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TMI Blog2021 (4) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of ₹ 29.33 lakhs lost by the assessee in NSEL was not a bad debt, but it is a case of business loss. Hence it is a case of trading loss allowable as deduction u/s 28 of the Act and not as bad debt u/s 36(1)(vii) of the Act. Hence, in my view, there is no requirement to refer to the provisions of sec.36(1)(vii) of the Act. Even though the assessee wrote off entire amount of ₹ 29.33 lakhs in one go in his books of account, he chose to claim the deduction in a staggered manner in three years. The major portion of the amount has been claimed in AY 2014-15 2015-16. The possibility of staggered claim could be that the assessee might have expected that he could realize some amount of ₹ 29.33 lakhs. Since, it did not happe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s observed that the assessee has not furnished any supporting document in respect of this claim. The same is not the point of dispute arising from the assessment order. The issue is whether the interest expenditure is allowable as deduction against interest income. If it is not allowable as deduction against interest income, then whether it is allowable as deduction against business income. The interest expenditure is allowable as deduction against business income only. Accordingly, set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to allow the above said interest expenditure as deduction against business income. If both the claims discussed above are allowed against business income, then the income from business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not allowable as deduction and accordingly disallowed them. The Ld. CIT(A) also confirmed the same. Hence the assessee has filed this appeal before the Tribunal. 3. The first issue relates to disallowance of National Spot Exchange Limited ( NSEL ) loss (described as bad debts claim ) of ₹ 6,61,216/-. The facts relating thereto are that the assessee had dealt with NSEL, which was a platform for undertaking online trading operations in commodities. During the year ending 31.3.2014, the assessee had made sale and purchase of commodities worth ₹ 95.53 lakhs and ₹ 94.02 lakhs respectively. As on 31.3.2014, a sum of ₹ 29.33 lakhs was due to the assessee by NSEL. In the mean time, the NSEL was closed down due to allega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the claim wrongly under the head Income from other Sources . It was submitted that the above said loss is allowable as deduction against business income and accordingly it was prayed before Ld CIT(A) to allow the same as deduction against the business income. The Ld. CIT(A) however noticed that the assessee has written off the entire amount of ₹ 29.33 lakhs, being the loss of amount due from NSEL, in financial year 2013-14 itself in its books of accounts. Accordingly, he took the view that the assessee cannot make bad debt claim u/s 36(1)(vii), since the deduction of bad debts is allowable in the year in which the debt was written off as bad in books of account. Accordingly, he confirmed the disallowance. 6. I heard the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount was not written off as bad during the year under consideration. 7. The transactions in commodities have been undertaken by the assessee in NSEL platform, which is the coordinating authority between the buyers and sellers. It is the responsibility of the NSEL to settle the accounts of the assessee. Due to closure of NSEL on account of large scale frauds, the realisation of the amount has become doubtful. In the instant case, it is the NSEL which has failed to pay the money due to the assessee. Hence, in my opinion, the amount of ₹ 29.33 lakhs lost by the assessee in NSEL was not a bad debt, but it is a case of business loss. Hence it is a case of trading loss allowable as deduction u/s 28 of the Act and not as bad debt u/s 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aft facility from State Bank of India in respect of his business/trading activity. The interest payable on overdraft facility fallen due and the assessee had availed loan against fixed deposit in order to pay the interest liability of overdraft facility. The A.O. held that it is not an expenditure incurred for earning the interest income. The AO also observed it is an item of business expense incurred during the course of conducting business. Accordingly, the A.O. disallowed the claim. Even though the A.O. has observed that it is an item of business expenses, yet he did not allow deduction of interest expenditure of ₹ 1,59,969/- against business income also. The Ld. CIT(A) confirmed the same, inter alia, observing that the assessee di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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