M.Vinayak Vs DCIT (Telangana High Court)
Telangana High Court held that loss suffered on deposits in nature of fixed deposit investments is capital loss. The same cannot be treated as bad debt or trading loss. Accordingly, appeal dismissed.
Facts- The present appeal has been preferred by the assessee. The substantial question of law involved therein is whether the loss of Rs.26,15,569/-sustained by the appellant on account of moneys deposited in Krishi Bank being lost due to liquidation of the Bank is allowable as a deduction as the same is a trading loss or business loss under Section 28 of the Income Tax Act, 1961 or in the alternative bad debt under Section 36(i)(vii) of the Income Tax Act, 1961.
Conclusion- Held that the deposits made by the assessee were in the nature of fixed deposit investments. Therefore, the loss suffered by the assessee when the bank went to liquidation is only a capital loss. Hence, the claim of the assessee cannot be treated as bad debt or trading loss. Thus, the substantial question of law is answered against the assessee in favour of revenue.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Mr. Duvva Pavan Kumar, learned counsel represents Mr. Y. Ratnakar, learned counsel for the appellant.
