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1 - 10 of 23 (0.35 seconds)The Commissioner Of Income-Tax vs The Mysore Sugar Co., Ltd on 3 May, 1962
23. In my opinion the amount written off was allowable as business loss/expenditure
because after the assignment of debt the appellant permanently lost its right to receive
any further sums from Marvel. The appellant had advanced loan to Marvel in the
course of its business and for business considerations. The loan debtor defaulted on
repaying principal and ultimately loan amount became irrecoverable despite appellant
obtaining decree from Civil Court in Bangalore. The loss was thus incurred by the
appellant in the course of business and therefore it was fully allowable. Ratio laid down
in the decisions in the cases of CIT Vs. Mysore Sugar Limited (46 ITR 649); Indoor
Mlwa United Limited Vs. State of Madhya Pradesh (55 ITR 736); CIT Vs.
Jwalaprasada Radha Kishan (107 ITR 540) and CIT vs. Inden Biselers (181 ITR 69)
support appellant's claim. Apart from the above decisions, appellant's claim also
appeared to be supported by recent decisions rendered by Delhi, Madhya Pradesh and
Calcutta High Courts as well.
Section 35 in The Companies Act, 1956 [Entire Act]
Commissioner Of Income-Tax vs Inden Biselers on 7 September, 1989
23. In my opinion the amount written off was allowable as business loss/expenditure
because after the assignment of debt the appellant permanently lost its right to receive
any further sums from Marvel. The appellant had advanced loan to Marvel in the
course of its business and for business considerations. The loan debtor defaulted on
repaying principal and ultimately loan amount became irrecoverable despite appellant
obtaining decree from Civil Court in Bangalore. The loss was thus incurred by the
appellant in the course of business and therefore it was fully allowable. Ratio laid down
in the decisions in the cases of CIT Vs. Mysore Sugar Limited (46 ITR 649); Indoor
Mlwa United Limited Vs. State of Madhya Pradesh (55 ITR 736); CIT Vs.
Jwalaprasada Radha Kishan (107 ITR 540) and CIT vs. Inden Biselers (181 ITR 69)
support appellant's claim. Apart from the above decisions, appellant's claim also
appeared to be supported by recent decisions rendered by Delhi, Madhya Pradesh and
Calcutta High Courts as well.
Commissioner Of Income-Tax vs Luxmi Devi Sugar Mills P. Ltd. on 14 September, 1990
i) Prakash Cotton Mills P. Ltd. V. CIT (201 ITR 684) (SC),
ii) Swadeshi Cotton Mills Co. Ltd. Vs. CIT (233 ITR 199 )(SC),
iii) Mahalakshmi Sugar Mills Co. Vs. CIT (123 ITR 429) (SC),
iv) CIT Vs. Luxmi Devi Sugar Mills P. Ltd. (188 ITR 41 )(SC),
v) CIT Vs. Mysore Electrical Industries Ltd. (196 ITR 884) (Kar) and
vi) CIT Vs. Chemical Constructions (243 ITR 858)(Mad).
Commissioner Of Income-Tax, Mysore, ... vs The Mysore Electrical Industries Ltd on 27 April, 1971
i) Prakash Cotton Mills P. Ltd. V. CIT (201 ITR 684) (SC),
ii) Swadeshi Cotton Mills Co. Ltd. Vs. CIT (233 ITR 199 )(SC),
iii) Mahalakshmi Sugar Mills Co. Vs. CIT (123 ITR 429) (SC),
iv) CIT Vs. Luxmi Devi Sugar Mills P. Ltd. (188 ITR 41 )(SC),
v) CIT Vs. Mysore Electrical Industries Ltd. (196 ITR 884) (Kar) and
vi) CIT Vs. Chemical Constructions (243 ITR 858)(Mad).
Commissioner Of Income-Tax vs Chemical Constructions on 24 November, 1998
"I have considered submissions of the A/R and perused details of payments made. As per
regulations of the local authorities the transporters are required to produce numerous documents
before the Octroi authorities when the truck passes through the check post. Each local authority has
its own set of rules regarding documentation and the truck drivers being semi literate, the
deficiencies can be found in the documents. Having regard to the lengthy procedures delays occur
on many occasions and to avoid delays in transportation of goods transporter is required to deposit
amounts on account of deficiency in documentations. The payments made at local check posts are
therefore more compensatory in nature and not penal in character. The payments are not made for
infraction of legal provision but are for regularizing the procedural deficiencies. In my considered
opinion the payments made at different check posts by transporters were compensatory in nature to
avoid delays in delivery of goods and not for infraction of law. Applying the ratio laid down in the
judicial decisions cited before me I hold that the disallowance of Rs.5,36,769/- was not justified and
the same is accordingly deleted."
The C.I.T., West Bengal-Ii, Calcutta vs Radha Krishan Nandlal on 6 March, 1975
23. In my opinion the amount written off was allowable as business loss/expenditure
because after the assignment of debt the appellant permanently lost its right to receive
any further sums from Marvel. The appellant had advanced loan to Marvel in the
course of its business and for business considerations. The loan debtor defaulted on
repaying principal and ultimately loan amount became irrecoverable despite appellant
obtaining decree from Civil Court in Bangalore. The loss was thus incurred by the
appellant in the course of business and therefore it was fully allowable. Ratio laid down
in the decisions in the cases of CIT Vs. Mysore Sugar Limited (46 ITR 649); Indoor
Mlwa United Limited Vs. State of Madhya Pradesh (55 ITR 736); CIT Vs.
Jwalaprasada Radha Kishan (107 ITR 540) and CIT vs. Inden Biselers (181 ITR 69)
support appellant's claim. Apart from the above decisions, appellant's claim also
appeared to be supported by recent decisions rendered by Delhi, Madhya Pradesh and
Calcutta High Courts as well.
Commr.Of Income Tax,New Delhi-Iv vs M/S Goyal Mg Gases Limited on 8 March, 2016
The Delhi High Court in the case of CIT vs. Goyal M. G.
Gases Ltd (163 Taxman 541 ) considered a similar claim for write off. In this case the
assessee had granted bill discounting facilities to M/s Kedia Castle from whom Rs.4.24
crores was outstanding On failure of the debtor to repay the debt the assessee filed
winding up petition against the debtor in the Calcutta High Court. While winding up
proceedings were pending; debtor was declared as sick company by BIFR and therefore
the assessee considered the debt as irrecoverable and wrote off the sum in its books.
The assessee's claim for bad debts was disallowed by A.O. on the ground that such
claim was not permissible because conditions of Sec 36(1) (vii) read with Sec 36(2)
were not fulfilled. The CIT(A) and the Tribunal allowed the claim and on further appeal
the Delhi High Court held that since the debtor was declared sick company by BIFR;
the debt had become irrecoverable and therefore the assessee's claim for bad debt was
rightly allowed.
Commissioner Of Income Tax, Mumbai vs M/S General Insurance Corporation on 25 September, 2006
15. Applying the ratio laid down in this decision I find that existing free reserves and
share premium account are used for buyback of shares which does not result in
permanent reduction of the share capital and no benefit of enduring nature is derived.
In the appellant's case the buyback of shares was effected by utilizing its free reserves.
In my considered opinion therefore the expenditure incurred on buyback of shares was
not a capital expenditure as there was neither permanent change in the capital
structure of the company nor benefit of enduring nature was received by the appellant.
The A.O. is therefore directed to deleted the disallowance of Rs.28,21,321/-"