M/S. MONEY CARE SECURITIES & FINANCIAL SERVICES LTD., MUMBAI V. THE ITO 4(3)(3), MUMBAI

ITA 4331/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0968 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 13-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 20-06-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HARIGOVIND SINGH
• Assessee Lawyers: KIRIT S SANGHVI
• Keywords: Non-deduction of tax; Bad and doubtful debts; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI J.SUDHAKAR REDDY, AM & SHRI V.DURGA RAO , JM ITA NO.4331/MUM/2008 : ASST.YEAR 2005-2006 ITA NO.2584/MUM/2009 : ASST.YEAR 2006-2007 M/S.MONEY CARE SECURITIES & FINANCIAL SERVICES LIMITED, B-402, VICTORY PARK OM SHANTI CHOWK, CHANDAVARKAR ROAD BORIVALI (WEST), MUMBAI 400 092. PA NO.AAACM4056H. VS. THE INCOME TAX OFFICER WARD 4(3)(3) MUMBAI. (APPELLANT) (RESPONDENT) ITA NO.4512/MUM/2008 : ASST.YEAR 2005-2006 ITA NO.3592/MUM/2009 : ASST.YEAR 2006-2007 THE INCOME TAX OFFICER WARD 4(3)(3) MUMBAI. VS. M/S.MONEY CARE SECURITIES & FINANCIAL SERVICES LIMITED, B-402, VICTORY PARK OM SHANTI CHOWK, CHANDAVARKAR ROAD BORIVALI (WEST), MUMBAI 400 092. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI HARI GOVIND SINGH ASSESSEE BY : SHRI KIRIT S.SANGHVI O R D E R PER V.DURGA RAO, JM : THESE ARE FOUR CROSS APPEALS AND ARE DIRECTED AG AINST SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX ( APPEALS) DATED 2 ND MAY, 2008 FOR ASSESSMENT YEAR 2005-2006 AND DATED 24 TH MARCH, 2009 FOR ASSESSMENT YEAR 2006-2007. AS THE ISSUES ARISE IN ALL THESE APPEALS ARE COMMON, FOR THE SAKE OF CONVENIENCE, THEY ARE HEARD TOGETHER AND DISPOSED O FF BY THIS COMMON ORDER. 2. WE HAVE HEARD SHRI KIRIT S.SANGHVI, THE LEARNED COUNSEL FOR THE ASSESSEE AND SHRI HARI GOVIND SINGH, THE LEARNED DEPARTMENTA L REPRESENTATIVE. ASSESSEES APPEAL : ITA NO.4331/MUM/2008 : ASST. YE AR 2005-2006. 3. GROUND NOS. 1 TO 3 IS ON THE ISSUE OF DISALLOWAN CE OF TRANSACTION CHARGES PAID BY THE ASSESSEE TO BOMBAY STOCK EXCHANGE / NATIONAL STOCK EXCHANGE ON THE ITA NOS.4331 & 4512/MUM/2008 ITA NOS.3592 & 2584/MUM/2009 M/S.MONEY CARE SECURITIES & FINANCIAL SERVICES PVT .LTD. 2 GROUND THAT NO TAX DEDUCTED AT SOURCE MADE U/S.194J THUS REQUIRING DISALLOWANCE U/S.40(A)(IA) OF THE ACT. THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE ITAT MUMBAI BENCHES IN DCIT VS. ANGEL BROKING LTD. [(2010) 35 SOT 457 (MUM.)] , DCIT VS. SONAL SHARES & STOCK BROKERS PVT. LTD. ITA NO.744/MUM/2009 DATED 23 RD FEBRUARY, 2010 . RESPECTFULLY FOLLOWING THE SAME, GROUND NOS.1 TO 3 OF THE ASSESSEES APPEAL ARE ALLO WED. 4. COMING TO GROUND NO.4 AND 5, THESE ARE IN RELATI ON TO THE DENIAL OF SET OFF OF LOSS BY APPLYING EXPLANATION TO SECTION 73 OF THE ACT. THE ASSESSEE HAS NOT PRE SSED THIS GROUND AND HENCE THE SAME IS DISMISSED AS NOT PRESSED. 5. GROUND NO.6 IS ON THE ALLOCATION OF EXPENSES BET WEEN SPECULATIVE AND NON- SPECULATIVE BUSINESS. BOTH THE PARTIES SUBMITTED TH AT FOR THE EARLIER ASSESSMENT YEAR IN ASSESSEES OWN CASE IN ITA NO.1758/MUM/2006 THE E BENCH OF THE TRIBUNAL VIDE ITS ORDER DATED 23.1.2009 SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. CONSISTENT WITH THE VIEW TAKEN THEREIN WE REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE OF ALL OCATION OF EXPENSES TOWARDS SPECULATION BUSINESS AND NON-SPECULATION BUSINESS, AFTER TAKING INTO CONSIDERATION THE DETAILS THAT ARE PROVIDED BY THE ASSESSEE. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR AS SESSMENT YEAR 2005-2006 IS ALLOWED IN PART. REVENUES CROSS APPEAL : ITA NO.4512/MUM/2008 : ASS T. YEAR 2005-2006. 7. FIRST GROUND IS ON THE ISSUE OF ALLOWABILITY OF BAD DEBT IN THE CASE OF STOCK BROKER, WHEN THE UNDISPUTED FACT IS THAT THE BAD DE BTS HAVE BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT. THIS ISSUE IS COVERED BY THE ORDE R OF THE SPECIAL BENCH C OF ITAT MUMBAI BENCHES IN THE CASE OF DCIT VS. SHRI SHREYAS S. MORAKHIA IN ITA ITA NOS.4331 & 4512/MUM/2008 ITA NOS.3592 & 2584/MUM/2009 M/S.MONEY CARE SECURITIES & FINANCIAL SERVICES PVT .LTD. 3 NO.3374/MUM/2004 DATED 16 TH JULY, 2010. RESPECTFULLY FOLLOWING THE SAME, WE DISMISS GROUND NO.1 OF THE REVENUES APPEAL. 8. GROUND NO.2 IS ON THE ISSUE WHETHER THE FIRST AP PELLATE AUTHORITY WAS RIGHT IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFF ICER, IN RESPECT OF V-SAT CHARGES ON THE GROUND THAT NO DEDUCTION OF TAX HAS BEEN MADE U/S.195J. WHILE DEALING WITH GROUND NOS. 1 TO 3 OF THE ASSESSEES A PPEAL, WE HAVE FOLLOWED THE DECISIONS IN THE CASE OF THE ITAT MUMBAI BENCHES IN DCIT VS. ANGEL BROKING LTD. [(2010) 35 SOT 457 (MUM.)] , DCIT VS. SONAL SHARES & STOCK BROKERS PVT. LTD. ITA NO.744/MUM/2009 DATED 23 RD FEBRUARY, 2010, WHEREIN WE HAVE ALLOWED THE CLAIM OF THE ASSESSEE . RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORD ER OF THE FIRST APPELLATE AUTHORITY AND DISMISS THIS GROUND O F THE REVENUE. 9. GROUND NOS. 3 AND 4 ARE GENERAL IN NATURE. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ASSESSEES APPEAL : ITA NO.2584/MUM/2009 : ASST. YE AR 2006-2007. 11. GROUND NO.1 OF THE ASSESSEES APPEAL IS SIMILAR TO GROUND NO.1 OF THE ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2005-2006 . CONSISTENT WITH THE VIEW TAKEN THEREIN, WE FOLLOW THE DECISION OF THE CO-ORD INATE BENCH OF THE TRIBUNAL IN DCIT VS. ANGEL BROKING LTD. [(2010) 35 SOT 457 (MUM .)] , DCIT VS. SONAL SHARES & STOCK BROKERS PVT. LTD. ITA NO.744/MUM/2009 DATED 23 RD FEBRUARY, 2010 . RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE ASSE SSING OFFICER TO ALLOW THIS CLAIM OF THE ASSESSEE. 12. GROUND NO.2 IS ON THE ALLOCATION OF EXPENSES BE TWEEN SPECULATIVE BUSINESS AND NON-SPECULATIVE BUSINESS. CONSISTENT WITH THE V IEW TAKEN BY US IN ASSESSMENT YEAR 2005-2006, WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER BACK TO THE ITA NOS.4331 & 4512/MUM/2008 ITA NOS.3592 & 2584/MUM/2009 M/S.MONEY CARE SECURITIES & FINANCIAL SERVICES PVT .LTD. 4 FILE OF ASSESSING OFFICER FOR DECISION AFRESH. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN PART. REVENUES CROSS APPEAL : ITA NO.3592/MUM/2009 : ASS T. YEAR 2006-2007. 14. THE FIRST ISSUE RAISED THROUGH GROUND NO.1 IS I N RESPECT OF ALLOWANCE OF BAD DEBTS. CONSISTENT WITH THE VIEW TAKEN IN THE REVENU ES APPEAL FOR ASSESSMENT YEAR 2005-2006, WE FOLLOW THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN DCIT VS. SHRI SHREYAS S. MORAKHIA IN ITA NO.3374/MUM/2004 DATED 16 TH JULY, 2010, WE UPHOLD THE FINDING OF THE FIRST APPELLATE AUTHORITY. THIS GROUND OF THE REVENUE IS DISMISSED. 15. GROUND NOS. 2 TO 7 ARE ON THE ALLOWABILITY OF V -SAT CHARGES, WHEN NO TAX DEDUCTION AT SOURCES IS MADE THEREON. CONSISTENT WI TH THE VIEW TAKEN IN THE REVENUES APPEAL FOR ASSESSMENT YEAR 2005-2006, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) AND DISMISS THIS GROUND OF THE REVEN UE. 16. GROUND NOS.8 AND 9 ARE GENERAL IN NATURE. 17. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED ON THIS 29 TH DAY OF JULY, 2010. SD/- SD/- ( J.SUDHAKAR REDDY ) ( V.DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI : 29 TH JULY, 2010. DEVDAS* ITA NOS.4331 & 4512/MUM/2008 ITA NOS.3592 & 2584/MUM/2009 M/S.MONEY CARE SECURITIES & FINANCIAL SERVICES PVT .LTD. 5 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED. 4. THE CIT(A) XV / XIV, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.