ACIT Vs Agnus Holdings Private Limited (ITAT Bangalore)
Bangalore ITAT Upholds Bad Debt Write-Off – Loans Advanced in Ordinary Course of Financing Business Allowable u/s 36(1)(vii)
The Income Tax Appellate Tribunal, Bangalore Bench, dismissed the Revenue’s appeal for assessment year 2018-19 against the order of the Commissioner of Income Tax (Appeals), which had deleted the disallowance of Rs.2.25 crore relating to advances written off by the assessee company. The assessee, engaged in investment, finance, and trading in shares, had filed its return declaring a loss. Following reopening of assessment under Section 147, the Assessing Officer disallowed the advances written off on the ground that the assessee failed to establish that the advances were made for business purposes and held that the advances were capital in nature.
Before the CIT(A), the assessee contended that the advances had been made during FY 2009-10 in the ordinary course of business to Mr. Kannan Ramanujam. It was submitted that the borrower later suffered financial losses and defaulted in repayment. The assessee argued that it had been carrying on financing and investment business for several years and that lending activities were covered by its Memorandum of Association. The assessee also relied upon audited financial statements, earlier assessment orders, and the auditor’s observation that the company was required to register as a Non-Banking Finance Company (NBFC).
