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TMI Blog2019 (6) TMI 827X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee as interest free unsecured advances to the said subsidiary. In our opinion the said advance was given by the assessee out of commercial consideration and expediency and therefore we are in agreement with the conclusion drawn by the Ld. CIT(A) that the said loss has to be allowed as business loss. As decided in CIT vs. Amalgamation (P) Ltd. [ 1997 (4) TMI 8 - SUPREME COURT] loss incurred by the assessee on account of honouring the guarantee given to the bank on behalf of subsidiary is a business loss and therefore allowable. Also see VASSANJI SONS CO. P. LTD. VERSUS COMMISSIONER OF INCOME-TAX, BOMBAY CITY I [ 1977 (11) TMI 7 - BOMBAY HIGH COURT] wherein held that debt which became irrecoverable which was advanced by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed which was replied by the assessee vide letter dated 21.03.2016 submitting therein that the said loss comprised of capital loss on account of winding up of subsidiary of ₹ 39,39,730/- and advances to subsidiary written off of ₹ 72,88,510/- aggregating to ₹ 1,12,28,240/-. It was also submitted that loss of investment in the subsidiary on account of winding up has been disallowed in the computation of income and has been separately claimed under the head capital gains/loss. It was also stated that assessee has advanced loans and advances to subsidiary out of commercial expediency which the subsidiary could not pay and as it has incurred huge losses and ultimately the said subsidiary was wound up and thus the advances we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of direct of the company wound out the company. The Ld. A.R. while opposing the argument of the Ld. D.R. that issue should be restored to the file of the AO relied primarily on the two decisions i.e. CIT vs. Amalgamation (P) Ltd. (1997) 92 taxman 132 (SC) and Vassanji Sons Co. (P) Ltd. vs. CIT (1980) 125 ITR 462 (Bom) and submitted that the appeal of the Revenue should be dismissed. 7. We have heard the rival submissions of both the parties and perused the material on record. Undisputed facts are that the assessee has a subsidiary in the name of PINC Mauritius to whom the assessee provided unsecured interest free advances to the tune of USD 1,49,810.92 equivalent to ₹ 72,88,510/- for incurring necessary expenses such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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