Case Law Details
Brief of the case
Assesse received interest on inter-coporate deposit which was offered to tax in earlier years. Subsequently, assesse made certain provision for bad debts. A settlement arrived at in terms of which assesse received a part of loan amount. Assesse claim for balance, as bad debts was rejected on ground that said amount was not offered for tax. Revenue challenged assesse claim on ground that since assessee cannot be said to be engaged in activity of money lending or business of banking, provision of bad debts could not be made according to Section 36(2)(i). High Court held that even if a part of debt was offered to tax, requirement of Section 36(2)(i), stands satisfied. Since assesse had offered interest income to tax in earlier years, HC held that its claim for bad debts was to be allowed.
Facts of the case
- The Assessee was engaged in the business of manufacture and sale of paper. It made Inter-corporate Deposits of Rs. 1 Cr with M/s ‘G’ i.e. GSB Capital Markets Ltd and received interest on them.
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