ANGEL COMMODITIES BROKING P.LTD, MUMBAI V. DCIT CEN CIR 46, MUMBAI

ITA 3994/MUM/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71567 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 17-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: D V LAKHANI
• Keywords: Principle of natural justice; Non-deduction of tax; Bad and doubtful debts; Difference of opinion; Revenue expenditure; Capital expenditure

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. 3994/MUM/2013 ( / ASSESSMENT YEAR: 2009-10) ANGEL COMMODITIES BROKING PVT. LTD. G-1, AKRUTI TRADE CENTRE, ROAD NO.7, MIDC MAROL, ANDHERI (E), MUMBAI-400 093 / VS. DY. CIT, CENTRAL CIRCLE 46, R. NO.659, 6 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400 020 ./ ./PAN/GIR NO. AAACK 3472 D ( /APPELLANT ) : ( !' / RESPONDENT ) # / APPELLANT BY : SHRI D. V. LAKHANI !' $ # / RESPONDENT BY : SHRI S. S. RANA % &'( $ )* / DATE OF HEARING : 04.09.2013 +,- $ )* / DATE OF PRONOUNCEMENT : 23.10.2013 . / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-36, MUMBAI (CIT(A) FOR SH ORT) DATED 28.03.2013, DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A. Y.) 2009-10 VIDE ORDER DATED 18.12.2011. 2 ITA NO. 3994/MUM/2013 (A.Y. 2009-10) ANGEL COMMODITIES BROKING PVT. LTD. VS. DY. CIT 2. THE APPEAL RAISES SEVERAL GROUNDS, WHICH WE SHAL L TAKE UP IN SERIATIM. THE FIRST TWO GROUNDS ARE IN RESPECT OF THE DISALLOWANCE OF T HE ASSESSEES CLAIM U/S. 36(1)(VII) TOWARD BAD DEBTS WRITTEN OFF AS IRRECOVERABLE IN TH E SUM OF RS.61,34,006/-, ON THE GROUND OF NON-SATISFACTION OF THE CONDITION OF SECTION 36( 2) OF THE ACT. THIS IS FOR THE REASON THAT THE ASSESSE, BEING A MEMBER OF TWO STOCK EXCHANGES, NAMELY, NATIONAL COMMODITY & DERIVATIVES EXCHANGE LIMITED (NCDEX) AND MULTI COMM ODITY EXCHANGE (MCX), THE TRADE DEBT ARISING IN THE COURSE OF HIS BUSINESS AN D, FURTHER, SATISFYING THE CONDITION OF SECTION 36(2)(I), SO THAT THE RECEIPT WOULD HAVE SW ELLED THE PROFITS FOR ANY YEAR, AS EXPLAINED BY THE APEX COURT IN A.V. THOMAS AND CO. LTD. VS. CIT [1963] 48 ITR 67 (SC), COULD ONLY BE IN RESPECT OF THE BROKERAGE CHARGED B Y THE ASSESSEE TO ITS CLIENTS FOR THE SERVICES RENDERED THERETO AS SUCH MEMBER. FURTHER, THE APPELLANT HAD FAILED TO FURNISH THE RELEVANT DETAILS; TO EXPLAIN AS TO WHEN THE SAID EX PENDITURE WAS INCURRED; TO SHOW IF IT WAS EVER ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT SO AS TO SATISFY THE CONDITION OF SECTION 36(2) R/W S. 36(1)(VII). THE SAME THEREFORE DID NOT FIND FAVOUR WITH THE REVENUE DESPITE RELIANCE BY THE ASSESSEE ON THE DECISION BY THE HON 'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHREYAS S. MORAKHIA [2012] 342 ITR 285 (BOM). AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 3. BEFORE US, THE ASSESSEE WOULD PLACE RELIANCE ON A SERIES OF DECISIONS BY THE TRIBUNAL IN ITS CASE AS WELL AS GROUP COMPANIES, MA KING A COMPILATION OF THE SAME, WHICH IS PLACED BY WAY OF A SEPARATE PAPER-BOOK. THE LD. DEPARTMENTAL REPRESENTATIVE (DR), ON THE OTHER HAND, WOULD RELY ON THE ORDERS OF THE AUT HORITIES BELOW. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 4.1 THAT THE WRITE OFF IN ACCOUNTS OF A DEBT AS IRR ECOVERABLE IS ITSELF SUFFICIENT FOR THE CLAIM OF DEDUCTION U/S. 36(1)(VII) STANDS SINCE SET TLED BY THE APEX COURT IN T.R.F. LTD. VS. CIT [2010] 323 ITR 397 (SC), UNLESS OF-COURSE THE WRIT E OFF ITSELF IS NOT BONA FIDE (REFER: DY.CIT VS. OMAN INTERNATIONAL BANK SAOG [2009] 313 ITR 128 (BOM)). THE REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO IMPUGN TH E GENUINENESS OF THE WRITE OFF, WHICH 3 ITA NO. 3994/MUM/2013 (A.Y. 2009-10) ANGEL COMMODITIES BROKING PVT. LTD. VS. DY. CIT THEREFORE HAS TO BE REGARDED AS IN SATISFACTION OF THE MANDATE OF SECTION 36(1)(VII). AS REGARDS THE ELIGIBILITY OF ENTIRE AMOUNT RECEIVABLE FROM THE CLIENTS BY A MEMBER OF A STOCK EXCHANGE AS A DEBT, I.E., IN TERMS OF SECTION 36(1) (VII) R/W S. 36(2)(I), AS AGAINST ONLY THE BROKERAGE CHARGED THERETO, SO AS TO BE INCLUSIVE OF THE AMOUNT DUE ON THE ACCOUNT OF THE CONTRACTS ENTERED INTO FOR AND ON BEHALF OF THE CLI ENTS, STANDS SINCE CLARIFIED BY THE HONBLE HIGH COURT IN THE CASE OF SHREYAS S. MORAKHIA (SUPRA). WE ARE AS SUCH UNABLE TO UNDERSTAND THE INSISTENCE OF THE REVENUE FOR THE AS SESSEE TO SHOW THE ENTIRE AMOUNT CLAIMED AS HAVING BEEN ROUTED THROUGH THE PROFIT AN D LOSS ACCOUNT, I.E., AT ANY TIME ANTERIOR TO ITS WRITE OFF, IN ORDER TO QUALIFY AS A DEBT U/S.36(1)(VII). FURTHER, THE ARGUMENT THAT THE ASSESSEE HAD NOT FOLLOWED THE PRESCRIBED P ROCEDURE, TAKING ADEQUATE MARGIN PRIOR TO THE EXECUTION OF THE TRADE, LIMITING ITS EXPOSUR E TO RISK TO THAT EXTENT, IN WHICH EVENT NO LOSS TO IT COULD ARISE, STANDS CONSIDERED BY THE SP ECIAL BENCH IN THE CASE OF SHREYAS S. MORAKHIA [2010] 40 SOT 432 (MUM-SB)(5 ITR (TRIB) 1), WHICH STANDS SINCE APPROVED OF BY THE HONBLE HIGH COURT SUPRA. THE SAME WOULD, THEREFORE, BE OF NO MOMENT. 4.2 AS REGARDS THE NON-FURNISHING OF THE REQUISITE DETAILS, DISQUALIFYING THE ASSESSEES CLAIM, AS ALSO NOTED BY THE LD. CIT(A), WITHOUT DOU BT FURNISHING OF THE RELEVANT DETAILS AND EVIDENCES IS A PRE-REQUISITE, THE CONTENTS OF T HE SHOW CAUSE NOTICE DATED 16.11.2011, REQUIRING THE FOLLOWING, HAVING BEEN REPRODUCED BY THE AO AT PARA 3.1 OF THE ASSESSMENT ORDER, FURTHER STATING OF THE SAME AS HAVING NOT BE EN FURNISHED (AT PARA 3.2 THEREOF): - THE DEBTS REPRESENTING THE AMOUNTS DUE FROM THE C LIENTS; - TREATMENT TO THE MARGIN MONEY, IF ANY, RECEIVED F ROM THE RELEVANT CLIENTS IN ACCOUNTS; & - THE DELIVERY STATUS OF THE RELEVANT CONTRACTS, WI TH CORRESPONDING ACCOUNTING TREATMENT. IT IS THIS FAILURE ON THE PART OF THE ASSESSEE THAT WE CONSIDER AS RELEVANT (FROM THE STAND POINT OF ADJUDICATION), AND RESPONSIBLE FOR THE DEN IAL OF THE ASSESSEES CLAIM, WHO WE FIND TO HAVE FURNISHED THE PARTY-WISE DETAILS OF THE DEB TS WRITTEN OFF, ALSO CLARIFYING - BEFORE THE LD. CIT(A) THOUGH, THAT THE SAME HAVE BEEN WRIT TEN OFF AFTER ADJUSTING THE MARGIN MONEY RECEIVED FROM THE CLIENTS (PB PAGES 32-44 ). THE SAID DETAILS, HOWEVER, AS IT WOULD 4 ITA NO. 3994/MUM/2013 (A.Y. 2009-10) ANGEL COMMODITIES BROKING PVT. LTD. VS. DY. CIT APPEAR TO US, STOOD FURNISHED BEFORE THE FIRST APPE LLATE AUTHORITY, ALSO EXPLAINING TO HAVE ATTEMPTED, THOUGH IN VAIN, TO RECOVER THE AMOUNTS F ROM THE PARTIES, LEADING TO THE IMPUGNED WRITE OFF (REFER PARA 4 OF ITS LETTER DATE D 07.02.2013/PB PGS.29-30 ). THE SAID WRITE OFF, BEING TO THE CREDIT OF THE RESPECTIVE AC COUNT OF THE CUSTOMER, A TRADE DEBTOR, ONLY THE DEBTORS CONSIDERED GOOD FIND REFLECTION I N THE BALANCE-SHEET AS AT THE YEAR-END, I.E., 31.03.2009 (REFER SCHEDULE F THEREOF/PB PGS.1 -27 ). THE ASSESSEE THUS HAS A STRONG PRIMA FACIE CASE, WHICH IN FACT STANDS STATED VIDE ITS WRITTEN NOTE AT PB PG.31. IN VIEW THEREOF, THE LD. CIT(A) OUGHT TO HAVE IN OUR VIEW, RATHER THAN RELYING ON THE SAID NON- SUBMISSION, CAUSED THE SAME TO BE PRODUCED, AND DEC IDED THE MATTER IN ACCORDANCE WITH, AND FOLLOWING DUE PROCESS OF, LAW. WE ARE IN FACT A LSO AT LOSS TO UNDERSTAND AS TO WHY; IT CLAIMING THE FACTS OF ITS CASE AS BEING COVERED BY THE DECISION BY THE SPECIAL BENCH IN THE CASE OF SHREYAS S. MORAKHIA (SUPRA), AND WHICH STANDS FURTHER UPHELD BY THE HO N'BLE JURISDICTIONAL HIGH COURT, DID NOT THE ASSESSEE FUR NISH THE RELEVANT DETAILS BEFORE THE ASSESSING AUTHORITY. MERE STATING OR MAKING BALD ST ATEMENTS, WE MAY CLARIFY, IS NOT SUFFICIENT INASMUCH AS FACTS NEED TO BE PROVED WITH MATERIALS/EVIDENCES; IN FACT STOOD SPECIFICALLY CALLED FOR BY THE ASSESSING AUTHORITY, WHICH IS IN LAW OBLIGED TO VERIFY AND BE SATISFIED IN THE MATTER AS TO THE TRUTH AND THE COR RECTNESS OF WHAT IS BEING STATED/CLAIMED. THE SAME HAVING NOT BEEN DONE, WE ONLY CONSIDER IT FIT AND PROPER IN THE FACTS AND CIRCUMSTANCES OF THE CASE TO RESTORE THE MATTER BAC K TO THE FILE OF THE A.O. TO ALLOW THE ASSESSEE AN OPPORTUNITY TO ESTABLISH THE FACTS OF I TS CASE AS BEING COVERED BY THE DECISIONS BEING RELIED UPON BY IT. THE AO SHALL DECIDE THE SA ME IN ACCORDANCE WITH LAW PER A SPEAKING ORDER. WE MAY FURTHER CLARIFY THAT APART FROM ITS OBLIGATION TO ESTABLISH THE FACTS AS CLAIMED AS TRUE AND CORRECT, I.E., THE FACTUAL A SPECT, THE ASSESSEES CASE IN OUR VIEW ADMITS OF NO DIFFERENCE OF OPINION IN VIEW OF THE B INDING DECISION BY THE HONBLE HIGH COURT IN THE CASE OF SHREYAS S. MORAKHIA (SUPRA). WE DECIDE ACCORDINGLY. 5. GROUND NOS. 3 TO 5 OF THE ASSESSEES APPEAL ARE IN RESPECT OF A DISALLOWANCE IN THE SUM OF RS.1,08,92,401/- QUA EXPENSES TOWARD VSAT AND LEASE LINE CHARGES, PAID BY THE ASSESSEE TO THE STOCK EXCHANGES OF WHICH IT IS A ME MBER. THE SAME STAND DISALLOWED U/S. 5 ITA NO. 3994/MUM/2013 (A.Y. 2009-10) ANGEL COMMODITIES BROKING PVT. LTD. VS. DY. CIT 40(A)(IA) IN VIEW OF THE ADMITTED NON-DEDUCTION OF TAX AT SOURCE, WHICH IN VIEW OF THE REVENUE THE SAID SUMS ARE EXIGIBLE TO U/S. 194J, BE ING ONLY FEES FOR TECHNICAL SERVICES. THIS ASPECT STANDS SINCE SETTLED BY THE HONBLE HIG H COURT IN THE CASE OF CIT V. KOTAK SECURITIES LTD. [2012] 340 ITR 333 (BOM) AND CIT V. ANGEL CAPITAL & DEBT MARKET LTD . (IN ITA(L) NO. 475 OF 2011 DATED 28/7/2011). ACCORD INGLY, WE DO NOT FIND MERIT IN THE REVENUES CASE, AND DIRECT FOR THE DELETION OF THE SAME. WE DECIDE ACCORDINGLY. 6. GROUND NO. 6 OF THE ASSESSEES APPEAL IS IN RESP ECT OF ASSETS WRITTEN OFF IN THE SUM OF RS.6,33,932/-. THE DISALLOWED STOOD EFFECTED AND SUSTAINED BY THE REVENUE ON THE GROUND THAT THE SAME IS IN THE NATURE OF A CAPITAL EXPENDITURE AND, ACCORDINGLY, NOT ADMISSIBLE U/S.37(1), WITH REFERENCE TO THE DECISIO NS AS IN THE CASE OF CIT VS. ASHOK LEYLAND LTD. [1972] 86 ITR 549 (SC), D. P. CHIRANIA AND COMPANY VS. CIT [1978] 112 ITR 12 (KAR) AND JAGAT BUS SERVICE VS. CIT [1950] 18 ITR 13 (ALL) (AT PG.23), SO THAT AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 7. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE ASSESSEE, AS A MATTER OF ITS ACCOUNTING POLICY, WRITES OFF THE VSA T CHARGES PAID BY IT TO MCX EQUALLY OVER A PERIOD OF 3 YEARS. THE IMPUGNED CLAIM THUS R EPRESENTS 1/3 RD THE CHARGES PAID DURING THE EARLIER YEARS, SO WRITTEN OFF. THE ASSES SEES CASE IS THAT THE EXPENDITURE IS ONLY REVENUE IN NATURE, AND HAS BEEN WRITTEN OFF IN ACCO UNTS OVER THE PERIOD OF ITS ANTICIPATED BENEFIT. HOWEVER, IT COULD NOT BEFORE US SHOW ANY B ASIS FOR THE WRITE OFF OVER A PERIOD OF THREE YEARS, AS WHERE THE BENEFIT ARISING OUT OF TH E SAID CHARGES IS FOR A FIXED TERM, ETC. THERE IS NO CONCEPT OF DEFERRED REVENUE EXPENDITURE UNDER THE ACT, SO THAT ONCE AN EXPENDITURE IS A REVENUE EXPENDITURE, THE SAME WOUL D STAND TO BE ALLOWED IN THE YEAR IN WHICH THE SAME IS INCURRED, EVEN AS THE BENEFIT THE REOF MAY ARISE OR CONTINUE TO ARISE FOR THE SUBSEQUENT PERIOD AS WELL. FURTHER, WE FIND THA T THE CHARGES ARE REQUIRED TO BE PAID ON A YEAR TO YEAR BASIS. NO CASE FOR THE ADMISSIBILITY OF THE SAID CHARGES, ARISING FOR AND PERTAINING TO THE EARLIER YEARS, DESPITE THE RELIAN CE BY THE LD. AR BEFORE US ON THE DECISION IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPN. LTD. VS. CIT [1997] 225 ITR 802 6 ITA NO. 3994/MUM/2013 (A.Y. 2009-10) ANGEL COMMODITIES BROKING PVT. LTD. VS. DY. CIT (SC), WHICH IS CLEARLY DISTINGUISHABLE ON FACTS, IS MADE OUT. AGAIN, NO CASE FOR VIOLATION OF ANY PRINCIPLE OF NATURAL JUSTICE, AS STATED IN I TS GROUND, STOOD MADE BY THE ASSESSEE BEFORE US, NOR IS THE SAME INFERABLE FROM THE MATER IAL ON RECORD. WE DECIDE ACCORDINGLY, CONFIRMING THE DISALLOWANCE. 8. THE SEVENTH GROUND ASSUMED BY THE ASSESSEE IS IN RESPECT OF DISALLOWANCE IN THE SUM OF RS.84,37,655/-, FORMING PART OF THE EXPENDIT URE ON BROKERAGE AND COMMISSION, INCURRED AND CLAIMED IN THE SUM OF RS.16.85 CRORES FOR THE CURRENT YEAR. THE ASSESSEE WAS IN THE COURSE OF THE ASSESSMENT PROCEEDINGS REQUIRE D TO FURNISH PAN AND ADDRESSES OF THE VARIOUS PERSONS TO WHOM THE PAYMENTS IN RELATION TO THE SAID EXPENDITURE STOOD MADE. THE ASSESSEE HAVING FAILED TO FURNISH THE SAME IN R ESPECT OF 10 PARTIES, LISTED AT PARA 6.1 OF THE ASSESSMENT ORDER, THE A.O. DISALLOWED THE EX PENDITURE QUA THE SAME, STATING THAT THE ASSESSEE HAD FAILED TO DISCHARGE ITS PRIMARY OB LIGATION, AND THAT IN THE ABSENCE OF THESE PRELIMINARY DETAILS NO FURTHER INVESTIGATION OR VERIFICATION IN THE MATTER COULD BE CARRIED OUT. THE RELEVANT DETAILS, I.E., PAN AND AD DRESSES OF THE SAID PARTIES, STOOD FURNISHED IN THE APPELLATE PROCEEDINGS. HOWEVER, NO DOCUMENTARY EVIDENCE TOWARD THE SERVICES RENDERED BY THE SAID PARTIES HAVING BEEN FURNISHED, WHO WERE CLAIMED TO BE REGULAR BROKERS AND PAID FOR HAVING INTRODUCED PLAN S TO THE APPELLANT, THE DISALLOWANCE STOOD CONFIRMED, SO THAT, AGGRIEVED, THE ASSESSEE I S IN SECOND APPEAL. 9. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. ADMITTEDLY, THE REQUISITE DETAILS, WHICH WERE NOT FURNISHED IN THE ASSESSMENT PROCEEDINGS, STOOD FURNISHED AND ADMITTED AT THE FIRST APPELLATE STAGE (PB PG. 4 6), SO THAT THIS ASPECT IS NO LONGER RELEVANT OR IN ISSUE. WE HAVE PERUSED THE REMAND RE PORT DATED 01.03.2013 (PB PGS. 52- 61), AS WELL AS THE ASSESSEES REPLY DATED 22.03.20 13 (PB PGS. 62-65), TO FIND THE MATTER AS INDETERMINATE. THE BASIS OF THE DISALLOWANCE IN THE FINAL ANALYSIS IS THE NON-DISCHARGE OF THE ONUS U/S.37(1) ON IT BY THE ASSESSEE. IN THE GIVEN FACTS AND CIRCUMSTANCES, AS WELL AS IN THE INTEREST OF JUSTICE, WE THEREFORE ONLY CO NSIDER IT FIT AND PROPER THAT THE MATTER IS RESTORED BACK TO THE FILE OF THE A.O. FOR AN ADJUDI CATION AFRESH PER A SPEAKING ORDER AFTER ALLOWING THE ASSESSEE REASONABLE OPPORTUNITY TO PRE SENT ITS CASE. WE DECIDE ACCORDINGLY. 7 ITA NO. 3994/MUM/2013 (A.Y. 2009-10) ANGEL COMMODITIES BROKING PVT. LTD. VS. DY. CIT 10. VIDE ITS GROUND NOS. 8 & 9, THE ASSESSEE ASSAIL S THE ADDITION FOR RS.17,65,879/- IN RESPECT OF SUMS CREDITED TO THE ACCOUNT SUNDRY COL LECTION FROM CLIENTS A/C. THE ASSESSEE HAVING FAILED TO FURNISH ANY EXPLANATION O R DETAILS IN THE ASSESSMENT PROCEEDINGS, THE SAME CAME TO BE ADDED BY THE A.O. BEFORE THE LD. CIT(A), IT WAS EXPLAINED THAT THE ASSESSEE OPERATES, APART FROM IT S HEAD OFFICE, THROUGH VARIOUS BRANCHES, HAVING A CUSTOMER BASE OF ABOUT FIFTEEN THOUSAND CU STOMERS. AS SUCH, THE CHEQUES ARE RECEIVED BY IT FROM CUSTOMERS LOCATED ALL OVER INDI A, WHICH ARE AT TIMES UNABLE TO BE RECONCILED OR IDENTIFIED WITH A PARTICULAR CUSTOMER . ALL SUCH SUMS ARE CREDITED TO A SEPARATE ACCOUNT, AND TRANSFERRED TO THE ACCOUNT OF THE RESPECTIVE CUSTOMER ON BEING IDENTIFIED. THIS IS A CONTINUOUS EXERCISE, SO THAT AT ANY GIVEN TIME SUMS CONTINUE TO OUTSTAND IN THIS, SUNDRY ACCOUNT. THE SAME, IT IS F URTHER STATED, IS FAR BELOW THE AMOUNT OUTSTANDING AS AT THE YEAR-END FROM THE SUNDRY DEBT ORS, I.E., IN AGGREGATE, DEPICTING THE RELEVANT FIGURES IN THE TWO CHARTS AS UNDER (PB PG. 47 ): (AMOUNT IN RS. ) TABLE A BALANCE OF SUNDRY COLLECTION FROM CLIENT A/C SR. NO. END OF F.Y. AMOUNT 1 2007-08 (15,30,115) 2 2008-09 (17,65,879) 3 2009-10 (33,98,017) 4 2010-11 (32,83,814) 5 2011-12 (29,05,247) TABLE B OUTSTANDING DEBTORS POSITION FOR PREVIOUS THREE FIN ANCIAL YEARS SR. NO. END OF F.Y. AMOUNT 1 2006-07 4,58,68,802 2 2007-08 9,42,59,542 3 2008-09 34,28,64,606 F.Y. => FINANCIAL YEAR 11. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD. THE ASSESSEES EXPLANATION IS A PLAUSIBLE ONE, AND UNDER REGULAR C IRCUMSTANCES, I.E., ORDINARILY, WOULD 8 ITA NO. 3994/MUM/2013 (A.Y. 2009-10) ANGEL COMMODITIES BROKING PVT. LTD. VS. DY. CIT MERIT ACCEPTANCE. THIS IS AS A SUM TO BE BROUGHT TO THE CHARGE OF TAX AS INCOME HAS TO BE IN THE NATURE OF INCOME, THE ONUS FOR WHICH IS ON T HE REVENUE, WHILE IT IS ONLY THE BROKERAGE AMOUNT INCLUDED IN THE AMOUNT RECEIVED FR OM ITS CLIENTS THAT COULD BE ATTRIBUTED AS OF INCOME NATURE AS FAR AS THE ASSESS EE, A STOCK BROKER, IS CONCERNED. BESIDES, THE ASSESSEE HAS ALSO GIVEN A REASONABLE E XPLANATION AS TO THE SOURCE OF THE SUMS RECEIVED, ALBEIT IMPENDING ADJUSTMENT IN ACCOUNTS I N THE APPROPRIATE DEBTOR ACCOUNT. AT THE SAME TIME, HOWEVER, IN THE FACTS OF THE PRES ENT CASE, WE OBSERVE THAT THE AMOUNT OUTSTANDING IN THE SUNDRY ACCOUNT, RATHER TH AN DECLINING, WITNESSES AN INCREASE OVER TIME, CLEARLY INDICATING LACK OF PROPER PROCED URES IN THE ASSESSEE-COMPANY IN THIS RESPECT. FURTHER, THE ASSESSEE PER ITS BALANCE-SHEE T CLAIMS TO HAVE STATED THE SUNDRY DEBTORS AT AMOUNTS EXPECTED TO BE REALIZED THEREFRO M. AS SUCH, FOR IT TO CONTEND THAT THE SUMS ALREADY RECEIVED WOULD STAND TO BE CONSIDERED OR UNDERSTOOD AS HAVING BEEN RECEIVED THEREFROM, I.E., NETTED FROM THE AMOUNT DU E FROM ITS EXISTING DEBTORS, WHICH IS WHAT THE ASSESSEE STATES IN ESSENCE, IS A CONTRADIC TION IN TERMS. ALSO, IT IS TO BE BORNE IN MIND THAT THE ASSESSEE HAS BEEN CONSISTENTLY CLAIMI NG HUGE SUMS AS BAD DEBTS ON ACCOUNT OF NON- RECOVERY, SO THAT IT MAY WELL BE THAT THE A MOUNTS RECEIVED PERTAIN THERETO, IN WHOLE OR IN PART. UNDER THE GIVEN FACTS AND CIRCUMSTANCES, THEREFORE, THE REVENUES STAND IS TO BE UPHELD, I.E., IN PRINCIPLE. THE ASSESSEE, HOWEVER, WOULD NOT STAND TO BE PREJUDICED, AND MAY CLAIM THE SAME AS DEDUCTION IF AND TO THE EXTEN T ANY AMOUNT SO ADDED IS LOCATED WITH REFERENCE TO THE EXISTING DEBTORS, UPON ADJUSTING T HE SAME IN THEIR RESPECTIVE ACCOUNTS. TOWARD THIS, THE ASSESSEE STATES TO HAVE RECONCILED THE IMPUGNED OUTSTANDING TO THE EXTENT OF RS.9,25,496/-. THE A.O. IS DIRECTED TO VERIFY TH E ASSESSEES CLAIM IN THIS REGARD, AND ALLOW IT RELIEF WHERE AND TO THE EXTENT FOUND CORRE CT. WE DECIDE ACCORDINGLY. 12. THE LAST AND THE TENTH GROUND OF ASSESSEES APP EAL IS IN RESPECT OF INTEREST U/S.234B, AND WHICH WAS ADMITTED BY THE LD. AR DURI NG THE COURSE OF HEARING TO BE ONLY CONSEQUENTIAL INASMUCH AS THE SAID LEVY IS MANDATOR Y. WE ACCORDINGLY DISMISS THE SAME. 9 ITA NO. 3994/MUM/2013 (A.Y. 2009-10) ANGEL COMMODITIES BROKING PVT. LTD. VS. DY. CIT 13. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. /-)0 &12/) $ 3. ' 4 ), 5 6$ 789 3 : 3. ' 4 ) $ ) ;< ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 23, 2 013 SD/- SD/- (I. P. BANSAL) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER % ( MUMBAI; =& DATED : 23.10.2013 '.&../ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. % >) ( ) / THE CIT(A) 4. % >) / CIT CONCERNED 5. A'BC !)&D1 , * D1- , % ( / DR, ITAT, MUMBAI 6. CE2 F( / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , % ( / ITAT, MUMBAI