ITO - 4(2)(1), MUMBAI V. M/s. PRATIK STOCK VISION P. LTD., MUMBAI

ITA 7081/MUM/2006

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6138 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-11-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 28-12-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, C, MUMBAI BEFORE SHRI R.S.SYAL, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 7081/MUM/2006 (ASSESSMENT YEAR: 2003-04) THE INCOME TAX OFFICER WARD 4(2)(1), MUMBAI-400020 .. APPELLANT VS M/S PRATIK STOCK VISION PVT LTD., 17, KHATAU BLDG, ANNEXE, ALKESH DINESH MODI MARG, FORT, MUMBAI-400023 PA: AABCP8660P . RESPONDENT APPELLANT BY : SHRI SUMEET KUMAR RESPONDENT BY : SHRI HARESH P SHAH O R D E R PER VIJAY PAL RAO,JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER DATED 24.10.2006 OF CIT(A)-IV, MUMBAI FOR THE ASSES SMENT YEAR 2003-04. 2. THE REVENUE HAS RAISED FOLLOWING EFFECTIVE GROU NDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING TH E BAD DEBTS OF RS.63,97,675/- CLAIMED AND DISALLOWED , AS A BUSINESS LOSS HOLDING THAT THE AMOUNT HAD CRYSTALLIZED IN THE RELEVANT PREVIOUS YEAR WHEN THE FACTS AVAILABLE ON RECORD CLEARLY INDICATE THAT THE AMOUNT HAD CRYSTALLIZED IN EARLIER PREVIOUS YEAR WH ICH WAS CLEARLY IN THE ASSESSMENT ORDER ITA NO. 7081/MUM/2006 (ASSESSMENT YEAR: 2003-04) 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING TH E BAD DEBTS OF RS.63,97,675/- CLAIMED AND DISALLOWED , AS A BUSINESS LOSS IGNORING THE FACT THAT THE TRANSACTION GIVING RISE TO DEBT WAS DONE IN VIOLATI ON OF THE SEBI LAWS AND REGULATION OF THE STOCK EXCHANGE AND COMPANIES ACT, HENCE CANNOT TERMED AS LEGAL DEBT 3. FURTHER PLACED IN THE ABOVE FACTUAL AND LEGAL SCENARIO, THE IMPUGNED ORDER OF THE LD. CIT(A) IS, THE APPELLANT PRAYS, CONTRARY TO LAW CONSEQUENTLY MERIT S TO BE SET ASIDE AND THAT OF THE AO BE RESTORED 3. WE HAVE HEARD THE LEARNED DR AS WELL AS THE LEAR NED AR AND CONSIDERED THE RELEVANT RECORD. THE ASSESSEE I S A MEMBER OF NATIONAL STOCK EXCHANGE IN SHARES AND S ECURITIES ON BEHALF OF THE CLIENTS. AT THE OUTSET, WE NOTE T HAT THIS ISSUE STANDS COVERED BY THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF JCIT V/S SHREYAS S MORAKHI A IN ITA NO.3374/MUMBAI/ ORDER DATED 16.07.2010 (210 ITR 1). ACCORDINGLY, THE ISSUE IS DECIDED AGAINST THE REVEN UE AND IN FAVOUR OF THE ASSESSEE. HOWEVER, THE AO HAS TO AS CERTAIN WHETHER THE COMMISSION ON THESE TRANSACTIONS WAS AL READY TAKEN INTO ACCOUNT BY THE ASSESSEE AS PART OF THE I NCOME AND OFFERED FOR TAXATION AND IF ANY MARGIN MONEY WAS RE CEIVED BY THE ASSESSEE, THE SAME HAS TO BE ADJUSTED BEFORE AL LOWING THE CLAIM OF BAD DEBTS. ITA NO. 7081/MUM/2006 (ASSESSMENT YEAR: 2003-04) 3 4. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 3/12/2010 SD SD (R.S.SYAL ) (VI JAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, ON THIS 3RD DAY OF DEC, 2010 SRL:301110 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI