Assessee made deposits/advances with its sister-concern in assessment year 2001-02. In relevant assessment year, after assessing financial condition of sister concern (MCCL) assessee waived off principal amount of deposit and interest accrued on it as bad debts . Assessing Officer disallowed assesee’s claim of bad debts under section 36(1)(vii) on ground that assessee was not in business of lending money and non-recovery of deposit made to sister-concern would be a capital loss . On appeal CIT(A) up held the order of Assessing Officer . Tribunal deleted the addition . On appeal by the revenue the Court held that  since in initial assessment year interest income accrued on deposits made by assessee was taxed as business income, deposits would be assumed to be done in ordinary course of business . Since the  condition required under section 36(2)(i) was satisfied by assessee and would be entitled to deduction on bad debts under section 36(1)(vii) of the Act . ( AY. 2005 -06 )