2012 (4) TMI 774

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..... over debts amounting to ₹ 25,68,81,748/- from its sister concern, M/s. Elgi Finance Ltd. in the previous year relevant to the assessment year 2002-03. These debts were taken over for a sum of ₹ 22,10,00,000/-. The difference of ₹ 3.58 crores was offered as income in the three assessment years commencing from the assessment year 200203. These transactions were concluded on the basis of mutual agreement. 3. A part of such debts taken over by the assessee-company was written off as bad debts for the impugned assessment year. The amount of ₹ 1,04,92,744/- was claimed as bad debts under sec.36(1)(vii). The Assessing Officer rejected the claim made by the assessee on the ground that the assessee has not fulfilled the c .....

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..... inment of the main objects in the memorandum of association. 6. For that without prejudice the deduction of ₹ 1,04,92,744/- claimed as bad debts is allowable as an expenditure u/s 37(1) of the Act. 5. We heard Shri T.Banusekar, the learned counsel appearing for the assessee and Shri S. Moharana, the learned Commissioner of Income-tax appearing for the Revenue. 6. The very same issue was considered by ITAT, Chennai D Bench in assessee s own case for the assessment year 2004-05 through its order dated 6.6.2008 passed in ITA No.2256/Mds/2006. After detailed examination of the case, the Tribunal held that there is no infirmity in the elaborate order of the Commissioner of Income-tax(Appeals) that the amounts are not allowable .....

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..... rt of the Revenue to hold that the debts written off by the assessee could not be allowed as a deduction under sec.37(1). The Tribunal made a finding that the facts of the case speak out that the debts were taken over by the assessee company as part of its business design. 8. It is the same issue which has come up for the impugned assessment year also. The assessee has taken over the debts of its sister concern as part of its business endeavour by executing a lawful agreement. The sister concern and the assessee both, have entered into the agreement in a rightful manner. The discount benefit gained by the assessee at the time of transactions was offered as income. That was assessed by the Revenue. Wherever the assessee is getting any ben .....

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