The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has granted relief to Bollywood actor Jackie Shroff by treating the loan given to wife which was written off as a business loss under the provision of the Income Tax Act.
The transaction is dated way back for the financial year 2008-2009 where the actor took the loss amount in the business book as ITAT challenged and disagreed to such mentions and stated that such an amount was drawn as the personal use and cannot be included as a business loss.
Jackie Shroff became a savior for wife Ayesha and Quest films with whom the actor had proprietorship and suffered losses from having stakes in films like ‘Boom’ and ‘Sandhya’ which were a huge flop at the box-office. This did lead to a production house shut down and Ayesha left with loans to pay. In his return, Jackie had declared it a business loss in his tax return. However, the IT Officer that had reviewed the loan as a personal expense has now written off the total amount as the loss incurred in the business.
Allowing the contentions of the actor, the ITAT held that as the loans were advanced to his wife or her proprietary concern cannot be the only criteria for holding it as personal in nature. As there was no possibility of recovery of these loans in the future, the write-off should be treated as a business loss.
The Tribunal held that the findings of the Ld.CIT (A) that the monies advanced by the assessee are in the nature of business advances have not been challenged by the Revenue.
“However, we find that Ld.CIT (A) sustained the disallowance only for the reason that the assessee has suo moto written off the advances and such suomoto write off is not allowable as deduction u/s. 36(1)(vii) / 37(1) of the Act,” the Tribunal said.
“Once the advances are held to be business advances they are allowable as a deduction either u/s. 37(1) or u/s. 28 of the Act as a business loss. The deduction cannot be denied on the ground that the assessee had suomoto written off the advances,” the Tribunal added.
