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TMI Blog2014 (5) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... s bad debt. The second grievance of the Revenue relate to the deletion of addition on account of interest of Rs. 49.69 lakhs. 3. The assessee is in the business of printing and publishing of law journals. The return of income was filed on 26.9.2008 declaring loss at Rs. 8,21,520/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and duly served on the assessee. During the scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has debited Rs. 61,60,166/- to the Profit and Loss account of bad debt. The right off was on account of the following: 1) AIR Engineering Co. Pvt. Ltd. Rs. 59,09,599/- 2) Mangala Binding Rs. 567/- 3) Amrit Natural Chemicals Rs. 2,50,000/- 3.1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess income. Since then M/s. AIR Engineering Co. closed down its business hence the amount advanced by the assessee became irrecoverable. It was claimed that advances made by the assessee were entirely in the normal course of business carried out by the assessee. 4.1. After considering the facts and the submissions, the Ld. CIT(A) observed that the assessee has made substantial investment in M/s. AIR Engineering since its inception and was charging interest on the investment made to the subsidiary. Such interest was being assessed in the hands of the assessee as business income of the assessee. Drawing support from the decision of the Calcutta High Court in the case of Turner Morrison & Co. Ltd Vs CIT 245 ITR 724(Cal), the Ld. CIT(A) was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenditure as well as bad debt. Reliance on the decision of the Hon'ble Calcutta High Court in the case of Turner Morrison & Co. Ltd. (supra) by the Ld. CIT(A) is well founded. A similar view has also been taken by the Hon'ble M.P. High Court in the case of Mrs. Gita Sanghi Vs CIT 277 ITR 388 wherein claim of advance given on interest on being written off has been allowed as a bad debt u/s. 36 of the Act. Even otherwise on the facts and the circumstances of the case, the loss of advance by the assessee company to its 100% subsidiary company is to be allowed as a business loss. We therefore do not find any error or infirmity in the findings of the Ld. CIT(A). First grievance of the Revenue is accordingly dismissed. 10. The second grievan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed/given free of interest. This submission of the assessee was rejected by the AO. The AO was of the firm belief that the primary burden of establishing the claim is on the assessee and in the instant case the assessee has not lead any evidence in this regard. The AO further observed that the assessee has nowhere discharged the primary burden of proving that the interest paid by the assessee was utilized for the purpose of its own business. Drawing support from the various judicial decisions, the AO computed the proportionate disallowance of interest at Rs. 49,69,279/-. 12. The assessee carried the matter before the Ld. CIT(A). The facts of the case were explained to the Ld. CIT(A) and after perusing the facts, the Ld. CIT(A) was of the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessed as business income in the hands of the assessee which has been brought to our notice that similar additions were deleted by the Ld. CIT(A) in A.Y. 2009-10 and the Revenue has accepted the order of the Ld. CIT(A). Moreover, it is seen that these advances are coming from earlier years.
17. The Ld. DR could not show sum advance which was given afresh during the year under consideration nor it has been mentioned in the assessment order. Considering all these facts in totality, we do not find any reason to interfere with the findings of the Ld. CIT(A). The second grievance of the Revenue is also dismissed.
18. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the Open Court on 30th April, 2014. X X X X Extracts X X X X X X X X Extracts X X X X
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