Sh. Raghav Bahl, New Delhi V. ACIT, New Delhi

ITA 105/DEL/2010

• Counselvise Citation: 10520114 RSA 2010
• Duration Of Justice: 5 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 23-07-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 08-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Business income; Salary income; Cost of acquisition
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F , NEW DELHI BEFORE SHRI I.C.SUDHIR , JUDICIAL MEMBER AND SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER I.T.A.NO S . 105 & 1 06 /DEL/20 1 0 A.Y. 20 0 4 - 0 5 AND 200 5 - 06 SH . RAGHAV BAHL B2, KAILASH APARTMENT LALA LAJPAT RAI MARG NEW DELHI PAN: AALPB 0480 G VS. A CIT, CENTRAL CIRCLE 15 NEW DELHI (APPELLANT) (RESPONDENT) A PPELLANT BY : SH. RAKESH GUPTA, ADV. AND SHRI SOMIL AGGARWAL, C.A. RESPONDENT BY : SH. VIKRAM SAHAY , SR. DR ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AND ARE DIRECTED AGAINST SEPARATE ORDERS OF THE LD.CIT(A) - II, NEW DELHI DATED 23.11.2009 FOR THE A.Y. 2004 - 05 AND 2005 - 06. AS THE ISSUES ARISING IN BOTH THESE APPEALS ARE COMMON, FOR THE SAKE OF CONVENIENCE, THEY ARE HEARD TOGETHER AND ARE DISPOSED OF BY WAY OF THIS COMMON ORDER. 2. FACT S IN BRIEF : - THE FACTS OF THE CASE ARE BROUGHT OUT AT PARA 2.1 OF THE LD.CIT(A) S ORDER, WHICH IS EXTRACTED FOR READY REFERENCE. 2.1. THE FACTS IN THIS REGARD ARE THAT THE ASSESSEE IS BASICALLY A MEDIA PROFESSIONAL AND IS DERIVING SALARY INCOME FROM TELEVISION EIGHTEEN INDIA LTD. HE HAS FILED A RETURN OF INCOME ON 30.12.2005 DECLARING A TOTAL INCOME OF RS.6,77,88,280/ - . SUBSEQUENTLY DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED REVISED COMPUTATION SHOWING TOTAL INCOME OF RS.4,62,49,040/ - VIDE LETTER DATED 24.4.2006. THE INCOME SO DECLARED 2 INCLUDES SALARY INCOME, INCOME FROM HOUSE PROPERTY, SPECULATION INCOME AND INCOME FROM OTHER SOURCES. AS PER REVISED C OMPUTATION, THE ASSESSEE HAS DECLARED INCOME UNDER THE HEAD SHORT TERM CAPITAL GAIN FOR RS.50,04,653/ - AND INCOME FROM SPECULATION GAIN AT RS.43,79,344/ - . THE DETAILS OF THE SAME ARE AS UNDER. A . DETAILS OF SPECULATION GAIN 1. SPECULATION GAIN FROM M/S RRP MANAGEMENT SERVICES P.LTD. RS. 9,07,265/ - 2. SPECULATION GAIN FROM M/S KOTAK SECURITIES LTD. RS. 34,72,079/ - TOTAL SPECULATIVE GAIN RS.43,79,344 B . DETAILS OF SHORT TERM CAPITAL GAIN 1. SHORT TERM CAPITAL GAIN FROM M/S T.H.VAKIL SHARE & SECURITIES P.L T D. RS. 25,74,360 2. SHORT TERM CAPITAL GAIN FROM M/S KOTAK SECURITIES LTD. RS. 24,30,293 TOTAL RS.50,04,653/ - 2 . 1 . 1 . THE A O NOTED THAT THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE THROUGH M / S KOTAK SERV I CES LTD . ON WHICH NET PROF I T HAS BEE N SHOWN AMOUNTING TO RS . 59 , 02 , 372/ - ARE NOT I N THE NATURE OF PURCHASE AND SA L E OF SHARES AND SECURITIES BY THE ASSESSEE HIMSELF. RATHER THEY ARE IN THE NATU R E O F BUSINESS TRANSACT I ONS ENTERED INTO ON BEHALF OF THE ASSESSEE BY M / S KOTAK SECU RI T I ES L TD . AND THAT AT THE END OF THE YEAR , THE ASSESSEE HAS BEEN G I VEN THE NE T PR O FIT AMOUNTING TO RS . 59 , 02 , 372/ - ( 2430293 + 3472079) ARISING ON THESE TRANSACTIONS . IN THESE TRANSACT I ONS , THE ASSESSEE IS NOT DIRECT INVESTOR . IN TURN M/S KOTAK SECURITIES LTD. HAVE RECEIVED A FEE OF RS . 19,97 , 200 / - AS THE I R TRANSACTIONS CHARGES WHIC H ARE NO T IN THE NATURE OF BROKERAGE CHARGES ON THE PURCHASE AND SALE OF SHA R ES AND SECURITIES. RATHER THIS FEE IS TOWARDS 3 BUSINESS CONSULTATION / ADVISORY CHARGES TO MANAGE THE BUSINESS ON BEHALF OF THE ASSESSEE . THEREFORE , HE HELD THAT P R OF IT AR I SING ON THESE TRANSACTIONS CANNOT BE TREATED AS SHORT T ERM CAPITAL GAIN T O BE ADJUSTABLE TOWARDS SHORT TERM CAPITAL L OSS . RATHER HE HELD THE PROFIT AMOUNT I NG T O RS. 59,02,372/ - ARISING ON THESE TRA NSACTIONS AS THE BUSINESS I NCOME OF THE APPELLANT . 2.1 . 2 . APART FROM THIS HE ALSO TREA T ED T HE SHORT TERM CAPITA L GAIN FROM M / S T.H.VAKIL SHARES AND SECUR I TIES LTD . OF RS . 25 , 74 , 360 / - AS SPECULATION GAIN THOUGH ASSESSEE HAS SHOWN THE SAME AS SHO R T TE RM CAP I TAL GAIN . 2.1 . 3 . IN OTHER WO R DS , THE A O T REA T ED SPEC UL A TI ON GAIN F R OM M / S KOTAK SECURITIES L T D. AS WE LL AS S H OR T T E RM CA P IT A L G A IN CL A IM ED BY TH E A PPELLANT FR O M M / S KOTAK SECURITIES A T RS. 34 , 1 2 , 07 9 / - A ND R S . 24 ,30, 293 / - RESPECT I VELY AS BUSINESS INCOME AND SPECU L A TI ON GA IN FROM M / S R . R . P . MANAGEMENT ( P ) L TD. SERVICES AT RS. 9 , 07,265 / - AND SHORT TERM CAPITAL GAIN FROM M / S T . H . VAK I L SHARES & SECURITIES AT RE. 25,74 , 3601 - TOTALLING TO RS . 34 , 81,625/ - AS SPECULATIO N GA I N. 2 . 1 . 4. AS THE A O HAS NOT ASSESSED ANY AMOUNT UNDER THE HEAD ' SHORT TERM CAPITAL GAIN ' , THEREFORE, THE CLAIM OF THE APPELLANT OF ADJUSTING SHORT TERM CAPITAL LOSS AGAINST DECLARED SHORT TERM CAPITAL GAIN HAS ALSO BEEN REJEC T ED AUTOMATICALLY. 2.1. ON APPEAL THE FIRST APPEL LATE AUTHORITY GRANTED PART RELIEF. 3 . AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS. GROUNDS OF APPEAL FOR THE A.Y. 2004 - 05 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN TREATING THE AMOUNT OF SHORT TERM CAPITAL GAIN FROM M / S KOTAK SECURITIES LTD. FOR RS.24,30,293/ - AS BUSINESS INCOME OF THE ASSESSEE. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. C IT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN 4 TREATING A SUM OF RS.59,02,372/ - AS BUSINESS INCOME OF THE ASSESSEE INSTEAD OF SHORT TERM CAPITAL GAIN A ND SPECULATIVE GAIN. 3. THAT HAVING REGARD TO THE FACTS AN D CIRCUMSTANCES OF THE CASE, LD. C I T ( A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN COMPUTING THE SHORT TERM CAPITAL GAIN AT RS.34,81,625/ - INSTEAD OF RS.50,04,653/ - AS DECLARED BY ASSESSEE AND HAS FURTHER ERRED IN NOT ADJUSTING TH IS INCOME AGAINST THE SHORT TERM CAPITAL LOSS. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN NOT ALLOWING DEDUCTION OF RS. 1,70,000/ - ON ACCOUNT OF WRITTEN OFF SUNDRY DEBTORS. 5. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT QUASHING THE IMPUGNED ASSESSMENT ORDER PASSED BY LD. AO AND IN NOT DELETING VARIOUS ADDITIONS/DISALLOWANCES MADE BY LD. AO AS THE ASSESS MENT ORDER IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS AND MORE SO BY RECORDING INCORRECT FACTS AND FINDING. 6. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODIFY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. GROUNDS OF APPEAL FOR THE A.Y. 200 5 - 06 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN TREATING THE A S UM OF RS. 18,24,165 / - AS BUSINESS INCOME OF THE ASSESSEE INSTEAD OF AS BUSINESS INCOME OF THE ASSESSEE AND HAS FURTHER ERRED IN NOT ADJUSTING THIS INCOME AGAINST THE SHORT TERM CAPITAL LOSS. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER THE ACTION OF LD. CIT(A ) IN CONFIRMING THE ACTION OF LD.AO IN NOT TREATING THE INCOME OF THE ASSESSEE AS SHORT TERM CAPITAL GAIN AND IN NOT ADJUSTING THIS INCOME AGAINST THE SHORT TERM CAPITAL LOSS IS NOT JUSTIFIED AND THE SAME MAY KINDLY BE REVERSED. 3. THAT IN ANY CA SE AND IN ANY VIEW OF THE MATTER LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT QUASHING THE IMPUGNED ASSESSMENT ORDER PASSED BY LD. AO AND IN NOT DELETING VARIOUS ADDITIONS/DISALLOWANCES MADE BY LD. AO AS 5 THE ASSESSMENT ORDER IS NOT SUSTAINABLE ON VARIOU S LEGAL AND FACTUAL GROUNDS AND MORE SO BY RECORDING INCORRECT FACTS AND FINDING. 4. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODIFY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 3.1. IN BOTH THE ASSESSMENT ORDERS, THE ONLY ISSUE THAT IS TO BE ADJUDI CATED, IS WHETHER THE INCOME IN QUESTION IS TO BE ASSESSED UNDER THE HEAD SHORT TERM CAPITAL GAIN OR UNDER THE HEAD BUSINESS INCOME OF THE ASSESSEE . 3.2. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A MEDIA PROFESSIONAL DERIVING IN COME FROM SALARY AND THAT HE HAD MADE INVESTMENTS THROUGH PORTFOLIO MANAGERS. HE DREW THE ATTENTION OF THE BENCH TO PARA 2.2.2 OF THE LD.CIT(A) ORDER AND SUBMITTED THAT THE INCOME FROM M/S KOTA K SECURITIES LTD. IS IN TWO PARTS , NAMELY , SPECULATION GAIN AND SHORT TERM CAPITAL GAIN AND THAT THE ASSESSEE HAS OFFERED THE SPECULATION GAIN AS NORMAL BUSINESS INCOME AND THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE SHORT TERM CAPITAL GAIN EARNED BY THE ASSESSEE WAS WRONGLY TREATED AS BUSINE SS INCOME BY THE A.O. HIS CONTENTIONS ARE THAT THE ASSESSEE DERIVES INCOME FROM SALARY AND IS NOT INTO THE PURCHASE AND SALE OF SHARES. HE SUBMITTED CONTRACT NOTES AND SUPPORTED HIS CLAIM THAT ALL THE TRANSACTIONS THROUGH H M/S KOTAK SECURITIES LTD. WE RE FOR INVESTMENT PURPOSES ONLY. HE VEHEMENTLY CONTENDED THAT THE ENTIRE TASK OF PURCHASE AND SALE OF SHARES WAS ENTRUSTED, M/S KOTAK SECURITIES LTD., WHO WERE THE PORTFOLIO MANAGERS AND IT IS THE PORTFOLIO MANAGER WHO EXECUTED THE TRANSACTIONS ON BEHALF OF THE ASSESSEE. HE TOOK THIS BENCH TO THE COPIES OF BILLS, CONTRACT NOTES ETC., D - MAT ACCOUNT, ASSESSEE S PERSONAL BALANCE SHEET WHEREIN THE AMOUNT DISCLOSED UNDER THE HEAD INVESTMENT AND RELIED ON CIRCULAR NO.4 OF CBDT/2007 DATED 15.6.2007 AND CONTEN DED THAT THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE A.O. F OR THE PROPOSITION THAT, WHENEVER INVESTMENTS ARE MADE PORTFOLIO MANAGEMENT SERVICES, THE 6 INCOME THERE FROM SHOULD BE CHARGED UND ER THE HEAD CAPITAL GAINS , HE RELIED ON THE FOLLOWING CASE LAWS. (I) APOORVA PATNI VS. A D IT , PUNE B BENCH OF THE TRIBUNAL IN ITA NOS. 239/PN/11 ETC. ORDER DT. 21 ST JUNE, 2012 REPORTED IN (2012) 33 CCH 424 PUNETRIB. (II) NALIN PRAVIN SHAH VS. ACIT, ITA 1576/MUM/2012 DATED 21 ST FEB., 2014 (MUMBAI B BENCH OF THE TRIBUNAL) 3.3. LD.SR.D.R. ON THE OTHER HAND RELIED ON THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF RADIALS INTERNATIONAL VS. ACIT JUDGEMENT DT. 25.4.2014 AND SUBMITTED THAT THE HON BLE HIGH COURT HAS LAID D OWN THAT THE SAME PRINCIPLES THAT ARE APPLICABLE FOR DETERMINING WHETHER THE INCOME FROM SALE AND PURCHASE OF SHARES IS TO BE ASSESSED UNDER THE HEAD CAPITAL GAINS OR UNDER THE HEAD INCOME FROM BUSINESS IS TO BE APPLIED, WHILE ADJUDICATING CASES WHERE PURCHASE AND SALE OF SHARES IS DONE THROUGH A PORTFOLIO MANAGER. HE SUBMITTED THAT THE PORTFOLIO MANAGER IS MERELY AN AGENT. HE RELIED ON PARA 2.3.3 AND PARA 2.3.3.1 OF THE ORDER OF THE LD.CIT(A) AND POINTED OUT THAT THE SAME SCRIPS WERE FREQUENTLY PURCH ASED AND SOLD BY THE AGENCY OF THE ASSESSEE I.E. M/S KOTAK SECURITIES LTD. AND THE PERUSAL OF THE DOCUMENTS DEMONSTRATE THAT THESE ARE TRADING TRANSACTIONS. HE CONTENDED THAT THE ASSESSEE IS ENGAGED IN TRADING IN SHARES AND IT IS ONLY FOR THAT PURPOSE THAT M/S KOTAK SECURITIES LTD. WAS APPOINTED AS PORTFOLIO MANAGERS. HE POINTED OUT THAT THE ASSESSEE BORROWED FUNDS AND UTILISED THE SAME FOR TRADING. HE SUBMITTED THAT WHEN THE FACTS OF THE CASE ARE CONSIDERED AND THE PRINCIPLES LAID DOWN BY THE HON BLE DELHI HIGH COURT IN THE CASE OF RADIALS INTERNATIONAL (SUPRA) APPLIED , THEN THE ORDER OF THE FIRST APPELLATE AUTHORITY HAS TO BE UPHELD. 4. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF O RDERS OF LOWER AUTHORITIES, MATERIAL PLACED ON RECORD AS WELL AS CASE LAWS CITED, WE HOLD AS UNDER. 7 5. THE HON BLE DELHI HIGH COURT IN THE CASE OF RADIAL INTERNATIONAL (SUPRA) AT PARA 17 HELD AS FOLLOWS. 17. THIS COURT THUS CONCLUDES THAT : A. THE PMS AGREEMENT IN THIS CASE WAS A MERE AGREEMENT OF AGENCY AND CANNOT BE USED TO INFER ANY INTENTION TO MAKE PROFIT B. THE INTENTION OF AN ASSESSEE MUST BE INFERRED HOLISTICALLY, FROM THE CONDUCT OF THE ASSESSEE, THE CIRCUMSTANCES OF THE TRANSACTION S, AND NOT JUST FROM THE SEEMING MOTIVE AT THE TIME OF DEPOSITING THE MONEY C. ALONG WITH THE INTENTION OF THE ASSESSEE, OTHER CRUCIAL FACTORS LIKE THE SUBSTANTIAL NATURE OF THE TRANSACTIONS, FREQUENCY, VOLUME ETC. MUST BE TAKEN INTO ACCOUNT TO EVALUATE WH ETHER THE TRANSACTIONS ARE ADVENTURE IN THE NATURE OF TRADE . 5.1. FOLLOWING THIS BINDING JUDGEMENT OF THE JURISDICTIONAL HIGH COURT, WE UPHOLD THE FINDING OF THE FIRST APPELLATE AUTHORITY THAT M/S KOTAK SECURITIES LTD. I S MERELY AN AGENT OF THE ASSESS EE. IN THE CASE ON HAND, ADMITTEDLY THE ASSESSEE HAS INDULGED IN SPECULATIVE TRANSACTIONS THROUGH M/S KOTAK SECURITIES LTD. MANY A TIME, THE PURCHASE AND SALE OF SHARES WAS SETTLED WITHOUT DELIVERY. THE QUANTUM OF TRANSACTIONS ARE FREQUENT AND THE ASSES SEE HAS BORROWED FUNDS FOR UNDERTAKING THESE TRANSACTIONS. THIS IS EVIDENT FROM THE LETTER DT. 24.4.2006 ADDRESSED BY THE ASSESSEE TO THE ASSESSING OFFICER, WHERE AT PARA 3 IT IS STATED AS FOLLOWS. 3. DURING THE YEAR THE ASSESSEE HAD CLAIMED INTEREST PA YMENT AMOUNT OF RS.79,10,498/ - AGAINST INCOME FROM OTHER SOURCES. IT IS SUBMITTED THAT THE ASSESSEE MAINLY BORROWED FUNDS FOR THE PURPOSE OF INVESTMENT IN SHARES, MUTUAL FUNDS AND INTEREST BEARING BONDS. IN ADDITION TO ABOVE THE ASSESSEE ALSO ADVANCED SU RPLUS MONEY AGAINST WHICH HE EARNED INTEREST INCOME. THE ASSESSEE IN FACT UTILIZED THE BORROWED FUNDS BOTH FOR THE PURPOSE OF INVESTMENT AND ALSO TO EARN INTEREST INCOME. DURING THE YEAR THE ASSESSEE EARNED AN INTEREST INCOME OF RS. 34,70,156/ - OUT OF FUND S SO ADVANCED AND INVESTED. HOWEVER WHILE FILLING THE INCOME TAX RETURN THE ASSESSEE CLAIMED ALL THE INTEREST PAYMENT AMOUNTING TO RS.79,10,498/ - WHERE AS THIS SHOULD BE RESTRICTED TO RS. 34,70,156/ - . THE BALANCE RS. 44,40,342/ - REPRESENT PAYMENT OF INTERES T ON CAPITAL ACCOUNT AND ELIGIBLE FOR DEDUCTION FROM CAPITAL GAIN. 8 DURING THE YEAR ASSESSEE HAS CLAIMED INTEREST PAYMENT AMOUNTING TO RS. 4,52,392/ - FROM INCOME FROM HOUSE PROPERTY. IN THIS RESPECT IT IS SUBMITTED THAT THE 'ASSESSEE HAS RAISED LOAN AMOUN TING TO RS.50,00,000/ - FROM ICIC I HOME FINANCE AGAINST THE MORTGAGE OF RESIDENTIAL HOUSE IN JUNE, 02. THE LOAN SO RAISED IN FACT INVEST IN MUTUAL FUND. HENCE THE ASSESSEE IS ELIGIBLE FOR DEDUCTION OF INTEREST PAYMENT FROM CAPITAL GAIN. BUT IN THE RETURN WR ONGLY ASSESSEE CLAIMED THE DEDUCTION FROM INCOME FROM HOUSE PROPERTIES. HENCE THE EFFECT FOR THE SAME HAS BEEN TAKEN IN REVISED STATEMENT OF INCOME ANNEXED HEREWITH. IN ADDITION TO ABOVE IN THE ASSESSMENT PROCEEDINGS FOR A.Y. 2000 - 01, 2001 - 02, 2002 - 03 AND 2003 - 2004 THE AO DISALLOWED PART OF INTEREST PAYMENT AS OF CAPITAL NATURE AND CONSIDERED IT TO BE A PART OF ACQUISITION COST. AS THE ASSESSEE SOLD THOSE SHARES DUR I NG THE YEAR THE ASSESSEE IS ELIGIBLE FOR THE SAME AS ALLOWABLE DEDUCTION FROM CAPITAL GAIN . REVISED STATEMENT OF INCOME IS ANNEXED HEREWITH. IN THE ORIGINAL RETURN FILED THE ASSESSEE BY OVERS EAS CLAIMED RS.27,00,000/ - AS SHARE TRANSFER EXPENSES, WHICH HAS BEEN R ECTIFIED IN THE REVISED INCOME STATEMENT ATTACHED HEREWITH. 5.2. THE CLAIM OF THE ASSESSEE THAT, WHEREVER THE TRANSACTION OF PURCHASE AND SALE OF SHARES IS SETTLED, BY DELIVERY, THEN IT SHOULD BE CONSIDERED AS AN INVESTMENT AND IF NOT AS BUSINESS CANNOT BE COUNTENANCED . 5.3. THOUGH THE LD.COUNSEL FOR THE ASSESSEE RE QUESTED THAT THE ISSUE SHOULD BE SET ASIDE TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION IN VIEW OF THE RECENT DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF RADIALS INTERNATIONAL (SUPRA), WE ARE NOT INCLINED TO DO SO, AS IN OUR VIEW THE FACTS A VAILABLE ON RECORD DO NOT SUPPORT THE CLAIMS OF THE ASSESSEE. IN THE RESULT THESE GROUNDS ARE DISMISSED. 6. FOR THE A.Y. 2004 - 05: GROUND NO.4 IS ON THE DISALLOWANCE OF DEDUCTION OF RS.1,70,000/ - ON ACCOUNT OF WRITING OFF OF SUNDRY DEBTORS. 6.1. WE HAVE PE RUSED PARAS 4.1 TO 4.3 OF THE LD.CIT(A) S ORDER. AT PARA 4.3 THE LD.CIT(A) HELD AS FOLLOWS. 9 4.3. I HAVE CONSIDERED THE FACTS OF THE CASE. THE SUBMISSION OF THE APPELLANT HAS ALSO BEEN GONE THROUGH. THERE CAN NOT BE A GENERAL RULE THAT SINCE SUNDRY CREDIT BALANCE HAS BEEN WRITTEN BACK, THEREFORE, A.O. SHOULD ALLOW SUNDRY DEBIT BALANCE WRITTEN OFF ALSO AND SHOULD ONLY CONSIDER THE NET AMOUNT. THIS IS SO AS THE NATURE OF BOTH THE ENTRIES MAY BE DIFFERENT. EXACTLY SAME ARE THE FACTS IN THIS CASE. WHEREAS APPELLANT HAS W RITTEN BACK SUNDRY CREDIT BALANCES OF RS.18,465/ - AND RS.2,32,500/ - WHICH WERE PAYABLE TO P.N.BAHL HUF AND CHANDER ARORA RESPECTIVELY AND WAS OUTSTANDING SINCE LAST 7 - 8 YEARS. THE AMOUNT OF SUNDRY DEBIT BALANCE IS PERTAINING TO SHRI ROHIT ARORA OF RS.1,70,000/ - AND THIS AMOUNT WAS OUTSTANDING FROM LAST TEN YEARS. THIS AMOUNT WAS NOT RECOVER ABLE HENCE IT WAS WRITTEN OFF DURING THE YEAR. IT IS INTERESTING TO NOTE THAT APPELLANT HAS CLAIMED THIS WRITE OFF OF RS. 1,70,000 / - AGAINST INCOME ASSESSABLE UNDER THE HEAD 'OTHER SOURCES', THOUGH NOW IT IS CLAIMING AS BAD DEBT. THERE IS NO PROVISION OF AL LOWANCE OF BAD DEBT AGAINST INCOME ASSESSABLE UNDER THE HEAD OTHER SOURCES UNLESS IT IS ESTABLISHED THAT THIS IS AN EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR EARNING INCOME UNDER THE HEAD 'OTHER SOURCES'. OBVIOUSLY IN THE INSTANT CASE FACTS ARE NO T SO. THEREFORE THERE IS NO CASE OF ALLOWANCE OF THE SAME AGAINST INCOME UNDER THE HEAD 'OTHER SOURCES', U NDER THE HEAD 'BUSINESS', THE BAD DEBT CAN BE ALLOWED BUT THAT TOO WHEN SUCH BAD DEBT HAS BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNTS AND ALSO IF THE S AME HAS BEEN TAKEN INTO ACCOUNT FOR ARRIVING AT THE INCOME OF THE APPELLANT EITHER FOR THE YEAR OR FOR THE EARLIER YEARS. THIS FACT ALSO COULD NOT BE ESTABLISHED BY THE APPELLANT EITHER BEFORE A.O. OR BEFORE THE UNDER SIGNED. THEREFORE, THE SAME IS NOT ALLO WABLE . THE A.O. HAS RIGHTLY DISALLOWED THE SAME. THEREFORE, THIS GROUND IS DECIDED AGAINST THE APPELLANT. 6.2. THE LD.COUNSEL FOR THE ASSESSEE COULD NOT CONTROVERT THESE FINDINGS OF THE FIRST APPELLATE AUTHORITY. HENCE GROUND NOS. 4 AND 5 ARE DISMISS ED. 6.3. THE OTHER GROUNDS ARE GENERAL IN NATURE. 10 7. IN THE RESULT THE APPEALS OF THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST , 2015. SD/ - SD/ - [ I.C.SUDHIR ] [J. SUDHAKAR REDDY] JUDICIA L MEMBER ACCOUNTANT MEMBER DT. THE 14 TH AUGUST, 2015 MANGA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES