DCIT 4(1), MUMBAI V. A.C. CHOKSHI SHARE BROKERS P. LTD, MUMBAI

ITA 1521/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71021 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY R PARIKH
• Assessee Lawyers: MRS BHAVNA YASHROY
• Keywords: Non-deduction of tax; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI . . , , BEFORE SHRI I. P. BANSAL, JM AND SHRI SANJAY ARORA , AM ./ I.T.A. NO. 641/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) A. C. CHOKSI SHARE BROKERS PVT. LTD. 2 ND FLOOR, ITTS HOUSE, K. DUBHASH MARG, KALA GHODA, FORT, MUMBAI-400 001 / VS. ASST. CIT, RANGE 4(1), 6 TH FLOOR, AAYKAR BHAVAN, M. K. ROAD, MUMBAI-400 020 ./ ./PAN/GIR NO. AABCA 3464 E ( !'#$% /ASSESSEE ) : ( & / REVENUE ) ./ I.T.A. NO. 1521/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) DY. CIT-4(1), 6 TH FLOOR, ROOM NO.640, AAYAKAR BHAVAN, MUMBAI-20 / VS. A. C. CHOKSI SHARE BROKERS PVT. LTD. 2 ND FLOOR, ITTS HOUSE, K. DUBHASH MARG, KALA GHODA, FORT, MUMBAI-400 001 ./ ./PAN/GIR NO. AABCA 3464 E ( & / REVENUE ) : ( !'#$% /ASSESSEE ) !'#$% ' ( / APPELLANT BY : SHRI SANJAY R. PARIKH & ' ( / RESPONDENT BY : MRS. BHAVNA YASHROY ) !&* ' %+ / DATE OF HEARING : 29.08.2013 ,-. ' %+ / DATE OF PRONOUNCEMENT : 06.09.2013 2 ITA NOS. 641 & 1521/MUM/2012 (A.Y. 2008-09) A. C. CHOKSI SHARE BROKERS PVT. LTD. / / O R D E R PER SANJAY ARORA, A. M.: THESE ARE CROSS APPEALS BY THE ASSESSEE AND THE REV ENUE ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-9, MUMB AI (CIT(A) FOR SHORT) DATED 05.12.2011, PARTLY ALLOWING THE ASSESSEES APPEAL C ONTESTING ITS ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FO R THE ASSESSMENT YEAR (A.Y.) 2008-09 VIDE ORDER DATED 30.11.2010. 2. WE SHALL TAKE UP THE ASSESSEES APPEAL, BEING SE NIOR, FIRST. VIDE ITS FIRST AND SOLE GROUND, THE ASSESSEE CHALLENGES THE DISALLOWANCE U/ S. 40(A)(IA) OF THE ACT IN RESPECT OF NON-DEDUCTION OF TAX AT SOURCE ON VSAT AND LEASE LINE CHARGES PAID BY IT, A SHARE BROKER, TO THE STOCK EXCHANGE/S. THE MATTER HAS SIN CE BEEN CLARIFIED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ITO VS. ANGEL CAPITAL & DEBIT MARKET LTD. (IN ITA (L) NO.475 OF 2011 DATED 28.07.2011/COPY ON REC ORD), HOLDING THAT THE SAID CHARGES ARE NOT LIABLE FOR TAX DEDUCTION AT SOURCE AS THE S AME ARE ONLY IN THE NATURE OF REIMBURSEMENT OF CHARGES TO THE STOCK EXCHANGE/S. T HE SAID DECISION BY THE HONBLE COURT HAVING BEEN RENDERED AFTER THE PASSING OF THE IMPUGNED ORDER, THE SAME THOUGH WOULD GOVERN THE ISSUE UNDER REFERENCE, COULD NOT B E GIVEN EFFECT TO THE BY THE REVENUE. FURTHER, WE ALSO OBSERVE THAT THE LD. CIT(A) HAS GO NE WRONG IN ALSO INCLUDING TRANSACTION CHARGES WHILE DECIDING THE MATTER VID E PARAS 5.1.1 TO 5.1.3 (PGS.7-8) OF HIS ORDER; THERE BEING NO REFERENCE TO THE SAME IN THE ASSESSMENT ORDER (REFER PARA 5.1 THEREOF), WHICH WAS SPECIFICALLY PERUSED FOR THE PU RPOSE. CLARIFICATION QUA THE SAME WAS ALSO OBTAINED BY THE BENCH DURING HEARING; THE LD. AR STATING AT BAR THAT THE IMPUGNED AMOUNT OF RS. 5,26,940/- DOES NOT INCLUDE ANY TRANS ACTION CHARGES. ACCORDINGLY, THE IMPUGNED DISALLOWANCE IS DIRECTED TO BE DELETED. 3. COMING TO THE REVENUES APPEAL, THE SAME DISPUTE S THE DISALLOWANCE AT RS.34,52,850/- ON ACCOUNT OF BAD DEBTS. THE SAME ST ANDS DISALLOWED AS THE ASSESSEE BEING A SHARE BROKER, IT IS ONLY THE BROKERAGE COMPONENT OF THE AMOUNT CHARGED TO ITS CLIENTS, 3 ITA NOS. 641 & 1521/MUM/2012 (A.Y. 2008-09) A. C. CHOKSI SHARE BROKERS PVT. LTD. WHICH COULD BE CONSIDERED AS A DEBT AND, THUS, LIAB LE TO BE CONSIDERED FOR CLAIM U/S. 36(1)(VII) ON BEING WRITTEN OFF AS IRRECOVERABLE IN ITS ACCOUNTS. THE MATTER HAS AGAIN BEEN SINCE DECIDED BY THE HONBLE HIGH COURT IN THE CASE OF CIT V. SHREYAS S. MORAKHIA [2012] 342 ITR 285 (BOM), CONFIRMING THE DECISION BY THE S PECIAL BENCH OF THE TRIBUNAL [ DY. CIT VS. SHREYAS MORAKHIA [2010] 40 SOT 432 (MUM) (SB) [5 ITR (TRIB) 1] TO T HE EFFECT THAT THE ENTIRE AMOUNT AS CHARGED BY A BROKE R TO HIS CLIENTS SATISFIES THE CONDITION OF SECTION 36(2), AND IS, THUS, ELIGIBLE FOR CLAIM U/S . 36(1)(VII). WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED AND THE REVENUES APPEAL IS DISMISSED. $.%0 !'#$% ' & 1 % ' % 23 & ' $ ' % 23 ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 06, 2013 SD/- SD/- (I. P. BANSAL) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ) * MUMBAI; 4! DATED : 06.09.2013 &.!. ./ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. 5 / THE APPELLANT 2. 675 / THE RESPONDENT 3. ) 8% ( ) / THE CIT(A) 4. ) 8% / CIT - CONCERNED 5. ;&<= 6%!>' , + >'. , ) * / DR, ITAT, MUMBAI 6. =?# @* / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , ) * / ITAT, MUMBAI