M/s. Shree Investment, Vadodara V. The ACIT, Circle-2(2), Vadodara

ITA 296/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8601 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 05-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Bad and doubtful debts

Judgement Text

ITA NO.296/AHD/2016 ASSESSMENT YEAR: 2008-09 PAGE 1 OF 2 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR VICE PRESIDENT AND MAHAVIR PR ASAD JM] ITA NO.296/AHD/2016 ASSESSMENT YEAR: 2008-09 SHREE INVESTMENT, ...... ...... APPELLANT 3, KARAMDHAM COMPLEX, NEAR AKOTA ATITHI GRUH, AKOTA, VADODARA 390 020. [PAN: ABFFS 8958 K] VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2(2), VADODARA. ....................... RESPONDENT APPEARANCES BY BHAVIN MARFATIA FOR THE APPLICANT S.K. DEV FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 28.09.2018 DATE OF PRONOUNCEMENT : 11.12.2018 O R D E R PER PRAMOD KUMAR, VICE PRESIDENT: 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF LEARNED CIT(A)S ORDER DATED 12 TH OCTOBER 2015, FOR THE ASSESSMENT YEAR 2008-09, ON THE FOLLOWING GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME TAX (A)-5 , VADODARA [THE CIT(A)] ERRED IN FACT AND IN LAW IN CONFIRMI NG THE ACTION OF THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2(2), VADODARA [THE AO] IN DISALLOWING BAD DEBTS AMOUNT ING TO RS.48,64,921/-. 2. WITHOUT PREJUDICE TO THE ABOVE, THE CIT(A) ERRE D IN FACT AND IN LAW IN NOT ALLOWING THE CLAIM U/S.28 AS BUSINESS EXPENDITURE WHILE COMPUTING THE INCOME CHARGEABLE TO TAX. 3. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN N OT ADMITTING THE CONFIRMATION FILED BY THE APPELLANT UNDER RULE 46A PROVING THE FACT THAT DEBT WAS INCURRED AND THEREFORE THE CLAIM OF BAD DEBTS/BUSINESS LOSS WAS AS PER LAW. ITA NO.296/AHD/2016 ASSESSMENT YEAR: 2008-09 PAGE 2 OF 2 2. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIA L FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE BEFORE US IS A SUB-BROKER OF MARF ATIA STOCK BROKING LIMITED. DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE CLA IMED BAD DEBTS OF RS.48,64,921/- BUT THE SAID CLAIM WAS DECLINED ON THE GROUND THAT THE DEBTS WERE IN ACCOUNT OF THE PRINCIPAL AND THAT IN SOME CASE ASSESSEE CONTINUED TO DO BUSINESS WITH THESE PARTIES EVEN AFTER THE DEFAULTS. AGGRIEVED, ASSESS EE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A) DECLINED TO ADMIT THE EVIDENCE TO THE EFFECT THAT THE PRINCIPAL I.E. MARFATIA STOCK BROKING PVT. LTD. HAD DEDUCTED THE SAID SUM FROM BROKERAGE ACCOUNT OF THE ASSESSEE. THE ACTION OF THE ASSESSING OFFICER WAS THUS CONFIRMED. THE ASSE SSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLIC ABLE LEGAL POSITION. 4. WE FIND THAT ONCE IT IS NOT IN DISPUTE THAT THE RELATED BROKERAGE INCOME IS CREDITED TO THE PROFIT AND LOSS ACCOUNT, AS IS THE POSITION NOW IN THIS CASE, THE RELATED UNREALISED VALUE OF SHARES IS DEDUCTIBLE UNDER SECT ION 36(1)(VII) OF THE ACT. IT IS SO HELD BY HONBLE BOMBAY HIGH COURT, AFFIRMING A SPEC IAL BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF DCIT VS. SHREYAS S MORAKHIA (40 SOT 432), IN THE JUDGEMENT REPORTED AS CIT VS. SHREYAS S MORAKHIA [(2012) 342 ITR 285 (BOM)]. ON A PERUSAL OF MATERIAL ON RECORD, WE ARE THUS SATISFIED THAT T HE RELATED INCOME WAS OFFERED TO TAX, AND THE DEBTS IN QUESTION ARE THUS DEDUCTIBLE UNDER SECTION 36(1)((VII). IN ANY EVENT, THIS LOSS IS INCIDENTAL TO THE BUSINESS AS W ELL. IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE DEEM IT FIT AND PROPER TO DELETE THE IMPUGNED DISALLOWANCE OF RS.48,64,921/-. THE ASSES SEE GETS THE RELIEF ACCORDINGLY. 5. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCE D IN THE OPEN COURT TODAY ON THE 11 TH DECEMBER, 2018. SD/- SD/- MAHAVIR PRASAD PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEM BER) AHMEDABAD, DATED THE 11 TH DAY OF DECEMBER, 2018 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD