Section 36 of Income Tax Act, 1961— This appeal by revenue is directed against order of CIT(A).

The A.O. observed that since the principal amount of the loan advanced by the assessee has not been included in the income of the assessee either for the current year or for any of the earlier years, the condition laid down in Section 36(2) is not fulfilled and therefore the said amount of Rs. 5,69,78,892/-representing the write off of principal amount of loans advanced cannot be allowed as a deduction u/s. 36(l)(vii).

CIT(A) has deleted the disallowance of the amount.

Held that— writing off of sums which represent money lent in the ordinary course of business is allowed as deduction. The assessing officer has clearly erred in not considering the later part of the aforesaid section. He is clearly into error in holding that for writing off of money lent in ordinary course of business the allowance/deduction can be allowed only if the sum has been computed as income in the earlier assessment year.[ITO 6 (3) (4) , MUMBAI VERSUS M/S. KHYATI REALTORS PVT. LTD.] [2019] 17 ITCD Online (35) [ITAT MUMBAI]