M/s. Global Capital Ltd., New Delhi V. DCIT, New Delhi

ITA 2283/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2858 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 17-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIJAY KR JIWANI
• Assessee Lawyers: MANU K GIRI
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : BENCH B : NEW DELHI BEFORE SRI R.K.PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 2283/DEL/2015 A.Y. 2010-11 M/S GLOBAL CAPITAL LTD. 414/1, 4 TH FLOOR DDA COMMERCIAL COMPLEX DISTRICT CENTRE JANAK PURI NEW DELHI 110 058 PAN: AAACG3130E VS . DCIT CIRCLE 12(1) NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY SH. MANU K GIRI, ADV. REVENUE BY SH. VIJAY KR JIWANI, SR. D.R. DATE OF HEARING 02/08/2018 DATE OF PRONOUNCEMENT 29/08/2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST O RDER DATED 23/01/2015 PASSED BY LD. CIT (A)-15, NEW DELHI FOR A SSESSMENT YEAR 2010-11 ON FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER PASSES BY THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) IS BAD IN LAW. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL), ERRED IN CONFIRMED THE ADDITION OF RS. 20 ,00,000/- BEING PROVISION MADE FOR DOUBTFUL ADVANCE (PAYMENT MADE 2 ITA NO. 2283/ DEL/2015 (GLOBAL C APITAL LTD.) BY THE APPELLANT COMPANY TO OTC (DELHI STOCK EXCHAN GE) FOR MEMBERSHIP WHICH WAS NOT GIVEN NOR THE ADVANCE REFUNDED). 2. BRIEF FACTS OF THE CASE ARE AS UNDER: ASSESSEE FILED ITS RETURN OF INCOME DECLARING LOSS OF RS.69,54,114/- ON 4/10/2010. THE CASE WAS SELECTED FOR SCRUTINY, AN D NOTICE UNDER SECTION 143 (2) WAS ISSUED. IN RESPONSE TO STATUTORY NOTICES, REPRESENTATIVES OF ASSESSEE APPEARED BEFORE LD. AO, FILED REQUISITE DETAILS AND CASE WAS DISCUSSED. 3. LD. A.O. OBSERVED THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF ENGINEERING AND SUPPLY OF GRINDING MACHINERY FOR CE MENT PLANT. ON PERUSAL OF PROFIT AND LOSS ACCOUNT, LD.AO OBSERVED THAT ASSESSEE HAD MADE PROVISION FOR DOUBTFUL ADVANCES WRITTEN OFF AMOUNTING TO RS. 20 LACS. IT WAS OBSERVED THAT ASSESSEE HAD NOT A DDED BACK SAID AMOUNT IN COMPUTATION OF INCOME. LD. A.O. ACCORDING LY VIDE SHOW CAUSE NOTICE DATED 07/03/13, CALLED UPON ASSESSEE, AS TO WHY PROVISION FOR DOUBTFUL ADVANCES SHOULD NOT BE ADDED BACK TO TOTAL INCOME OF ASSESSEE. 4. ASSESSEE IN RESPONSE TO SHOW CAUSE, SUBMITTED TH AT, IT IS REGISTERED NBFC WITH RBI, IT HAD MADE PAYMENT OF RS. 20 LAKHS FOR MEMBERSHIP OF OTC (DELHI STOCK EXCHANGE). IT WAS SU BMITTED THAT ASSESSEE WAS NOT ALLOWED MEMBERSHIP OF OTC, AND AMOU NT WAS NOT REFUNDED. ASSESSEE THUS HELD IT TO BE DOUBTFUL ADVANCES IN BOOKS OF ACCOUNT OF ASSESSEE, WHICH WAS CLAIMED AS B USINESS EXPENDITURE. 3 ITA NO. 2283/ DEL/2015 (GLOBAL C APITAL LTD.) 5. LD.AO DISSATISFIED WITH SUBMISSIONS MADE BY AS SESSEE, REJECTED ITS CONTENTIONS, AND DISALLOWED OF RS. 20 LACS AND ADDED BACK TO INCOME OF ASSESSEE. 6. LD.AO ALSO MADE ADDITION IN THE HANDS OF ASSESS EE UNDER SECTION 14 A READ WITH RULE 8D TO THE EXTENT OF RS.2 1,31,832/-. 7. AGGRIEVED WITH ADDITIONS MADE BY LD. AO, ASSESSE E PREFERRED APPEAL BEFORE LD. CIT (A). 8. LD.CIT (A) UPHELD ADDITION MADE BY LD.AO, IN R ESPECT OF ADDITION OF RS.20 LACS, BUT DELETED ADDITION MADE B Y LD. AO UNDER SECTION 14 A READ WITH RULE 8D OF INCOME TAX RULES. 9. AGGRIEVED BY ORDER OF LD.CIT (A), ASSESSEE IS IN APPEAL BEFORE US NOW. 10. THE ONLY ISSUE RAISED BY ASSESSEE IS REGARDING ALLEGED PAYMENT OF RS.20 LACS, TOWARDS MEMBERSHIP OF OTC (DELHI STOC K EXCHANGE). LD. AR SUBMITTED THAT MEMBERSHIP OF OTC ENABLES ASS ESSEE TO USE ITS FACILITIES AND DO NOT RESULT IN CREATION OF ASS ET OF ENDURING NATURE SO AS TO HELD EXPENDITURE AS CAPITAL IN NATU RE. IT WAS SUBMITTED THAT THESE ARE MERELY AN ENTRY FEES AND I S REQUIRED TO BE PAID ANNUALLY. LD. AR PLACED RELIANCE UPON THE FOLL OWING DECISIONS: DECISION OF HONBLE DELHI HIGH COURT IN CASE OF NES ET HOLDINGS PRIVATE LIMITED VERSUS CIT (2006) 282 ITR 601; DECISION OF COORDINATE BENCH OF THIS TRIBUNAL IN CA SE OF M/S KRISHNA COMMODITIES VERSUS ACIT IN ITA NO. 3617/DEL /2012 WIDE ORDER DATED 31/10/12. 11. ON THE CONTRARY LD. DR SUBMITTED THAT DECISIO NS RELIED UPON BY LD. AR ARE DISTINGUISHABLE ON FACTS. IT WAS SUBMI TTED THAT IN 4 ITA NO. 2283/ DEL/2015 (GLOBAL C APITAL LTD.) BOTH THE DECISIONS, ACTIVITY CARRIED ON BY ASSESSEE S THEREIN WERE DEALING IN COMMODITY EXCHANGE. HE SUBMITTED THAT IN THE PRESENT FACTS OF CASE, ASSESSEE HAS NOT BROUGHT ON RECORD A NYTHING TO ESTABLISH THAT ASSESSEE WAS DEALING IN SHARES OR AN Y COMMODITY. FURTHER LD. DR SUBMITTED THAT DELHI STOCK EXCHANGE REJECTED MEMBERSHIP APPLICATION OF ASSESSEE AND DID NOT REFU ND THE AMOUNT. IT WAS UNDER THESE CIRCUMSTANCES THAT ASSESSEE HAD WR ITTEN OFF RS. 20 LACS AS BAD DEBTS. 12. LD. DR, AT THIS JUNCTURE, SUBMITTED THAT HAD THE AMOUNT TO BE ACTUALLY BAD, ASSESSEE WOULD HAVE INITIATED SOME LE GAL PROCEEDINGS AGAINST DELHI STOCK EXCHANGE FOR REFUND OF SUCH HUG E MONEY. HE SUBMITTED THAT ASSESSEE DOES NOT FULFIL REQUIREMENT S OF LAW, UNDER SECTION 36 (1) (VII), IN ORDER TO CLAIM SAID AMOUNT AS BAD DEBTS. HE RELIED UPON OBSERVATIONS OF LD.CIT (A) IN SUPPORT O F ITS ARGUMENT. 13. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH S IDES AND IN THE LIGHT OF RECORDS PLACED BEFORE US. ASSESSEE IN PRESENT FACTS OF CASE HAS WRITTEN OFF A SUM OF RS. 20 LACS, WHICH IS ALLEGED TO HAVE BEEN GIVEN TO DELHI STOCK EXCHANGE, TOWARDS ITS MEMB ERSHIP, WHICH WAS DENIED. AS THESE WERE NON-REFUNDABLE IN NAT URE, DELHI STOCK EXCHANGE DID NOT REFUND THE SAID AMOUNT TO AS SESSEE. 14. ASSESSEE BEFORE US HAS NOT ESTABLISHED BY WAY O F DOCUMENTARY EVIDENCES REGARDING ITS DEALING IN COMMODITIES EXCH ANGE/SHARES ETC., FOR WHICH IT COULD HAVE BENEFITED FROM MEMBERS HIP OF DELHI STOCK EXCHANGE. FURTHER REASON FOR REJECTION OF ITS MEMBERSHIP BY DELHI STOCK EXCHANGE IS ALSO NOT KNOWN. IT IS FURTHE R OBSERVED THAT ASSESSEE HAS NOT TAKEN ANY STEPS TO RECOVER THE MON EY FROM DELHI 5 ITA NO. 2283/ DEL/2015 (GLOBAL C APITAL LTD.) STOCK EXCHANGE AND THEREFORE UNDER SUCH CIRCUMSTANC ES WE DO NOT SEE NECESSARY FULFILMENT OF SECTION 36(1)(VII) OF T HE ACT, IN ANY MANNER WHATSOEVER. WE THEREFORE DO NOT FIND ANY REAS ON TO INTERFERE WITH OBSERVATIONS OF LD. CIT (A) AND THE SAME IS UPH ELD. ACCORDINGLY GROUND RAISED BY ASSESSEE STANDS DISMISSED. 15. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH AUGUST, 2018. SD/- SD/- (R.K.PANDA) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 29 TH AUGUST, 2018 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT - TRUE COPY - BY ORDE R, ASSISTANT REGISTRAR ITAT DELHI BENCHES 6 ITA NO. 2283/ DEL/2015 (GLOBAL C APITAL LTD.) DATE OF DICTATION 2 4.08.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 2 7 .08.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 2 7 . 0 8 . 2 0 1 8 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 2 9 . 0 8 . 2 0 1 8 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 2 9 . 0 8 . 2 0 1 8 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 2 9 . 0 8 . 2 0 1 8 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 2 9 . 0 8 . 2 0 1 8 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER