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| The Tax Publishers2020 TaxPub(DT) 0560 (Mum-Trib) : (2020) 180 ITD 0776 INCOME TAX ACT, 1961
Section 36(1)(vii), 36(2)
Since interest income was offered to tax , requirement of section 36(2)(i) was satisfied even though principal amount of loan was not offered to tax as interest represented part of the debt and section 36(2)(i) uses the expression 'debt or part thereof.” Thus, requirement of section 36(2) stood satisfied and assessee was eligible to claim deduction under section 36(1)(vii) in relation to advances written off.
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Business deduction under section 36(1)(vii) - Bad debts - Advances written off - Disallowance on the ground that principal amount of loan was not offered to tax as income in earlier years
Assessee claimed deduction of advances written off under section 36(1)(vii). AO disallowed deduction on the ground that principal amount of loan was not offered to tax as income in earlier years. Held: Since interest income was offered to tax , requirement of section 36(2)(i) was satisfied even though principal amount of loan was not offered to tax as interest represented part of the debt and section 36(2)(i) uses the expression 'debt or part thereof.” Thus, requirement of section 36(2) stood satisfied and assessee was eligible to claim deduction under section 36(1)(vii).
Relied: CIT v. T. Veerabhadra Rao (1985) 155 ITR 152 (SC) : 1985 TaxPub(DT) 1300 (SC),CIT v. Shreyas S Morakhia (2012) 342 ITR 285 (Bom.) : 2012 TaxPub(DT) 0718 (Bom-HC)
REFERRED :
FAVOUR : in assessee's favour
A.Y. : 2004-05
INCOME TAX ACT, 1961
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