ACIT 8(1), MUMBAI V. ANGEL COMMODITIES BROKING P. LTD, MUMBAI

ITA 8172/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8617 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 25-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.8172/MUM/2010(A.Y. 2007-08) THE ACIT, CEN.CIR.46, ROOM NO.658, 6 TH FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI - 20. (APPELLANT) VS. M/S. ANGEL COMMODITIES BROKING PVT LTD.. G-1, AKRUTI TRADE CENTRE, ROAD NO.7, MIDC, ANDHERI (E), MUMBAI -93. PAN: AAACK 3472D (RESPONDENT) APPELLANT BY : SHRI MANOJ KUMAR RESPONDENT BY : NONE DATE OF HEARING : 04/10/2012 DATE OF PRONOUNCEMENT : 1 0/10/2012 ORDER PER I.P.BANSAL, J.M THIS IS AN APPEAL BY THE REVENUE. IT IS DIRECTE D AGAINST THE ORDER DATED 13/9/2010 PASSED BY LD. CIT(A)16, MUMBAI FOR ASSESSMENT YEAR 2007-08. GROUND OF APPEAL READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING TO DELETE THE ADDITION O F RS.22,57,545/-, MADE BY THE ASSESSING OFFICER, BY HOLDING THAT BAD DEBTS ARISEN IN THE CASE OF BROKER WAS ALLOWABLE AS BUSINESS LOSS WITHO UT APPRECIATING THE ASSESSING OFFICERS FINDING THAT IT WAS NOT A TRADI NG DEBT. 2. NOTICE OF HEARING WAS SENT TO THE ASSESSEE. IN RESPONSE A LETTER DATED 4/10/2012 HAS BEEN FIELD. IN THE SAID LETTER IT HA S BEEN SUBMITTED THAT THE ISSUE RAISED BY THE REVENUE IN THE PRESENT APPEAL I S DIRECTLY COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. SHREYAS S. MORARKHA, 342 ITR 285 AND THE APPEAL MAY BE DECI DED ON MERITS. ITA NO.8050/MUM/2010(A.Y. 2007-08) 2 3. IN THIS VIEW OF THE SITUATION WE PROCEED TO DECI DE THE PRESENT APPEAL AFTER HEARING LD. DR. 4. THE ASSESSEE IS A MEMBER OF NCDEMX & MCX AND IS ACTING AS STOCK BROKER. A SUM OF RS.22,57,545/- WAS CLAIMED AS BU SINESS LOSS BY WRITING OFF DEBTS PERTAINING TO ASSESSEES BUSINESS COMMODI TIES BROKERAGE. ITO RELYING UPON CERTAIN DECISION OF ITAT DISALLOWED TH E SAID AMOUNT AS THE SAME NEITHER COULD BE ALLOWED UNDER SECTION 37(1) O F THE INCOME TAX ACT,1961(THE ACT) NOR UNDER SECTION 36(1)(VII) OF THE ACT. ACCORDING TO AO IN THE PRESENT CASE ASSESSEE AS FAILED TO ESTABLISH TH AT DECISION OF WRITE OFF OF THIS BAD DEBT IS BUSINESS DECISION AND BONAFIDE. T HE AO HAS ALSO OBSERVED IN PARA 4.9 OF THE ASSESSMENT ORDER THAT LD. CIT(A) HAS DELETED SIMILAR ADDITION FOR A.Y 2006-07 AND THE SAID DECISION OF T HE LD. CIT(A) IS NOT ACCEPTED BY THE DEPARTMENT AND A FURTHER APPEAL HAS BEEN FIELD. THUS RELYING UPON THE SIMILAR DISALLOWANCE IN A.Y 2006-0 7 A SUM OF RS.22,57,547/- WAS DISALLOWED DURING THE YEAR UNDER CONSIDERATION. 5. LD. CIT(A) DELETED THE ADDITION FOR THE REASON T HAT SIMILAR DELETION WAS UPHELD BY ITAT IN THE CASE OF ASSESSEE ITSELF IN RE SPECT OF A.Y 2006-07 VIDE ORDER DATED 23/7/2010 IN ITA NO.4693/M/09. 6. LD. D.R RELIED UPON THE ORDER PASSED BY AO. 7. WE HAVE HEARD LD. DR AND WE HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS ORDER PASSED BY LD. CIT (A). THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE AFOREMENTIONED ORD ER OF THE TRIBUNAL. THE RELEVANT OBSERVATION OF THE TRIBUNAL ARE REPRODUCED BELOW: 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. ITA NO.8050/MUM/2010(A.Y. 2007-08) 3 5. THE AFORESAID ISSUE IN THIS APPEAL HAS COME UP F OR CONSIDERATION OF THIS TRIBUNAL IN THE CASE OF DCIT VS SHREYAS S. MORAKHIA , (ITA NO.3374/MUM./2004; A.Y. 1998-99). THE SPECIAL BENCH , VIDE ORDER DATED 16TH JULY 2010, WAS HELD THAT THE AMOUNT RECEIVABLE BY A SHARE BROKER, FROM HIS CLIENTS IN RESPECT OF TRANSACTIONS IN SHARES, I S A TRADING DEBT AND, ACCORDINGLY, ELIGIBLE FOR DEDUCTION AS SUCH. IT IS ALSO SETTLED IN LAW, AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF TRF LTD. V S CIT, (1010-TIOL-15- SC), THAT THE BAD DEBTS ARE TO BE ALLOWED AS DEDUCT ION IN THE YEAR IN WHICH THE BAD DEBTS ARE ACTUALLY WRITTEN. IN VIEW OF THES E BINDING JUDICIAL PRECEDENTS, OBJECTIONS RAISED BY THE AUTHORITIES BE LOW ARE INDEED UNSUSTAINABLE IN LAW. 6. FOR THE REASONS SET OUT ABOVE, AND RESPECTFULLY FOLLOWING HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF TRF LTD. (SUPRA), A ND SPECIAL BENCH DECISION IN THE CASE OF SHREYAS M. MORAKHIA (SUPRA), WE DELE TE THE IMPUGNED DISALLOWANCE. THE ASSESSEE GETS THE RELIEF ACCORDIN GLY. 8. THE ORDER OF SPECIAL BENCH HAVE BEEN CONFIRMED B Y HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHREYAS MORAKIA ( SUPRA). THEREFORE, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY LD. CIT (A) AND DEPARTMENTAL APPEAL IS DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 10 TH DAY OF OCT., 2012 SD/- SD/- (RAJENDRA ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 10 TH OCT., 2012. COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R A BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.8050/MUM/2010(A.Y. 2007-08) 4 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 03/10/2012 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 04/10/2012 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER