The ACIT, Circle-3, Ahmedabad V. Shri Rameshchandra D.Chokshi, Ahmedabad

ITA 558/AHD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50498 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 23-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI A.K.GARODIA, ACCOUNTANT MEMBER ITA NO.558/AHD/2011 ASSESSMENT YEAR:2006-07 ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE- 3, INSURANCE BULDING, 5 TH FLOOR, ASHRAM ROAD, AHMEDABAD V/S. RAMESHCHANDRA D CHOKSHI, 3, PATIDAR SOCIETY, B/H, PARADISE PARK, NR. WADAJ, AHMEDABAD PAN NO.ACQPC8981Q (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI MAHESH KUMAR, DR, RESPONDENT BY:- SHRI S.N.DIVETIA, AR DATE OF HEARING 19-08-2011 DATE OF PRONOUNCEMENT 26-08-2011 O R D E R PER A.K.GARODIA, ACCOUNTANT MEMBER:- THIS IS AN REVENUES APPEAL DIRECTED AGAINST THE O RDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-GANDHINAGAR, A HMEDABAD DATED 08- 12-2010 FOR ASSESSMENT ORDER 2006-07. 2. GROUND RAISED BY REVENUE ARE AS UNDER:- 1. THE LD. CIT(APPEALS) ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.11,89,070/- MADE ON ACCOUNT OF B AD DEBTS BY THE A.O. ITA NO.558/AHD/2011 A .Y.2006-07 ACIT, CIR-3, ABD V. RAMESHCHANDRA D CHOKSHI PAGE 2 3. THE BRIEF FACTS ARE THAT IT IS NOTED BY THE ASSE SSING OFFICER IN PARA-3 OF THIS ASSESSMENT ORDER THAT IN THE PROFIT AND LOSS A CCOUNT, THE ASSESSEE HAS DEBITED BAD DEBTS OF RS.11,89,070/-. IT IS ALSO NOT ED BY AO THAT ASSESSEE IS A SHARE SUB-BROKER AND HENCE, FURTHER CLARIFICATION W AS DEEMED NECESSARY IN RESPECT OF ALLOWABILITY OF BAD DEBTS. AO HAS CITED TWO DECISIONS OF TRIBUNAL I.E. IN THE CASE OF INDIA INFOLINE SECURITIES PVT. LTD. V. ACIT , ITA NO.2584/M/2006 AND IN THE CASE OF M/S. KANAK N SHAH V. ACIT ITA NO.2617/AHD/2007 . THE AO ASKED THE ASSESSEE AS TO WHETHER THE AMOUNT WAS TAKEN INTO ACCOUNT FOR THE INCOME IN THIS YEAR OR ANY EARLIER PREVIOUS YEA R. IT IS FURTHER NOTED BY AO THAT HEARING WAS FIXED ON 16-12-2008 BUT ON THAT DA TE, THERE WAS REQUEST FOR ADJOURNMENT AND HEARING WAS ADJOURNED ON 18-07-2008 AND THEREAFTER, THE ASSESSEE DID NOT APPEAR FOR HEARING AND DID NOT FUR NISH ANY SUBMISSION. THE AO DISALLOWED THE CLAIM OF ASSESSEE REGARDING BAD D EBT. BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CI T(APPEALS) WHO HAS DELETED THE DISALLOWANCE BY FOLLOWING THE TRIBUNAL S DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05. NOW, THE REVE NUE IS IN APPEAL BEFORE US. 4. IT IS SUBMITTED BY LD. DR OF THE REVENUE THAT SI NCE ONLY BROKERAGE INCOME WAS CONSIDERED BY ASSESSEE AS HIS INCOME, TH E BAD DEBT FOR THE WHOLE AMOUNT RECEIVABLE FROM THE CUSTOMER CANNOT BE ALLOWED AS DEDUCTION BECAUSE IT DOES NOT FULFILL THE REQUIREME NTS OF U/S.36(2). AS AGAINST THIS, LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(APPEALS). HE IS ALSO SUBMITTED A COPY OF THE TR IBUNALS ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05 IN ITA NO.1015/AHD/2008 DATED 19-08-2010. IT WAS SUBMITTED THAT FACTS IN T HE PRESENT YEAR ARE IDENTICAL AND HENCE THE ORDER OF L D. CIT(APPEALS) SHOULD BE CONFIRMED. ITA NO.558/AHD/2011 A .Y.2006-07 ACIT, CIR-3, ABD V. RAMESHCHANDRA D CHOKSHI PAGE 3 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE O RDER OF LOWER AUTHORITIES AND TRIBUNALS DECISION CITED BY LD. AR OF THE ASSESSEE WHICH IS RENDERED IN ASSESSEES OWN CASE FOR ASSESS MENT YEAR 2004-05. IN THE TRIBUNALS ORDER, TRIBUNAL HAS CONSIDERED TH E JUDGMENT OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT V. BONANZA PORTFOLIO LTD. (2010) 320 ITR 178 (DEL) AND ALSO ANOTHER JUDGMENT OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT V. D.B (INDIA) SECURITIES (2009) 318 ITR 26 (DEL). IT IS ALSO NOTED BY TRIBUNAL THAT IN THOSE TWO CASES, IT WAS HELD BY HONBLE DELHI HIGH COURT THAT MONEY REC EIVABLE BY THE ASSESSEE AS SHARE BROKER FROM HIS CLIENTS AGAINST P URCHASE OF SHARES MADE ON THEIR BEHALF HAS TO BE TREATED AS DEBT AN D SINCE THE BROKERAGE PAID BY CLIENT WAS A PART OF THAT DEBT AND THAT PAR T HAD BEEN TAKEN INTO ACCOUNT IN COMPUTATION OF INCOME, THE CONDITION STI PULATED IN U/S.36(1)(VII) AND 36(2) STOOD SATISFIED AND THE A SSESSEE WAS ENTITLED FOR DEDUCTION IN RESPECT OF SAID AMOUNT SINCE IT HAD BE COME BAD. IT IS ALSO NOTED BY THE TRIBUNAL THAT AGAINST THE DECISION OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF D.B.(INDIA) SECURITIES (SUPRA), SLP WAS FILED BY THE DEPARTMENT BEFORE HONBLE APEX COURT A ND THE SAME WAS DISMISSED BY HONBLE APEX COURT IN THEIR DECISION D ATED 30-04-2010 IN CC 6427/2010 TRIBUNAL HAS ALSO NOTED A DECISION OF SPECIAL BENC H OF THE TRIBUNAL IN THE CASE OF SHRI SHREYAS S MORAKHIA IN ITA NO.3374/MUM/2004 DATED 16-07-2010 IN WHICH THE SPECIAL BENCH HAS FOLLOWED THE JUDGMENT OF HONBLE DELHI HIGH COURT A ND DECIDED SIMILAR ISSUE IN FAVOUR OF ASSESSEE. HENCE, IN OUR CONSIDER ED OPINION, THE TWO TRIBUNALS DECISION CITED BY ASSESSING OFFICER IN H IS ASSESSMENT ORDER ARE OF NO RELEVANCE IN VIEW OF SUBSEQUENT TWO JUDGM ENTS OF HONBLE DELHI HIGH COURT WHICH ARE IN FAVOUR OF ASSESSEE AN D THE SLP OF THE DEPARTMENT AGAINST ONE SUCH DECISION OF HONBLE DEL HI HIGH COURT HAS ITA NO.558/AHD/2011 A .Y.2006-07 ACIT, CIR-3, ABD V. RAMESHCHANDRA D CHOKSHI PAGE 4 BEEN DISMISSED BY HONBLE APEX COURT AND MOREOVER, THE SPECIAL BENCH OF TRIBUNAL HAS ALSO DECIDED SIMILAR ISSUE IN FAVOU R OF THE ASSESSEE BY FOLLOWING TWO JUDGMENT OF HONBLE DELHI HIGH COURT. MOREOVER. IN ASSESSEES OWN CASE, THE TRIBUNAL HAS DECIDED IN FA VOUR OF ASSESSEE IN ASSESSMENT YEAR 2004-05 AS PER TRIBUNALS DECISION CITED ABOVE, COPY OF WHICH IS AVAILABLE ON RECORD. WE THEREFORE DO NO T FIND ANY REASONS TO TAKE A CONTRARY VIEW IN THE PRESENT YEAR. HENCE, WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(APPEALS). 6. IN THE RESULT, REVENUES APPEAL IS DISMISSSED. ORDER PRONOUNCED IN OPEN COURT ON 26/08/2011 SD/- SD/- (D.K. TYAGI) (A.K.GARODIA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, DATED : 26/08/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-II, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD