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TMI Blog2018 (5) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... Motors India Pvt. Ltd. v. Deputy CIT reported in [2012 (8) TMI 714 - GUJARAT HIGH COURT] - any unabsorbed depreciation would be dealt with in accordance with the provisions of section 32(2) - thus the amount of business loss and unabsorbed depreciation to be carried forward for the set of against income of the subsequent years - decided in favor of assessee. - I.T.A./5729/Mum/2014 - - - Dated:- 5-4-2018 - Sh.Rajendra, Accountant Member and Amarjit Singh, Judicial Member For The Revenue : Shri Suman Kumar-DR For The Assessee : Shri F.V. Irani Order u/s. 254(1)of the Income- tax Act, 1961(Act) PER RAJENDRA, AM Challenging the order dated 30/06/2014 of the CIT(A)- 1, Mumbai, the Assessee has filed present appeal. The assessee is an NBFC company, filed its return of income on 24/09/2009 declaring total income at NIL. The case was selected for scrutiny and the AO completed assessment on 29/12/2011, determining its income at ₹ 47. 45 lakhs u/s. 143(3) of the Act. 2. First ground of appeal is about upholding the disallowance of bad debts of ₹ 4. 71 crores written off by the assessee during the year under consideration. During the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was some mutual arbitration/settlement, that as a result of such understanding amounts had been waived off by the assessee, that the amounts could not be treated as bad debts and would not qualify for deduction u/s. 36 of the Act, that the dues from the respective parties who was amounts by way of lease rentals, that same were not in the nature of advances made to them or other sums due from them as a result of trading transactions. Finally, upholding the order of the AO, he dismissed the appeal filed by the assessee. 2.2. During the course of hearing before us, the Authorised Representative (AR) stated that the assessee had leased certain assets to above-mentioned two entities, that it filed cases against both of them for cheque bouncing, that one-time settlement was arrived at, that in one case out of total outstanding the assessee had written off ₹ 2. 24 crores, that in the case the other party it had written off ₹ 2. 47 crores, that assessee was a NBFC, that the loss incurred by it was for carrying on its normal business, that in the earlier year the assessee had shown the income from lease rentals under the head business income, that the AO had accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. (supra), wherein similar issue was decided in favour of the assessee. Otherwise also, the expenditure is allowable as business loss, as per the provisions of section 28 of the Act. There is no dispute that the disputed transaction is a business transaction and therefore loss suffered by the assessee has to be allowed. Considering the above, we decide the first ground of appeal in favour of the assessee. 3. Second ground of appeal is about disallowance of ₹ 10 lakhs, being amount paid for reaching an out of court settlement. During the assessment proceedings, the AO found that the assessee had debited the profit and loss account by an amount of ₹ 10 lakhs under the head legal and professional fees. He directed the assessee to file an explanation in that regard. After considering the same, he observed that disputed amount was paid by the assessee to its 100% subsidiary entity, namely, MRR Trading and Investment Company Ltd. (MRR), that the assessee had claimed that it had no officer space for its operation in Mumbai, that MRR had agreed to allow it to use the office premises hired by it and owned by Roman Catholic Cathedral Trust (RCCT), that RCCT file a suit agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 . Third ground of appeal is an alternative ground to the earlier ground. As we have allowed the second ground of appeal, so, we allow the third ground of appeal for statistical purposes. 5. Next effective ground of appeal(Gs. AO. 4 5) is about set off and carryforward of unabsorbed depreciation pertaining to AY. s 1997-98 to 2000-01 and not directing the AO to quantify the amount of business loss and unabsorbed depreciation to be carried forward for set off against the income of subsequent years. Before us, the AR relied upon the case of Hindustan Unilever Ltd (394 ITR 73)and the DR supported the order of the FAA. 5. 1. We find that the honorable jurisdictional High Court in the case of Hindustan Unilever Ltd (supra)has dealt with the same issue, that in the cases of Schott glass India Private Ltd. (ITA/867/Mum/2015-AY. 2010-11, dated, 08/03/2017), New Holland Fiat (I) Private Ltd. (ITA/ 7574/Mum/2012-AY. 2008-09, dated, 03/05/2017)and GSM Structures Ltd (ITA/4086/ Mum/ 2014-AY. 2008-09, dated, 30/03/ 2016) identical issue has been decided against the revenue and in favour of the assessee. We would like to reproduce the relevant portion of the judgment of the hono ..... X X X X Extracts X X X X X X X X Extracts X X X X
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