to write off the same to the profit and loss account and claim it as allowable deduction under section 36(1)(vii) while computing the taxable profits for the relevant assessment year. In our humble opinion, the treatment given to the loans and advances by the subsidiary company prior to amalgamation woul .....

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..... eeping in view the totality of the facts and circumstances of the case, in our opinion, both the departmental authorities below clearly erred in relying on the judgment of the Hon'ble Supreme Court in the case of McDowell & Co. (supra). The assessee has fulfilled all the conditions laid down in section 36(1)(vii) the bad debts where written off in the books of accounts the assessee s not trying to set off carry forward loss or unabsorbed depreciation and, therefore, section 72A has no application. In view of this, we direct the A.O. to allow the bad debts amounting to Rs.87,03,275/- written off in the books of accounts. Resultantly, this ground of appeal is allowed." Having perused the documents and having heard the learned counsel for th .....

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