Dalmia Finance Ltd., New Delhi V. JCIT, Special Range-3, New Delhi

ITA 4656/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9397 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 22-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: V K BINDAL CA MS RINKY SHARMA
• Keywords: Bad and doubtful debts; Set aside; Capital Gains
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.4656/DEL./2018 (ASSESSMENT YEAR : 2014-15) M/S. DALMIA FINANCE LTD., VS. JCIT, SPECIAL RANGE 3, 2 ND INDRAPRAKASH, NEW DELHI. 21, BARAKHAMBA ROAD, NEW DELHI 110 001. (PAN : AABCD5533H) ITA NO.5184/DEL./2018 (ASSESSMENT YEAR : 2014-15) JCIT, SPECIAL RANGE 3, VS. M/S. DALMIA FINANCE LTD ., NEW DELHI. 2 ND INDRAPRAKASH, 21, BARAKHAMBA ROAD, NEW DELHI 110 001. (PAN : AABCD5533H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.K. BINDAL, CA MS. RINKY SHARMA, AR REVENUE BY : MS. NIDHI SRIVASTAVA, CIT DR DATE OF HEARING : 26,07.2021 DATE OF ORDER : 29.07.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : ITA NO.4656/DEL./2018 ITA NO.5184/DEL./2018 2 REVENUE AS WELL AS ASSESSEE HAVE FILED THE AFORESA ID CROSS APPEALS EMANATED FROM THE IMPUGNED ORDER DATED 17.0 5.2018 PASSED BY THE LD. CIT (APPEALS)-3, DELHI. 2. APPELLANT, M/S. DALMIA FINANCE LTD. (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 17.05.2018 PASSED BY THE COMMI SSIONER OF INCOME-TAX (APPEALS)-3, DELHI QUA THE ASSESSMENT YE AR 2014-15 ON THE GROUNDS INTER ALIA THAT :- 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS I N CONFIRMING ASSESSMENT OF THE SURPLUS WHICH AROSE ON SALE, THROUGH THE APPELLANT, OF THE MORTGAGED PLOTS OF LA ND BY THE MORTGAGEE OF THE PLOTS AS LONG TERM CAPITAL GAIN TH OUGH THE SAME IS NOT A TAXABLE INCOME UNDER THE PROVISIONS O F THE INCOME-TAX ACT IN VIEW OF THE JUDGMENT OF THE HON'B LE KERALA HIGH COURT IN CIT VS SMT THRESSIAMMA ABRAHAM (1994) 227 ITR 802 AGAINST WHICH THE SLP OF THE REVENUE WAS NO T ADMITTED BY THE HON'BLE SUPREME COURT. THUS, THE SU RPLUS OF RS.20,40,46,006/- AROSE ON DISPOSAL OF THOSE PLOTS, TAKEN BY THE MORTGAGEE AS A CHARGE THEREON, SHOULD BE EXCLUDED F ROM THE TAXABLE INCOME. 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN IGNORING THE JUDGMENTS OF THE HON'BLE APEX COURT IN UOI VS KAUMUDINI NARAYAN DALAL (2001) 249 ITR 219 (SC) AND MANY OTHERS THAT ONCE THE REVENUE HAS ACCEPTED AN ISSUE ON FACTS IN THE CASE OF ONE ASSESSEE, THEN THE REVENUE CANNOT A GITATE THE SAME IN THE CASE OF ANOTHER ASSESSEE. THUS, THE CLA IM OF THE APPELLANT MUST BE ACCEPTED. 3. THE LEARNED CIT(A) DESPITE ADMITTING THE ADDITIO NAL GROUND OF APPEAL, YET DID NOT GIVE ANY REASONS AS T O WHY THE ABOVE CLAIM OF THE APPELLANT IS NOT MAINTAINABLE IN LAW AND ON FACTS PLACED ON RECORD. 3. APPELLANT, JCIT, SPECIAL RANGE 3, NEW DELHI (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL SOUGHT TO ITA NO.4656/DEL./2018 ITA NO.5184/DEL./2018 3 SET ASIDE THE IMPUGNED ORDER DATED 17.05.2018 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-3, DELHI QUA T HE ASSESSMENT YEAR 2014-15 ON THE GROUNDS INTER ALIA T HAT :- 1. LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE AD DITION OF RS.20,71,90,000/- MADE BY THE AO ON ACCOUNT OF BAD DEBTS WRITTEN OFF NOT DUE TO BUSINESS EXIGENCIES BUT DUE TO COLLUSIVE NATURE OF TRANSACTION AS PROVIDED UNDER SECTION 36( 1)(VII) OF THE INCOME TAX ACT, 1961. 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE COMPANY FILED RE TURN OF INCOME DECLARING LOSS OF RS.79,76,182/- AFTER SETTING OFF LONG TERM CAPITAL GAINS OF RS.20,02,53,896/- AGAINST A BUSINESS LOSS OF RS.20,82,30,078/- DERIVED DURING THE YEAR UNDER ASS ESSMENT. DURING THE SCRUTINY PROCEEDINGS, ASSESSING OFFICER (AO) NOTICED THAT THE ASSESSEE HAS EARNED CAPITAL GAIN AMOUNTING TO RS.20,02,49,657/- BY SELLING LAND LOCATED AT CHATTA RPUR, DELHI BY VIRTUE OF SALE DEEDS DATED 07.10.2013, 12.12.2013 & 08.01.2014 BUT THE CAPITAL GAIN WAS ADJUSTED WITH BUSINESS LOS SES OF THE COMPANY. ASSESSEE COMPANY HAD WRITTEN OFF BAD DEBT S AS PER RETURN OF INCOME AMOUNTING TO RS.20,71,90,000/- AS PER MEMORANDUM OF SETTLEMENT DATED 28.01.2014 SIGNED BY THE RESPECTIVE PARTIES AS UNDER :- ITA NO.4656/DEL./2018 ITA NO.5184/DEL./2018 4 S. NO. PARTICULARS AMOUNT OUTSTANDING AS ON 31.03.2013 AMOUNT WRITTEN OFF BALANCE AS ON 31.03.2014 1 M/S. ALTAR INVESTMENT PVT. LTD. 7,48,80,000/- 2,98,80,000/- 4,50,00,000/- 2 M/S. CARISSA INVESTMENTS PVT. LTD. 30,75,10,000/- 15,75,10,000/- 15,00,00,000/- 3 M/S. DALMIA HOUSING FINANCE LTD. 4,48,00,000 1,98,00,000/- 2,50,00,000/- 42,71,90,000/- 20,71,90,000/- 22,00,00,000/- 5. DECLINING THE CONTENTIONS RAISED BY THE ASSESSEE , AO PROCEEDED TO DISALLOW THE AMOUNT WRITTEN OFF IN THE PROFIT & LOSS ACCOUNT TO THE TUNE OF RS.20,71,90,000/- AND MADE A DDITION THEREOF TO THE TOTAL INCOME OF THE ASSESSEE ON THE GROUND T HAT THE TRANSACTIONS CLAIMED BY THE ASSESSEE WERE NOT IN TH E NORMAL AND ORDINARY COURSE OF BUSINESS AND LOSS SO INCURRED WA S ALSO NOT A GENUINE BUSINESS LOSS, WHICH COULD NOT HAVE AVOIDED OR FORESEEN. 6. AO ALSO TAXED THE SURPLUS ARISING ON THE SALE OF MORTGAGED PLOTS OF LAND BY THE MORTGAGEE AND HAS MADE THE SAM E PART OF THE TAXABLE INCOME. 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING APPEAL WHO HAS PARTLY ALLOWED THE SAME. FEE LING AGGRIEVED, ITA NO.4656/DEL./2018 ITA NO.5184/DEL./2018 5 THE ASSESSEE AS WELL AS REVENUE HAVE COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEALS. 8. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUNDS NO.1, 2 & 3 OF ASSESSEES APPEAL (ITA NO.4656/DEL/2018) 9. UNDISPUTEDLY, ASSESSEE IS INTO THE BUSINESS OF F INANCING INCLUDING LENDING, ADVANCING MONEY, STANDING GUARAN TORS ETC. AND DURING THE ORDINARY COURSE OF BUSINESS, ASSESSEE ST OOD AS GUARANTOR IN CASE OF LOANS GIVEN TO M/S. ALTAR INVESTMENT PVT . LTD., M/S. CARISSA INVESTMENTS PVT. LTD. & M/S. DALMIA HOUSING FINANCE LTD. BY M/S. INDIA BULLS FINANCE SERVICES LTD., WHO HAVE FAILED TO REPAY THE SAME AND THEY HAVE ENTERED INTO A COMMITMENT AG REEMENT DATED 18.11.2009. IT IS ALSO NOT IN DISPUTE THAT T HE ASSESSEE COMPANY HAS FILED THREE SETS OF MEMORANDUM DATED 28 .01.2014 WITH THE AFORESAID THREE COMPANIES AND THEREBY AGR EED TO ACCEPT RS.15,00,00,000/-, RS.4,50,00,000/- & RS.2,50,00,00 0/- FROM M/S. CARISSA INVESTMENTS PVT. LTD., M/S. ALTAR INVESTMEN T PVT. LTD. & M/S. DALMIA HOUSING FINANCE LTD. RESPECTIVELY AS FI NAL SETTLEMENT ITA NO.4656/DEL./2018 ITA NO.5184/DEL./2018 6 AGAINST THE EARLIER MENTIONED DUES AND ON THE BASIS OF MEMORANDUM OF SETTLEMENT, ASSESSEE CLAIMED A CAPITA L LOSS OF RS.20,71,90,000/- AS DETAILED IN THE TABLE EXTRACTE D IN PRECEDING PARA NO.4 10. AT THE VERY OUTSET, LD. AR FOR THE ASSESSEE FAI RLY CONCEDED THAT THIS ISSUE HAS ALREADY BEEN DECIDED AGAINST TH E ASSESSEE BY THE COORDINATE BENCH OF THE TRIBUNAL IN A CASE OF WGF FINANCIAL SERVICES PVT. LTD. VS. ACIT IN ITA NO.9218/DEL/2019 FOR AY 2015-16 ORDER DATED 10.02.2021 , WHICH IS A SUBSIDIARY OF ASSESSEE COMPANY, AND REFERRED TO PARAS 13 TO 16 OF THE ORDER (SUPRA). THIS FACT HAS ALSO NOT BEEN CONTROVERTED BY THE LD. DR FOR THE REVENUE. 11. ASSESSEE HAS CHALLENGED THE TAXATION OF SURPLUS ARISING ON SALE OF MORTGAGE OF LAND BY THE MORTGAGEE. IT IS T HE CASE OF THE ASSESSEE THAT IT HAS MORTGAGED ITS PLOTS OF AGRICUL TURAL LAND WITH M/S. INDIA BULLS FINANCE SERVICES LTD. AS A GUARANT OR AGAINST THE LOANS GIVEN BY M/S. INDIA BULLS FINANCE SERVICES LT D. TO THE GROUP COMPANIES. THE SAID PLOTS OF LAND WERE SOLD DURING THE YEAR TO REPAY THE LENDER AS THE GUARANTEE WAS INVOKED BY TH E LENDER. CONSEQUENTLY, THERE AROSE A SURPLUS ON SALE OF THE SAID PLOTS OF LAND WHICH WAS DECLARED AS LONG TERM CAPITAL GAIN BY THE ASSESSEE IN ITS ITA NO.4656/DEL./2018 ITA NO.5184/DEL./2018 7 RETURN OF INCOME FILED FOR THE YEAR UNDER ASSESSMEN T I.E. ASSESSMENT YEAR 2014-15 AFTER TAKING THE BENEFIT OF INDEXATION. 12. HOWEVER, LD. CIT (A) HAS NOT AGREED WITH THE CO NTENTIONS RAISED BY THE ASSESSEE BY OBSERVING THAT, THE LENDER FORCED THE ASSESSEE TO REGISTER THE CONVEYANCE DEEDS OF THE MO RTGAGED PROPERTIES ON THEIR SALE AND TO RECOVER THE ENTIRE SALE CONSIDERATION THROUGH THE BORROWER TO AVOID INVOKIN G THE PROVISIONS OF SECTION 269T AND ALSO THE OTHER POSSI BLE LEGAL BATTLES WITH THE BUYERS. RATHER THE SALES WERE MADE AT THE PREVALENT MARKET VALUE OR APPROXIMATE VALUE THERETO AND THE S ALE PROCEEDS WERE RECEIVED IN THE BANK ACCOUNT OF THE ASSESSEE, HENCE SURPLUS ARISING ON THE SALE OF AGRICULTURAL LAND DECLARED A S CAPITAL GAIN BY THE ASSESSEE IS TO BE TREATED AS TAXABLE INCOME OF THE ASSESSEE. 13. THIS ISSUE HAS BEEN DECIDED BY THE COORDINATE B ENCH OF THE TRIBUNAL IN CASE OF WGF FINANCIAL SERVICES PVT. LTD. (SUPRA), WHICH IS A GROUP COMPANY, AGAINST THE ASSESSEE BY R ETURNING FOLLOWING FINDINGS :- 13. WE HAVE CAREFULLY PERUSED THE DECISION RELIED BY THE ASSESSEE AND THE LD. DR. IT IS TRUE THAT THE DECISI ONS RELIED UPON BY THE LD. DR HAVE BEEN DULY CONSIDERED BY THE TRIB UNAL OF DELHI BENCH IN THE CASE OF ADDL.CIT VS GLAD INVESTM ENTS PVT. LTD. (SUPRA). IN BOTH THE CASES RELIED UPON BY THE ASSESSEE, THE ASSESSEE ACTED AS GUARANTOR AND SINCE THE BORROWER COULD NOT REPAY THE MONEY, THE LENDER SOLD THE MORTGAGED/PLED GED PROPERTY AND SALE CONSIDERATION WAS RECEIVED BY THE LENDOR A ND ADJUSTED AGAINST SATISFACTION OF DEBT. A PERUSAL OF THE JUDI CIAL DECISIONS ITA NO.4656/DEL./2018 ITA NO.5184/DEL./2018 8 SHOWS THAT THERE IS A BIG DIFFERENCE BETWEEN THE DE CISIONS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE AND THE FA CTS OF THE CASE IN HAND. IN ALL THE DECISIONS RELIED UPON BY THE AS SESSEE, THE MORTGAGED PROPERTY WAS SOLD DIRECTLY BY THE LENDER WHO RECEIVED THE SALE CONSIDERATION, WHEREAS IN THE CASE OF THE ASSESSEE, SALE DEEDS WERE EXECUTED BY THE ASSESSEE AND THE SALE CO NSIDERATION WAS RECEIVED BY THE ASSESSEE AND THEREAFTER, THE AS SESSEE PAID THE CONSIDERATION TO THE LENDER TO DISCHARGE ITS LIABIL ITIES. 14. AFTER CAREFULLY PERUSING THE DECISIONS RELIED UPON BY THE ASSESSEE, IN OUR CONSIDERED OPINION, THE FACTORS TO BE CONSIDERED FOR DECIDING AS TO WHETHER THE SURPLUS OF SALE OF M ORTGAGED PROPERTY IS TAXABLE OR NOT AND WHETHER IT WAS A FOR CED SALE OF MORTGAGED PROPERTY TO PAY TO THE LENDER OR THE SALE WAS AT FREE WILL AND WHETHER ANY BENEFIT ACTUALLY ACCRUED/RECEI VED BY THE ASSESSEE. 15. A CAREFUL CONSIDERATION OF THE FACTS ON RECORD SHOW THAT THE APPELLANT COMPANY RECEIVED THE ENTIRE SALE CONS IDERATION AND IT CANNOT BE SAID THAT IT WAS A FORCED SALE DUE TO THE PRESSURE MOUNTED BY IBFSL. IT MAY BE POSSIBLE THAT THE PLOT OF LANDS WERE SOLD UNDER THE VIGIL AND DIRECTION OF IBFSL BUT THE FACT REMAINS THAT THE ENTIRE SALE CONSIDERATION WAS REALIZED BY THE APPELLANT AND THEREAFTER THE SALE CONSIDERATION WAS TAKEN BY IBFSL IN DISCHARGE OF ITS LOAN. 16. IT MAY BE POSSIBLE THAT THE BUYER DESIRED THE TRANSFER OF TITLE FROM THE OWNER TO AVOID ANY LITIGATION WITH T HE OWNER IN FUTURE AND THEREFORE, IBFSL, AFTER RECEIVING RS. 3 CRORES, RELEASED THE MORTGAGE IN FAVOUR OF THE ASSESSEE, TH US, FACILITATING THE ASSESSEE TO SELL THE LAND WITH CLEAR TITLE. WE ARE OF THE VIEW THAT THE INCOME DID ACCRUE TO THE ASSESSEE AND IT C ANNOT BE SAID THAT THE ASSESSEE SOLD THE SAID PLOTS OF LAND INVOL UNTARILY AS FORCED SALE. CONSIDERING THE FACTS OF THE CASE RELA TING TO SALE OF MORTGAGED PROPERTY, WE DO NOT FIND ANY FORCE IN THE CLAIM OF THE ASSESSEE. GROUND NO. 1 IS ACCORDINGLY, DISMISSED. 14. SINCE THIS ISSUE HAS ALREADY BEEN DECIDED AGAIN ST THE ASSESSEE AND LD. AR FOR THE ASSESSEE HAS FAIRLY CON CEDED THAT HE HAS NOTHING TO ARGUE AND THEREBY ACCEPTED THE FINDINGS RETURNED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES GROU P COMPANY CASE, SO WE ARE OF THE CONSIDERED VIEW THAT ASSESSE E COMPANY HAS ITA NO.4656/DEL./2018 ITA NO.5184/DEL./2018 9 VOLUNTARILY SOLD THE MORTGAGED PROPERTY AND HAS REC EIVED THE SALE PROCEEDS THEREOF THROUGH BANKING TRANSACTIONS AT TH E MARKET VALUE, HENCE SURPLUS ARISING ON THE SALE OF AGRICULTURAL L AND DECLARED AS CAPITAL GAIN BY THE ASSESSEE HAS BEEN RIGHTLY SUBJE CTED TO TAXABLE INCOME OF THE ASSESSEE FOR THE YEAR UNDER ASSESSMEN T. SO, FINDING NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED FINDING S RETURNED BY THE LD. CIT(A), GROUND NOS.1, 2 & 3 ARE DETERMINED AGAI NST THE ASSESSEE. GROUND NO.1 OF REVENUES APPEAL (ITA NO.5184/DEL/2018) 15. AO MADE ADDITION OF RS.20,71,90,000/- ON ACCOUN T OF BAD DEBTS WRITTEN OFF ON ACCOUNT OF BUSINESS EXIGENCY B UT DUE TO COLLUSIVE NATURE OF TRANSACTION AS PROVIDED U/S 36( 1)(VII) OF THE ACT. HOWEVER, LD. CIT (A) DELETED THE ADDITION BY THRASH ING THE FACTS AND SETTLED PRINCIPLE OF LAW ON THE ISSUE IN QUESTI ON. 16. LD. DR FOR THE REVENUE CHALLENGING THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) CONTENDED THAT AO HAS MAD E THE ADDITION ON FAILURE OF THE ASSESSEE TO SUBSTANTIATE ITS CLAI M. HOWEVER, THIS CONTENTION OF THE LD. DR IS NOT SUSTAINABLE IN VIEW OF THE FINDINGS RETURNED BY THE LD. CIT (A) IN PARA 2.15 OF THE IMP UGNED ORDER WHEREIN ALL THE DOCUMENTARY EVIDENCE PLACED ON RECO RD BY THE ITA NO.4656/DEL./2018 ITA NO.5184/DEL./2018 10 ASSESSEE HAS BEEN DULY PERUSED. MOREOVER, THE SHOR T QUESTION TO BE DECIDED BY THE LD. CIT (A) WAS, AS TO WHETHER LOSS SUFFERED BY THE ASSESSEE IN THE NORMAL COURSE OF ITS BUSINESS IN TH E NON-BANKING ACTIVITIES AS A GUARANTOR IS A BUSINESS LOSS BASED UPON COMMERCIAL PRUDENT DECISION? 17. THIS ISSUE HAS ALREADY BEEN DECIDED IN FAVOUR O F THE ASSESSEE BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE S GROUP COMPANY CASE WGF FINANCIAL SERVICES PVT. LTD. (SUPRA) BY RETURNING FOLLOWING FINDINGS:- 17. FACTS RELATING TO THE GRIEVANCE RELATED TO GR OUND NO.2 SHOW THAT THE ASSESSEE HAD GIVEN GUARANTEES TO THE LENDE R ON BEHALF OF THE BORROWERS AS GIVING GUARANTEE IS ONE OF THE BUSINES S OBJECTS OF THE ASSESSEE AND FOR WHICH GUARANTEE COMMISSION IS CHAR GED. SEVEN BORROWER COMPANIES HAD TAKEN LOANS FROM IBFSL AND I BFSL REQUIRED THE GUARANTOR TO SECURE ITS LOAN. ACCORDIN GLY, THE COMMITMENT AGREEMENT WAS MADE ON 18.11.2009 WHICH I S PLACED AT PAGES 127 TO 131 OF THE PAPER BOOK WHEREIN THE APPE LLANT COMPANY INTER-ALIA WITH OTHER THREE COMPANIES BECAME GUARAN TORS BY MORTGAGING THEIR RESPECTIVE PLOTS OF LAND IN FAVOUR OF IBFSL. THE BORROWER COMPANIES AGREED TO PAY RS.20 CRORES AS CO MMISSION IN LIEU OF THE GUARANTEE AND IF THE GUARANTEE IS INVOK ED BY THE LENDER, THEN THE BORROWERS WERE TO PAY ADDITIONAL RS.20 CRO RES AS DAMAGES FOR THE HARDSHIP THE ASSESSEE WOULD BEAR. SUBSEQUEN TLY, THE BORROWER COMPANIES COMMITTED DEFAULTS AND THE ASSES SEE COMPANY (GUARANTOR) HAD TO REPAY THE LOAN AMOUNTS. SINCE TH E BORROWER COMPANIES OWNED SHARES OF LISTED COMPANIES WHICH WE RE PLACED WITH IBFSL AS SECURITIES, THE BORROWER COMPANIES IN FORMED THE ASSESSEE THAT ONCE THE OUTSTANDING LIABILITY REPAID TO IBFSL AND AS AND WHEN THE SHARES HELD AS SECURITY ARE RELEASED B Y IBFSL, THE SHARES OF THE AMOUNT EQUAL TO THE AMOUNT PAID BY TH E ASSESSEE AS GUARANTOR WOULD BE GIVEN TO THE ASSESSEE. SINCE THE SHARES WERE SOLD BY THE LENDER COMPANY TO RECOVER ITS DEBTS, THEREFO RE, BORROWER COMPANIES COULD NOT GET THEIR SHARES BACK AND COULD NOT TRANSFER THE SHARES TO THE ASSESSEE. 18. SUBSEQUENTLY, A MEMORANDUM OF SETTLEMENT DATED 16.03.2015 WAS ENTERED AS PER WHICH AN AMOUNT OF RS .36.50 CRORES WAS ACCEPTED AS FULL AND FINAL SETTLEMENT AGAINST R S.64,26,92,000/- ITA NO.4656/DEL./2018 ITA NO.5184/DEL./2018 11 RECOVERABLE FROM CARISSA INVESTMENT PRIVATE LTD. (I N SHORT CIPL) BY THE ASSESSEE. THIS SETTLEMENT DEED IS PLACED AT PAGES 465 TO 468 OF THE PAPER BOOK AND ACCORDINGLY, THE ASSESSEE WRO TE OFF THE BALANCE LOAN AMOUNT AGGREGATING TO RS.27,76,92,000/ -. 19. THE ASSESSING OFFICER WAS OF THE FIRM BELIEF T HAT THE APPELLANT HAS NOT FULFILLED THE CONDITIONS OF SECTI ON 36(2) OF THE ACT AS THE ASSESSEE HAS NOT RECEIVED ANY GUARANTEE COMM ISSION FROM CIPL. 20. CIPL HAS PAID DONATION OF RS.10 CRORES AND EAR NED REVENUE OFRS.15 CRORES, THEREFORE, IT CANNOT BE SAI D THAT CIPL WAS NOT FINANCIALLY SOUND TO REPAY THE LOAN TAKEN FROM THE ASSESSEE. THE ASSESSING OFFICER WENT ON TO MAKE ADDITION OF RS.27 ,76,90,000/- WHICH WAS SUBSEQUENTLY CONFIRMED BY THE FIRST APPEL LATE AUTHORITY. 21. AS MENTIONED ELSEWHERE, THE ASSESSEE IS ENGAGE D IN THE BUSINESS OF FINANCING WHICH INCLUDED LENDING, ADVAN CING MONEY, STANDING GUARANTOR ETC. AND IN ITS ORDINARY COURSE OF BUSINESS, THE ASSESSEE GAVE GUARANTEE TO THE BORROWINGS MADE BY C IPL. AS PER THE AGREEMENT, CIPL WAS SUPPOSED TO TRANSFER SHARES HELD BY IT IN THE LISTED COMPANIES AFTER REPAYMENT OF ITS LOAN FR OM IBFSL. SINCE IBFSL SOLD THE SHARES HELD BY IT AS SECURITY, CIPL WAS NOT IN A POSITION TO TRANSFER THE SHARES TO THE ASSESSEE. CI PL WAS IN DEBT TO THE ASSESSEE TO THE TUNE OF RS.64.26 CRORES AND SIN CE CIPL DEFAULTED IN ITS OBLIGATION, THE ASSESSEE HAD TO SETTLE THE Q UARREL BY WAY OF MEMORANDUM DEED DATED 16.03.2015 AND COULD RECOVER ONLY RS.36.50 CRORES. THE ASSESSEE WAS LEFT WITH NO CHOI CE BUT TO WRITE OFF THE BALANCE RS.27,76,92,000/-. 22. IN OUR CONSIDERED VIEW, THE ENTIRE TRANSACTION CANNOT BE CONSIDERED AS THE COLORABLE DEVICE AS THE SAME WAS NEVER ENTERED WITH ANY INTENT TO DEFRAUD THE REVENUE. WE FIND THA T ALL THE TRANSACTIONS WERE UNDERTAKEN WITH THIRD PARTIES THR OUGH BANK ACCOUNTS OR REGISTERED MORTGAGE DEEDS ETC. IN THE R EGULAR COURSE OF BUSINESS AND WERE DULY RECORDED IN THE BOOKS OF ACC OUNTS. NOTHING COULD BE MANAGED AS THE TRANSACTIONS WERE SPREAD OV ER A PERIOD OF FIVE YEARS. 23. DUE TO MAYHEM IN THE STOCK MARKET IN THE YEAR 2008, THE STOCKS OF THE LISTED COMPANIES NOSE-DIVED AND THE B ORROWERS SUFFERED HUGE LOSSES, NOTHING WAS RECOVERABLE FROM THEM AND THERE WAS NO POINT IN FILING LEGAL SUIT. IT IS TRUE THAT NO GUARANTEE COMMISSION HAS BEEN RECEIVED BY THE ASSESSEE FROM C IPL BUT CIPL WAS NOT IN A POSITION TO MAKE ANY PAYMENT TO THE AS SESSEE. IT IS TRUE THAT CIPL MADE CERTAIN DONATIONS BUT THAT CANNOT BE CONSIDERED AGAINST THE ASSESSEE AS THE ASSESSEE COULD NOT BE H ELD RESPONSIBLE FOR THE BUSINESS MODULE OF CIPL. THE ASSESSEE COULD RECOVER ONLY RS.36.50 CRORES OUT OF RS.64.26 CRORES, THE BALANCE WRITTEN OFF MAY NOT FULFILL THE CONDITION OF SECTION 36(2) OF THE A CT BUT DEFINITELY A BUSINESS LOSS SUFFERED BY THE ASSESSEE IN CARRYING OUT ITS ORDINARY ITA NO.4656/DEL./2018 ITA NO.5184/DEL./2018 12 COURSE OF BUSINESS. CONSIDERING THE FACTS OF THE CA SE IN TOTALITY, THE WRITE OFF OF RS.27,76,92,000/- IS DEFINITELY A BUSI NESS LOSS AND DESERVE TO BE ALLOWED. WE ACCORDINGLY DIRECT THE AS SESSING OFFICER TO DELETE THE ADDITION OF RS.27,76,92,000/-, GROUND NO.2 IS ACCORDINGLY ALLOWED. 18. FOLLOWING THE DECISION RENDERED BY COORDINATE B ENCH OF THE TRIBUNAL IN ASSESSEES GROUP COMPANY CASE (SUPRA) I N IDENTICAL FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT WHEN THE ASSESSEE HAS SUFFERED LOSSES IN THE O RDINARY COURSE OF BUSINESS AS A GUARANTOR IT HAS TO BE TREATED AS A B USINESS LOSS WHICH IS ELIGIBLE TO BE WRITTEN OFF AS BAD DEBT DUE TO BU SINESS EXIGENCIES. THERE IS NOT AN IOTA OF EVIDENCE IN THE FILE IF THI S BUSINESS LOSS IS DUE TO COLLUSIVE NATURE OF TRANSACTION AS PROVIDED U/S 36(1)(VII) OF THE ACT. SO, FINDING NO ILLEGALITY OR PERVERSITY I N THE DELETION OF ADDITION MADE BY THE LD. CIT (A), GROUND NO.1 IS DE TERMINED AGAINST THE REVENUE. 19. RESULTANTLY BOTH THE APPEALS FILED BY THE ASSES SEE AND REVENUE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 29 TH DAY OF JULY, 2021. SD/- SD/- (ANIL CHATURVEDI) (KULDIP SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 29 TH DAY OF JULY, 2021. TS ITA NO.4656/DEL./2018 ITA NO.5184/DEL./2018 13 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-3, DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.