The Commissioner of Income-tax v. NRC Limited
[Citation -2015-LL-0317-58]

Citation 2015-LL-0317-58
Appellant Name The Commissioner of Income-tax
Respondent Name NRC Limited
Court HIGH COURT OF BOMBAY
Relevant Act Income-tax
Date of Order 17/03/2015
Judgment View Judgment
Keyword Tags business activities • business income • money lending • written off • interest • bad debt • loans and advance
Bot Summary: We have heard Mr.Suresh Kumar, learned counsel appearing for the appellant and Mr.Mihir Naniwadekar appearing for the assessee. The assessee was aggrieved by the order of the Commissioner of Income Tax in upholding the disallowance upto the extent of 11,32,93,915/- under section 36 / 36 of the Income Tax Act, 1961. Though the assessee was in the business of manufacturing man-made fabrics / yarn, chemicals and power generation, it had also taken to money lending transactions. The revenue contended that the same was not permissible, that was essentially because of the manufacturing and business activities of the assessee and which the revenue viewed and confined it to the above manufacturing and business activities. The assessee was not entitled to advance any loan or lend monies. The Tribunal in paragraphs 9 and 10 of the impugned order finds that there is no substance in the version of the revenue simply because clause 52 of the Memorandum ::: Uploaded on - 23/03/2015 ::: Downloaded on - 31/12/2018 15:22:08 ::: 3 itxa1116-13 of Association of the assessee company permits it to lend money to such persons and on such terms as may deem expedient and in particular to customers of and persons having dealings with the company. Once the Tribunal understood these were personal loans but given as advances during the course of business activities of the assessee and that the assessee has offered interest on the same as business income for the assessment years 2003-04 and 2004- 05 which was accepted by the department a different view cannot be taken.


1 itxa1116-13 sas IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1116 OF 2013 Commissioner of Income Tax Appellant. V/s. NRC Limited Respondent. Mr.Suresh Kumar with Ms.Padma Divakar for appellant. Mr.Mihir Naniwadekar for respondent. CORAM : S.C.DHARMADHIKARI AND A.K. MENON, JJ. DATED : 17TH MARCH, 2015 P.C. :- 1. We have heard Mr.Suresh Kumar, learned counsel appearing for appellant and Mr.Mihir Naniwadekar appearing for assessee. 2. revenue is aggrieved by order dated 10 th October, 2012 for assessment year 2005-06 passed in Income Tax Appeal No.3811/M/2010. assessee was aggrieved by order of Commissioner of Income Tax (Appeals) in upholding disallowance upto extent of `11,32,93,915/- under section 36 (1) (vii) / 36 (2) of Income Tax Act, 1961. 3. We are only concerned with this part of ::: Uploaded on - 23/03/2015 ::: Downloaded on - 31/12/2018 15:22:08 ::: 2 itxa1116-13 Commissioner's and Tribunal's order and bad debts written of, namely loans given in normal course of business and interest charged thereon. 4. Tribunal considered rival contentions and found that amount written off was loans and advances. That was because certain loans and advances were made and which assessee could not recover. Though assessee was in business of manufacturing man-made fabrics / yarn, chemicals and power generation, it had also taken to money lending transactions. 5. revenue contended that same was not permissible, that was essentially because of manufacturing and business activities of assessee and which revenue viewed and confined it to above manufacturing and business activities. assessee was not entitled to advance any loan or lend monies. It was not finding which was based on this understanding of revenue. 6. Tribunal in paragraphs 9 and 10 of impugned order finds that there is no substance in version of revenue simply because clause 52 of Memorandum ::: Uploaded on - 23/03/2015 ::: Downloaded on - 31/12/2018 15:22:08 ::: 3 itxa1116-13 of Association of assessee company permits it to lend money to such persons and on such terms as may deem expedient and in particular to customers of and persons having dealings with company. Once Tribunal understood these were personal loans but given as advances during course of business activities of assessee and that assessee has offered interest on same as business income for assessment years 2003-04 and 2004- 05 which was accepted by department, then, different view cannot be taken. Thus, even in assessment year 2005-06 interest on income received same treatment that Tribunal concluded that Commissioner should have allowed claim in respect of bad debts. findings of fact from paragraphs 9 to 11 of impugned order cannot be termed as perverse when they are not vitiated by perversity or any error of law apparent on face of record. Particularly, because of admitted factual position with regard to interest. In circumstances, this appeal does not raise any substantial question of law. It is accordingly dismissed. No order as to costs. (A.K. MENON, J.) (S.C.DHARMADHIKARI, J.) ::: Uploaded on - 23/03/2015 ::: Downloaded on - 31/12/2018 15:22:08 ::: Commissioner of Income-tax v. NRC Limited
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