Assessee, a non-resident banking company, was engaged in wholesale lending to its corporate customers. During year, pursuant to a scheme of Corporate Debt Restructuring (CDR), a part of loan was converted into equity shares of a company.  Company issued shares to assessee on preferential basis fully converting loan into equity shares.  However, when shares were credited into assessee’s D-Mat account, market value was lower than price of shares at which shares were issued to assessee, thereby incurring loss which was claimed as loss on account of bad debt under section 36(1)(vii).  Assessing Officer denied claim of loss on conversion of debt. CIT(A) affirmed the order of the AO. On appeal the Tribunal held that  the  assessee had assets (being loan outstanding) and assessee was assigned assets (market value of which was price of shares on NSE on date of credit in D-Mat account). The  assets were exchanged for another asset and, hence, loss incurred was nothing but a business loss. Therefore, loss incurred on conversion of loan into equity shares was to be allowed. (AY. 2015-16)