The ACIT, Crcle-3, Ahmedabad V. Innovate Securties Pvt.Ltd., Ahmedabad

ITA 1576/AHD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67515 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-07-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 17-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Keywords: Bad and doubtful debts
• Section: 11

Judgement Text

, , , , A, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + )* + )* + )* + ) ' ) ' ) ' ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.1576/AHD/2012 WITH CO NO.162/AHD/2012 [ASSTT.YEAR : 2009-2010] ACIT, CIR.3 AHMEDABAD. /VS. INNOVATE SECURITIES PVT. LTD. 1 ST FLOOR, DEVANSHISH, 39, SARDAR PATEL NAGAR ROAD NR. NEST HOTEL, ELLISBRIDGE AHMEDABAD 380 006. PAN : AAAC1 4767 R ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SHRI O.P. BATHEJA, SR.DR 4& 1 2 )/ ASSESSEE BY : SHRI SANJAY R. SHAH 5 1 &(*/ DATE OF HEARING : 9 TH JULY, 2013 678 1 &(*/ DATE OF PRONOUNCEMENT : 02-08-2013 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT : THIS APPEAL BY THE REVENUE AND THE CO BY THE ASSESSEE FOR THE ASSESSME NT YEARS 2009- ITA NO.1576/AHD/2012 WITH CO NO.162/AHD/2012 -2- 2010 ARE DIRECTED AGAINST THE ORDER OF THE CIT(A)-6 , AHMEDABAD DATED 21/05/2012. THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. ITA NO.1576/AHD/2012 (REVENUES APPEAL) 2. THE GROUND NO.1 OF THE REVENUES APPEAL IS AS UN DER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.39,36,933/- TOWARDS BAD DEBTS DE SPITE THE FACT THAT THE CONDITION LAID DOWN U/S.36(2) OF THE ACT ARE NOT SATISFIED IN THIS CASE. 3. THE LEARNED DR HAS RELIED ON THE ORDER OF THE AO . THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CORRECT FIGURE OF BAD DEBTS WAS RS.39,06,070/- AND NOT THE FIGURE MENTIONED IN THE GROUNDS OF THE APPEAL OF THE REVENUE. THE ISSUE IS COVERED IN FAV OUR OF THE ASSESSEE WITH THE SERIES OF DECISIONS INCLUDING THE DECISION OF THE DELHI HIGH COURT IN CIT VS. BONANZA PORTFOLIO LTD., 226 CTR 46 8 (DELHI) WHEREIN THE ASSESSEE WAS A SHARE BROKER AND CLAIM O F DEDUCTION OF AMOUNT NOT RECOVERED FROM CLIENT ON WHOSE BEHALF SH ARES WERE PURCHASED WAS ALLOWED AS BAD DEBTS. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE CIT(A) HAS PASSED A WELL REASONED ORDER ON THIS ISSUE. WE FIN D THAT THE CIT(A) HAS FOLLOWED THE DECISION OF THE HONBLE DELHI HIGH COURT, HONBLE BOMBAY HIGH COURT AND ITAT, MUMBAI BENCH, IN WHICH IT WAS HELD THAT THE VALUE OF SHARES TRANSACTED BY THE ASSESSEE AS BROKER ON BEHALF OF ITS CLIENT IS PART OF THE DEBT, ON WHICH BROKERA GE IS CHARGED AND THE SAME IS CREDITED TO THE PROFIT & LOSS ACCOUNT, AND HAS ALLOWED THE CLAIM OF THE ASSESSEE. WE FIND THAT THE DECISION O F THE HONBLE DELHI ITA NO.1576/AHD/2012 WITH CO NO.162/AHD/2012 -3- HIGH COURT IN CIT VS. BONANZA PORTFOLIO LTD. (SUPRA ) IS IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A) ON THIS ISSUE, AND THE GROUND NO.1 OF THE REVENUE IS DISMIS SED. 5. THE GROUND NO.2 OF THE REVENUES APPEAL IS AS UN DER: 2. THAT THE LD.CIT(A) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADJUSTMENT OF RS.88,49,009/- TO BOOK P ROFIT U/S.12125JB(2) OF THE IT ACT, 1961 DESPITE THE FACT THAT THE INDIRECT PROVISION MADE BY THE ASSESSEE IS REQUIRED TO BE ADDED TO BOOK PROFIT AS PER EXPLANATION (1) TO SECTION 11 5JB(2) OF THE ACT. 6. THE LEARNED DR RELIED ON THE ORDER OF THE AO. TH E LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E HAS NOT MADE ANY PROVISION, BUT IN FACT THE AMOUNT WAS WRITTEN OFF. HE REFERRED TO THE BALANCE SHEET OF THE ASSESSEE OF THE RELEVANT ACCOU NTING PERIOD WHEREIN THE PROVISION UNDER THE HEAD CURRENT LIABI LITIES AND PROVISION WAS SHOWN AS NIL. HE RELIED ON THE OR DER OF THE CIT(A). 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE CIT(A) HAS GIVEN A FINDING THAT IT IS NOT IN DISPUTE THAT THE LOSS IS ON ACCOU NT OF VALUATION OF CLOSING STOCK OF SHARES, WHICH IS ESTABLISHED METHO D AS PER THE ACCOUNTING STANDARD FOR VALUATION OF CLOSING STOCK, AND THAT NO PROVISION FOR DIMINUTION IN VALUE OF ASSETS WAS CRE ATED BY THE ASSESSEE. IN THESE FACTS, SINCE THE ASSESSEE HAS N OT MADE ANY PROVISION FOR DIMINUTION IN THE VALUE OF THE ASSETS, WHICH CA N BE ADDED BACK TO THE BOOK PROFIT OF THE ASSESSEE, THE ORDER OF THE C IT(A) IS CONFIRMED AND THE GROUND NO.2 OF THE APPEAL IS DISMISSED. ITA NO.1576/AHD/2012 WITH CO NO.162/AHD/2012 -4- CO NO.162/AHD/2012 (ASSESSEES CO) 8. THE ONLY GROUND OF THE CO OF THE ASSESSEE IS AS UNDER: 1. IN CASE THE DISALLOWANCE OF RS.39,06,070/- ON A CCOUNT OF BAD DEBT WRITTEN OFF IS UPHELD, DIRECTION SHOULD BE GIVEN TO THE LEARNED AO TO EXCLUDE RS.7,21,472 FROM THE TOTAL IN COME. IT IS SUBMITTED THAT THE AMOUNT OF RS.7,21,472/- (INCLUDE D IN THE AMOUNT OF RS.39,06,070 ALLOWED BY THE CIT(A) IS IN THE NATURE OF REVERSAL OF PROVISION FOR DOUBTFUL DEBT, WHICH W AS DISALLOWED IN THE YEAR IN WHICH SUCH PROVISION WAS MADE. IT IS SUBMITTED THAT IT BE SO HELD NOW. 9. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT IN CASE THE REVENUES APPEAL IS DISMISSED FOR THE RELEVANT ASSE SSMENT YEAR 2009- 2010, THE GROUND OF THE CO OF THE ASSESSEE SHALL BE COME INFRUCTOUS. IN THESE FACTS, WE DISMISS THE GROUND OF THE CO OF THE ASSESSEE, IN VIEW OF OUR ORDER OF DISMISSING THE REVENUES APPEA L FOR THE SAME ASSESSMENT YEAR 2009-2010 AND THE CO OF THE ASSESSE E IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE AND TH E CO OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD/- SD/- ( %&' %&' %&' %&'( (( ( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD