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TMI Blog2015 (10) TMI 2060X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009 (1) TMI 4 - HIGH COURT BOMBAY), then in that event, the disallowance be determined under Section 14A of the Act. This, undoubtedly would be on an application of a reasonable method as held by this Court in Godrej & Boyce (2010 (8) TMI 77 - BOMBAY HIGH COURT). Thus, we are at a loss to understand the grievance of the revenue. No substantial question of law. - Decided against revenue. Claim of bad debts - Tribunal allowing written off amount as irrecoverable as the same has to be allowed as bad debt u/s 36 (1) (vii) r.w.s.36 (2) - Tribunal held that investment in ICDS was part of the business activity as interest accrued therefrom has been treated as business income and loss arising on such investment was allowed as business loss? - H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh Adv For the Respondent : Mr. P. J. Pardiwalla Sr. Counsel a/w Mr. Atul Jasani ORDER P. C. This appeal under section 260A of the Income Tax Act, 1961 (for short the Act) by the revenue challenges the order dated 31st October, 2012 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order is in respect of A.Y.2002-03. 2. The revenue has urged the following question of law for our consideration : 1. Whether on the facts and in the circumstances of the case and in law the Tribunal is right in restoring back the issue of disallowance u/s 14A at ₹ 1,34,56,840/- to the Assessing Officer for fresh consideration? 2. Whether on the facts and in the circumstances of the case and in law th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was unable to recover a part of the principal amount of ICDs as well as interest thereon. Thus, they entered into a settlement with their debtors under which they received part of the amounts due in full and final settlement. The amount which had remained to be received/recovered was written off in the Books of Account mostly on account of interest to the extent of ₹ 2.19 crores and on account of principal to the tune of ₹ 32 lacs. The aforesaid claim for deduction was made under section 36 (1) (vii) of the Act as irrecoverable and/or under section 28 of the Act as write off and business loss. However, the Assessing Officer by an order dated 31st March 2005 disallowed the claim for deduction on account of the write off as ICDs o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Mr.Tejveer Singh learned counsel appearing for the revenue in support of the appeal submits that it was not open to the assessee to adjust the amounts received from its debtors on ICDs against the interest amount without first adjusting the principal amount. Besides, it is submitted that the respondentassessee is not engaged in business of banking or money lending and thus the loss on account of ICDs i.e. the principal and interest amount cannot be allowed to determine the petitioner's income chargeable under the head Profits and gains from business or profession. 8. We find that it is an undisputed position that the respondentassessee has made ICDs during the A.Y.1995-96. The interest received on these ICDs was on accrual basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial question of law. 9. In any event, the entire exercise of revenue to disallow the nonreceipt of principal amount as 'business loss' would be academic. This is so as this Court in COMMISSIONER OF INCOME TAX VS SHREYAS S.MORAKHIA (2012) 342 ITR 285 (Bom) has held in terms of section 36 (2) (i) of the Act where interest income has been offered to tax in earlier assessment year then the principal amount which is outstanding giving rise to interest income would also be covered under the provisions of section 36 (1) (vii) of the Act. This Court had held in Shreyas case that the debt comprises not only brokerage which was offered to tax, but also the principal amount chargeable to tax which was not received and therefore even ..... X X X X Extracts X X X X X X X X Extracts X X X X
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