SSV SHARES & STOCK BROKERS P. LTD., MUMBAI V. A.C.I.T. 4(2), MUMBAI

ITA 6347/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8956 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 14-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V KRISHNAMOORTHY
• Assessee Lawyers: N O N E
• Keywords: Depreciation; Cost of acquisition; Bad and doubtful debts

Judgement Text

ITA NO.6347 OF 2011 SVV SHARES AND STOCK BROKERS PV T LTD MUMBAI PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.6347/MUM/2011 (ASSESSMENT YEAR: 2007-08) SVV SHARES & STOCK BROKERS PVT. LTD., A-1 NAVJEEVAN, 121/127 KAZI SAYED STREET, MASJID (WEST) MUMBAI 400003 PAN: AABCS 5549 Q VS. ACIT 4(2) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY: N O N E DEPARTMENT BY: SHRI V. KRISHNA MOORTHY, DR DATE OF HEARING: 08/08/2012 DATE OF PRONOUNCEMENT: 12/09/2012 O R D E R PER B. RAMAKOTAIAH, A.M. THIS IS AN ASSESSEES APPEAL PREFERRED AGAINST THE ORDER OF THE CIT (A)-8 MUMBAI, DATED 25.07.2011. WHEN THE APPEA L WAS CALLED FOR HEARING, NONE APPEARED ON BEHALF OF ASSESSEE. A FTER HEARING THE LEARNED DR, WE PROCEED TO DECIDE THE APPEAL ON MERI TS, EX-PARTE ASSESSEE. 2. THE GROUNDS RAISED BY ASSESSEE ARE NINE IN NUMBER, BUT GROUND NO.8 IS SUMMATION OF OTHER GROUNDS WHICH IS AS UNDER: GROUND NO.8. LOOKING AT THE ABOVE FACTS, WE REQUES T YOUR HONOUR TO KINDLY ALLOW THE CLAIM FOR BAD DEBTS OF ` .2,30,114.00 AND DEPRECIATION OF ` .24,37,500/-. 3. AS CAN BE SEEN FROM THE ABOVE, THERE ARE TWO ISSUES FOR CONSIDERATION ONE ON THE CLAIM OF BAD DEBTS OF ` 2,30,114/- AND THE OTHER IS CLAIM OF DEPRECIATION OF ` 24,37,500/-. ASSESSEE IS IN THE BUSINESS OF SHARE BROKER AND DECLARED INCOME OF ` 25,61,174/-. WHILE SCRUTINIZING THE RETURN, AO FOLLOWING THE DEC ISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF TECHNO SHA RES AND STOCKS LTD VS. INCOME TAX OFFICER DID NOT CONSIDER THE DEPRECIATION ITA NO.6347 OF 2011 SVV SHARES AND STOCK BROKERS PV T LTD MUMBAI PAGE 2 OF 3 CLAIM ON THE MEMBERSHIP IN BOMBAY STOCK EXCHANGE (B SE) AND DISALLOWED THE CLAIM. IN FACT DURING THE ASSESSMENT PROCEEDINGS ASSESSEE HAD SUBMITTED THAT THEY HAVE NO OBJECTION FOR DISALLOWANCE OF DEPRECIATION IN VIEW OF THE HON'BLE BOMBAY HIGH COURT DECISION. ACCORDINGLY THE DEPRECIATION WAS DISALLOWED BY AO. ANOTHER CLAIM IS WITH REFERENCE TO THE BAD DEBTS OF ` .2,30,114/-. AO DISALLOWED THE CLAIM ON THE REASON THAT ASSESSEE DID NOT JUSTIFY H OW THE AMOUNTS HAVE BECOME BAD AND THE PARTICULARS REGARDING THE D EBT CLAIMS WERE NOT FURNISHED. ON THESE TWO ISSUES, THE CIT (A ) ADJUDICATED AND CONFIRMED THE ORDER OF AO. 4. ON THE ISSUE OF DEPRECIATION CLAIM ON THE MEMBERSHI P OF BSE, WHILE ADMITTING THAT THE HON'BLE BOMBAY HIGH COURT DECISION WAS REVERSED BY THE HON'BLE SUPREME COURT IN THE CASE OF TECHNO SHARES 327 ITR 323(SC), HE HOWEVER, TOOK UP A NEW I SSUE THAT ASSESSEE HAS NOT JUSTIFIED THE COST OF THE MEMBERSH IP SO AS TO CLAIM DEPRECIATION. HE DID NOT ALLOW THE CLAIM ON THE REA SON THAT THE DOCUMENTS FURNISHED BEFORE HIM DID NOT INDICATE ANY PAYMENT TOWARDS THE ACQUISITION OF MEMBERSHIP IN THE BSE. W ITH REFERENCE TO THE BAD DEBTS, HE ALSO CONFIRMED THE ORDER OF AO MAINLY ON THE REASON THAT ASSESSEE DID NOT FURNISH THE DETAILS, E VEN THOUGH THE CLAIM OF SIMILAR NATURE IN THE CASE OF STOCK BROKER WAS CONSIDERED BY THE ITAT SPECIAL BENCH IN THE CASE OF DCIT VS. S HREYAS S. MORAKHIA VIDE ITA NO.3374/MUMBAI/2004 FOR THE ASSES SMENT YEAR 1998-99. 5. AFTER HEARING THE LEARNED DR AND PERUSING THE RECOR D, WE ARE OF THE OPINION THAT THE MATTER REQUIRES RE-EXAMINAT ION BY AO. AS FAR AS THE CLAIM OF BAD DEBTS ARE CONCERNED ON PRINCIPL E THE CLAIMS RECOVERABLE FROM THE CUSTOMERS IN A STOCK BROKERS CASE IS ALLOWABLE AS A BAD DEBT AS HAS BEEN DECIDED BY THE HON'BLE BO MBAY HIGH COURT IN THE CASE OF CIT VS. SHREYAS S. MORAKHIA IN ITA NO.89 OF 2011 DATED 28TH FEBRUARY, 2012 ( 342 ITR 285(BOM)) . THEREFORE, ON LEGAL PRINCIPLE THE AMOUNT IS ALLOWABLE AS A DEDUCT ION. HOWEVER, IT IS ONE OF THE CONTENTION THAT ASSESSEE DID NOT FURN ISH THE NECESSARY ITA NO.6347 OF 2011 SVV SHARES AND STOCK BROKERS PV T LTD MUMBAI PAGE 3 OF 3 DETAILS. THEREFORE, ASSESSEE IS DIRECTED TO FURNISH NECESSARY DETAILS BEFORE AO WHO SHOULD EXAMINE AND ALLOW THE CLAIM. 6. WITH REFERENCE TO THE CLAIM OF DEPRECIATION ALSO, T HE HON'BLE SUPREME COURT HAS REVERSED THE DECISION OF THE HON' BLE BOMBAY HIGH COURT IN THE SAME CASE AND HELD THAT MEMBERSHI P OF THE STOCK EXCHANGE IS AN INTANGIBLE ASSET AND DEPRECIATION IS ALLOWABLE AS PER THE PROVISIONS. THEREFORE, HERE ALSO ON LEGAL PRINC IPLES THE CLAIM IS ALLOWABLE. HOWEVER, THE CIT (A) WENT INTO ISSUE OF COST OF ACQUISITION OF MEMBERSHIP. SINCE THIS ISSUE WAS NOT BEFORE AO A ND THE DETAILS ARE TO BE EXAMINED BASED ON PAST RECORD, IN THE INT EREST OF JUSTICE, WE RESTORE THE MATTER TO THE FILE OF AO TO CONSIDER THE ISSUE AFRESH AND DECIDE ACCORDING TO LAW AND FACTS AFTER GIVING DUE OPPORTUNITY TO ASSESSEE. ASSESSEE IS DIRECTED TO SUBMIT RELEVAN T DETAILS BEFORE AO. WITH THESE DIRECTIONS ASSESSEES GROUNDS ARE AL LOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH SEPTEMBER, 2012. SD/- SD/- (B.R. MITTAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 12 TH SEPTEMBER, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI