M/s. Pravin Ratilal Share and Stock Brokers Ltd., Ahmedabad V. The ACIT, Circle-3, Ahmedabad

ITA 1342/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8321 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER M/S. PRAVIN RATILAL SHARE & STOCK BROKERS LTD., 5 TH FLOOR, SAKAR, NR. GANDHIGRAM RLY. STATION, AHMEDABAD PAN: AAACP9124H (APPELLANT) VS THE ACIT, CIRCLE - 3 AHMEDABAD (RESPONDENT) REVENUE BY : S H RI PRASOON KABRA , SR. D . R. ASSESSEE BY: S H RI DEEPAK SONI , A.R. DATE OF HEARING : 08 - 09 - 2 017 DATE OF PRONOUNCEMENT : 09 - 10 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2009 - 10 , AR IS ES FROM ORDER OF THE CIT(A) - 6, AHMEDABAD DATED 21 - 02 - 2014 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. 0 THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW. THE ORDER IS CONTRARY TO THE PROVISIONS OF LAW AND THE FACTS OF YOUR APPELLANT'S CASE. I T A NO . 1342 / A HD/20 14 A S SESSMENT YEAR 200 9 - 10 I.T.A NO. 1342 /AHD/20 14 A.Y. 2009 - 10 PAGE NO M/S. PRAVIN RATILAL SHARE & STOCK BROKERS LTD. VS. ACIT 2 2.0 THE CIT(A) ERRED IN UPHOLDING DISALLOWANCE OF RS. 18,565/ - THE APPELLANT SUBMITS THAT N O EXPENDITURE WAS INCURRED BY THE APPELLANT FOR THE PURPOSE OF EARNING DIVIDEND AND THEREFORE DISALLOWANCE OF RS. 18,565/ - IS CONTRARY TO THE FACTS AND CONTRARY TO THE LAW. THE DISALLOWANCE OF RS. 18,565/ - BE QUASHED. 2.1 THE APPELLANT FURTHER SUBMITS THA T THE DISALLOWANCE OF RS. 18,565/ - MADE BY THE ASSESSING OFFICER IS EXCESSIVE. THE APPELLANT SUBMITS THAT ON BASIS OF THE AUDITED ACCOUNTS AND RETURN OF INCOME THERE BEING SURPLUS IN ACCOUNT OF INTEREST, THE AO OUGHT NOT TO HAVE CONSIDERED RS. 18,565/ - WHI LE MAKING DISALLOWANCE UNDER SECTION 14A. THE APPELLANT SUBMITS THAT IT BE SO HELD NOW. THE APPELLANT SUBMITS THAT DISALLOWANCE IF ANY TO BE UPHELD ON ANY TECHNICAL GROUND BE RESTRICTED TO A NOMINAL AMOUNT. THE APPELLANT SUBMITS THAT APPROPRIATE RELIEF BE ALLOWED. 2.2 THE APPELLANT FURTHER SUBMITS THAT PROVISIONS OF RULE 8D HAVE NOT BEEN PROPERLY APPLIED. THE ASSESSING OFFICER BE DIRECTED TO APPLY CORRECT PROVISION S OF RULE 80 D. 3.0 THE CIT(A) ERRED IN UPHOLDING DISALLOWANCE OF RS. 1,66,730/ - AS BAD DEBTS . THE A PPELLANT SUBMITS THAT ALL THE CONDITIONS OF SECTION 36(1)(VII) R.W.S. 36(2) STOOD FULFILLED IN RESPECT OF BA D DEBTS OF RS. 166730/ - . THE DISALLOWANCE OF 1,66,730/ - BE QUASHED. 3.1 THE APPELLANT WITHOUT PREJUDICE TO ABOVE SUBMITS THAT THE DISALLOW ANCE OF RS. 1,66,730/ - MADE BY THE ASSESSING OFFICER IS EXCESSIVE. THE APPELLANT SUBMITS THAT DISALLOWANCE IF ANY TO BE UPHELD ON ANY TECHNICAL GROUND BE RESTRICTED TO A NOMINAL AMOUNT. THE APPELLANT SUBMITS THAT APPROPRIATE RELIEF BE ALLOWED. 4.0 THE CIT( A) ERRED IN UPHOLDING COMPUTATION OF TAX AT RS. 66,829/ - . THE APP ELLANT SUBMITS THAT COMPUTATION MADE BY THE ASSESSING OFFICER IS ERRONEOUS AND CONTRARY TO THE FACTS. THE APPELLANT SUBMITS THE ASSESSING OFFICER BE DIRECTED TO ALLOW CREDIT IN RESPECT OF SEC URITIES TRANSACTION TAX IN VIEW OF CONSIDERING SHORT TERM CAPITAL GAIN AS BUSINESS INCOME. IT IS SUBMITTED THAT APPROPRIATE RELIEF BE ALLOWED. 3. AT THE TIME OF HEARING, THE LD. COUNSEL HAS NOT PRESSED THE GROUND NO S . 1 TO 2.2, SO, THE SAME ARE DISMISSED AS NOT PRESSED. GROUND NOS. 3 TO 4 ARE BEING ADJUDICATED BELOW. 4. IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 57 , 18 , 640/ - WAS FILED ON 29 TH SEPTEMBER, 2009. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) ON 16 TH SEPTEMBER , 2010. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE ASSESSING OFFICER NOTICED TH A T ASSESSEE HAD DEBITED BAD DEBT AMOUNTING TO RS. 1 , 66 , 730/ - . THE ASSESSING OFFICER ASKED THE ASSESSEE TO PROVE THE GENUINENESS OF BAD DEBT IN VIEW OF THE PROVISION OF SECTION 36(1) AND 36(2) OF THE ACT. THE ASSESSING OFFICER STATED THAT ASSESSEE HAS NOT FURNISHED THE PRO OF THAT THE BAD DEBT CLAIMED HA D BEEN CONSIDERED FOR THE COMPUTATION OF INCOME IN THE YEAR IN WHICH THE DEBT WAS CREATED. HE F URTHER STATED THAT ASSESSEE WAS A SHARE BROKER SHOWING ONLY INCOME FROM BROKER AGE AND I.T.A NO. 1342 /AHD/20 14 A.Y. 2009 - 10 PAGE NO M/S. PRAVIN RATILAL SHARE & STOCK BROKERS LTD. VS. ACIT 3 CONDITION LAID DOWN U/S. 36(2) WAS NOT SATISFIED. THEREFORE, THE ASSESSING OFFICER DISAL LOWED THE BAD DEBT CLAIM OF RS. 1,66,730/ - . 5. AGGRIEVED AGAINST THE DECISI ON OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS SUSTAINED THE ADDITION BY SIMPLY STATING THAT THE PROVISION OF SECTION 36(2) WERE NOT SATISFIED. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MAT ERIAL ON RECORD. WE HAVE NOTICED THAT ASSESSEE WAS A PUBLIC LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF PROVIDING ITS SERVICES AS SHARE BROKER, INVESTMENT ADVISORY OF IPO AND OTHER INVEST MENT SERVICES. THE ASSSESEE STATED THAT THE PARTIES WHOSE ACC OUNTS H AVE BEEN WRITTEN OFF HAD EFFECTED THE BUSINESS TRANSACTION WITH THE ASSESSEE WHEREBY INCOME BY WAY OF BROKERAGE WAS DERIVED. HE FURTHER STATED THAT THE BROKERAGE INCOME HA VE BEEN REFLECTED IN THE COMPUTATION OF TOTAL INCOME OF THE ASSESSEE IN THE EARLIER ASSESSMENT YEAR. IT WAS CONTENDED THAT THESE FACTS SUBSTANTIATE THAT THE REQUIREMENT OF SECTION 36 (2) HAS BEEN FULFILLED. IN THE PAPER BOOK SUBMITTED DURING THE COURSE OF APPELLATE PROCEEDINGS, THE COPIES OF ACCOUNT OF THE PARTIES , D O CUMENTARY EVIDENCES AND EVIDENCES OF LEGAL ACTION TAKEN BY THE ASSESSEE AGAINST THE PARTIES U/S. 138 OF NEGOTIABLE INSTRUMENTS ACT WERE FURNISHED . HOWEVER, WE HAVE NOTICED THAT THE LD. CIT(A) HAS SUSTAINED THE ADDITIONS BY STATING AS UNDER: - 4.1 AS SEEN FROM THE ASSESSMENT ORDER, THE DISALLOWANCE WAS MADE AS PER THE WORKING FURNISHED BY THE APPELLANT. HENCE THIS GROUND OF APPEAL IS DISMISSED AS DEVOID OF MERIT. I.T.A NO. 1342 /AHD/20 14 A.Y. 2009 - 10 PAGE NO M/S. PRAVIN RATILAL SHARE & STOCK BROKERS LTD. VS. ACIT 4 CONSIDERING THE SUBMISSION OF THE ASSESSEE, WE FIND THAT HE LD. CIT(A) HAS NOT GIVEN ANY REASONING IN HIS DECISION . AFTER CONSIDERING THE ABOVE STATED FACTS AND FINDINGS, WE ARE OF THE CONSIDERED OPINION THAT ASSESSEE HAS EXPLAINED THE CIRCUMSTANCES UNDER WHICH THE ACCOUNTS OF THE PARTIES HAVE BEEN WRITTEN OFF FROM WHOM THE ASSESSEE HAS DERIVED BROKERAG E INCOME WHICH HAD BEEN S HOWN IN THE COMPUTATION OF TOTAL INCOME IN THE EARLIER ASSESSMENT YEAR. THEREFORE, CONSIDERING THE ABOVE MENTIONED FACTS, WE ARE NOT INCLINED WITH THE DECISION OF THE LD. CIT(A) AND THE APPEAL OF THE ASSESSEE IS ALLOWED ON THIS I SSUE. 7 . REGARDING FOURTH GROUND OF APPEAL OF THE ASSESSEE PERTAINING TO COMPUTATION OF TAX, WE FIND NOWHERE IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS MENTIONED THAT CAPITAL GAIN OF THE ASSESSEE WAS TO BE ASSESS ED AS BUSINESS INCOME, THEREFOR E, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF THE LD. CIT(A). ACCORDINGLY , THIS GROUND OF APPEAL OF T HE ASSESSEE IS DISMISSED . 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C O URT ON 09 - 10 - 201 7 SD/ - SD/ - ( S.S. GO DARA ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 09 /10 /2017 I.T.A NO. 1342 /AHD/20 14 A.Y. 2009 - 10 PAGE NO M/S. PRAVIN RATILAL SHARE & STOCK BROKERS LTD. VS. ACIT 5 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,