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Section 36(1)(vii) of the Income-tax Act, 1961 - Bad debts - Assessment year 2000-01 - Where apart from manufacturing activity, assessee was doing money lending business, as part of its business, deduction on account of bad debt in respect of loan granted to a party could not be disallowed [In favour of assessee] The assessee was engaged in the manufacture of chemicals of job work basis. Apart from this, the assessee was also engaged in money-lending business. The assessee had advanced money on various occasions to a firm. In the relevant assessment year, the assessee claimed write off of the amount due and payable by the said firm, on the ground that the recovery was barred by limitation and even if any case was to be filed, it required a huge outlay of funds. The Assessing Officer disallowed the claim holding that advancing of money was for non-business purpose. The Tribunal allowed claim of the assessee observing that the assessee did have money-lending business and that the interest returned on the amount lent was accepted by the revenue as part of its business income. Held that a perusal of the order of the Tribunal and the assessment order showed that right from the assessment years 1991-92 to 2000-01, the assessee had been consistently receiving interest from the money-lending business as a business income and the same was offered as business income. The revenue accepted the claim of the assessee in the assessment made for the earlier years under section 143(3). Having regard to the abundant material available in this regard that the assessee had money-lending business, the Tribunal rightly held that apart from manufacturing activity, the assessee was doing money-lending business, as part of its business. In the absence of any material at the hands of the revenue, the Tribunal rightly held that the claim of the assessee could not be rejected. CASES REFERRED TO T.R.F. Ltd. v. CIT [2010] 323 ITR 397 (SC) and ACE Investments (P.) Ltd. v. CIT [2000] 244 ITR 166 (Mad.). T. Ravikumar for the Appellant. R. Sivaraman for the Respondent. JUDGMENT Mrs. Chitra Venkataraman, J. - The Revenue has preferred this tax case appeal against the order of the Income-tax…

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