A.A. DOSHI SHARE & STOCK BROKERS LTD, MUMBAI V. ITO 4(1)(1), MUMBAI

ITA 8442/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88648 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-02-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 03-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI AMIT SHUKLA, JM ./ I.T.A. NO. 8442/MUM/2010 ( / ASSESSMENT YEAR: 2001-02) A. A. DOSHI SHARE & STOCK BROKERS LTD. R-711, ROTUNDA BUILDING, BOMBAY SAMACHAR MARG, MUMBAI-400 023 / VS. ITO-4(1)(1), AAYKAR BHAVAN, MUMBAI-400 020 ' ./# ./PAN/GIR NO. AAACA 4670 R ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) '$ ' ( / APPELLANT BY : SHRI BHUPENDRA SHAH %&'$ ' ( / RESPONDENT BY : SHRI ASGHAR ZAIN )* + ' , / DATE OF HEARING : 23.02.2015 -./ ' , / DATE OF PRONOUNCEMENT : 18 .03.2015 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-8, MUMBAI (CIT(A) FOR SHO RT) DATED 19.10.2010, NOT ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A. Y.) 2001-02 VIDE ORDER DATED 26.08.2005. 2. THE APPEAL CONCERNS THE DISALLOWANCE OF THE ASSE SSEES CLAIM QUA A TRADE DEBT, RECEIVABLE BY THE ASSESSEE, A SHARE BROKER, FROM A CUSTOMER BY THE NAME M/S. SHAH & SHAH INVESTMENT, IN THE SUM OF RS. 10,08,078/-, ON BEING WRITTEN OFF AS IRRECOVERABLE. 2 ITA NO. 8442/MUM/2010 (A.Y. 2001-02) A. A. DOSHI SHARE & STOCK BROKERS LTD VS. ITO 3. AT THE VERY OUTSET, IT WAS SUBMITTED BY THE LEAR NED AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, THAT THE LAW IN THE M ATTER HAD SINCE ATTAINED FINALITY, I.E., WITH THE DECISION BY THE APEX COURT IN THE CASE OF TRF LTD. VS. CIT [2010] 323 ITR 397 (SC), AS ALSO BY THE HONBLE JURISDICTIONAL HIGH CO URT IN CIT VS. SHREYAS S. MORAKHIA [2012] 342 ITR 285 (BOM), PLACING A COPY OF THE LAT TER DECISION ON RECORD. AS SUCH, THE DEBT HAVING BEEN ACTUALLY WRITTEN OFF BY THE ASSESS EE IN ITS BOOKS OF ACCOUNT, NO DISPUTE QUA THE SAME SURVIVES, SO THAT THE MATTER MUST BE CONS IDERED AS SQUARELY COVERED BY THE SAID CASE LAW. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) WOULD, WITHOUT IN ANY MANNER REBUTTING THE SAID CONTENTIONS BY THE ASSESSEE, REL Y ON THE ORDERS BY THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. A READING OF THE IMPUGNED ORDER REVEALS THAT THE LD . CIT(A), ON ANALYZING THE DECISIONS IN THE CASE OF DY.CIT VS. SHREYAS S. MORAKHIA [2010] 5 ITR 1 (MUM) (SB) (TRIB), SINCE AFFIRMED BY THE HONBLE JURISDICTIONA L HIGH COURT VIDE ITS DECISION CITED SUPRA, AND CIT VS. DB (INDIA) SECURITIES LTD. [2009] 318 ITR 26 (DEL) [226 CTR 466], RELIED UPON BY THE ASSESSEE BEFORE HIM, FOUND THEIR RATIO AS OF THE ASSESSEE BEING ENTITLED TO ITS CLAIM OF LOSS ON ACCOUNT OF BAD-DEBT, UPON WRITE OFF IN THE BOOKS OF ACCOUNT, DETERMINED AT THE AMOUNT NOT REALIZABLE, I.E., AT N ET OF THE VALUE OF THE SECURITIES OR OTHER ASSETS OF THE DEBTOR HELD BY HIM. THE ARGUMENT IS U NEXCEPTIONABLE. THE LAW IN THE MATTER IS WELL SETTLED, SO THAT IT IS ONLY THE ASSESSMENT OF THE ASSESSEE AS A BUSINESSMAN, I.E., IN RELATION TO THE DEBT BEING IRRECOVERABLE AND, FURTH ER, AS SIGNIFIED BY THE WRITE OFF OF THE RELEVANT DEBT IN HIS BOOKS OF ACCOUNT FOR THE RELEV ANT YEAR, WHICH IS DECISIVE OF THE CLAIM, BOTH AS REGARDS THE AMOUNT IRRECOVERABLE AND THE PE RIOD IN WHICH IT IS SO BECOMES OR IS DEEMED TO BE SO. THE REVENUE, WHERE IT DISPUTES THE SAME, HAS TO SHOW THAT IT IS NOT SO, SO THAT THE WRITE OFF IS, TO WHATEVER EXTENT, NOT G ENUINE (REFER: DIT(IT) VS. OMAN INTERNATIONAL BANK SAOG [2009] 313 ITR 128 (BOM)). NO DOUBT QUA THE GENUINENESS OF THE CLAIM OR THE WRITE OFF PER SE , HOWEVER, STANDS EXPRESSED BY THE REVENUE IN THE I NSTANT CASE. THE REVENUES RIGHT OF VERIFICATION OF THE AS SESSEES CLAIM, HOWEVER, CANNOT BE DENIED AND, IN FACT, TO THE EXTENT NOT VERIFIABLE O R OTHERWISE NOT EXPLAINED IN TERMS OF OR ON THE BASIS OF THE UNDERLYING FACTS, IS, TO THAT E XTENT, NOT A VALID CLAIM. IN THE PRESENT 3 ITA NO. 8442/MUM/2010 (A.Y. 2001-02) A. A. DOSHI SHARE & STOCK BROKERS LTD VS. ITO CASE, THE REVENUES OBJECTION IS APPARENTLY VALID I N-AS-MUCH AS IT IS ONLY THE AMOUNT NOT RECOVERABLE, I.E., NET OF SECURITIES OR OTHER ASSET S OF THE DEBTOR AVAILABLE WITH THE ASSESSEE AS A CREDITOR, AND WHICH IT CAN REALIZE AND, THEREF ORE, REALIZABLE, THAT IS IRRECOVERABLE, AND WHICH COULD BE CLAIMED BY THE ASSESSEE. WHETHER THE ASSESSEE, IN HIS WISDOM, ACTUALLY REALIZES THE SAME OR NOT, IS NOT RELEVANT. WHAT IS RELEVANT IS THAT THE ASSESSEE IN THE COURSE OF HIS BUSINESS HAS RIGHT TO THE SECURITIES WHICH C AN BE REALIZED AND THE AMOUNT APPROPRIATED AGAINST THE OUTSTANDING DEBT OF THE DE BTOR UNDER REFERENCE. WHERE NOT REALIZED, THE SECURITIES/ASSETS WOULD HAVE TO BE VA LUED, AND THEIR REALIZABLE VALUE ADOPTED FOR THE PURPOSE. WE MAY THOUGH CLARIFY THAT WE ARE HERE NOT CONSIDER ING OR SPEAKING OF THE CLAIMS OR RIGHTS THAT ARE DISPUTED, AND WOULD, THEREFORE, WHERE SO DEEMED FIT AND PROPER BY THE ASSESSEE, ENFORCED THROUGH OR BY RECOURSE TO A LEGA L PROCESS, AS A RECOVERY SUIT. THE TWO ASPECTS ARE DIFFERENT. SUCH RIGHTS OF CLAIMS, IF AN D TO THE EXTENT REALIZED, WOULD STAND TO BE ASSESSED AND BROUGHT TO TAX U/S. 41(1) OF THE AC T. THE LD. CIT(A) HAS, HOWEVER, FELL IN ERROR IN CONFIRMING THE FULL DISALLOWANCE, RATHER T HAN REQUIRING THE ASSESSEE TO ESTABLISH THE QUANTUM WHICH WAS UNDER THE CIRCUMSTANCES REALI ZABLE, SO THAT THE MATTER IS ESSENTIALLY ONE OF VALUATION AND NOT OF DISALLOWANC E PER SE . THE MATTER SHALL, ACCORDINGLY, TRAVEL BACK TO THE F ILE OF THE LD. CIT(A) TO ENABLE THE DETERMINATION OF THE AMOUNT, IF ANY, REALIZABLE, AN D THUS THE QUANTUM OF DISALLOWANCE, IF ANY, WARRANTED UNDER THE CIRCUMSTANCES. THE LD. CIT (A) SHALL ADJUDICATE PER A SPEAKING ORDER AFTER HEARING BOTH THE PARTIES BEFORE HIM. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 0/ 1)2 30 ' 4' 567 8 * 9 ' :; ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 18 TH MARCH,, 2015 SD/- SD/- (AMIT SHUKLA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER <+ MUMBAI; =) DATED :18 .03.2015 4 ITA NO. 8442/MUM/2010 (A.Y. 2001-02) A. A. DOSHI SHARE & STOCK BROKERS LTD VS. ITO ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. @*A B %)C2 , , C2/ , <+ / DR, ITAT, MUMBAI 6. B D3 E + / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , <+ / ITAT, MUMBAI