ITO 4(1)(1), MUMBAI V. BANHEM SECURITIES P. LTD, MUMBAI

ITA 917/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71321 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 12-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 01-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DIVYA BAJPAI
• Keywords: Bad and doubtful debts

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL G GG G BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , !' !' !' !' #$ #$ #$ #$ % % % % & & & & , . BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI RAJENDRA SINGH RAJENDRA SINGH RAJENDRA SINGH RAJENDRA SINGH, AM , AM , AM , AM & && & SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM ./ I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.917/MUM/2011 917/MUM/2011 917/MUM/2011 917/MUM/2011 ( '( '( '( '( ) ) ) ) / ASSESSMENT YEAR :2007-08) INCOME TAX OFFICER-4(1)(1), 6 TH FLOOR, ROOM NO. 636, AAYAKAR BHAVAN, MUMBAI-400020 ( ( ( ( / VS. M/S BANHEM SECURITIES PVT. LTD., 312, VEENA CHAMBERS, 21, DALAL STREET, FORT, MUMBAI-400001 $* !' ./ + ./ PAN/GIR NO. :AABCB3486B ( *, / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( -.*, / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) *, *, *, *, / / / / ! !! ! / APPELLANT BY : MS. DIVYA BAJPAI -.*, -.*, -.*, -.*, 0 00 0 / / / / ! !! ! /RESPONDENT BY : SHRI DALPAT SHAH ( ( ( ( 0 00 0 1' 1' 1' 1' / DATE OF HEARING : 12 TH SEPTEMBER 2013 23) 23) 23) 23) 0 00 01' 1' 1' 1' /DATE OF PRONOUNCEMENT: 25 TH SEPTEMBER 2013 #!4 / O R D E R PER : & , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 18.11.2010 OF COMMISSIONER OF INCOME TAX(APPE ALS) FOR THE ASSESSMENT YEAR 2007-08. 2. THE REVENUE HAS RAISED THE SOLITARY GROUND AS UN DER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITI ON OF BAD DEBTS OF ` 20,92,927/- WITHOUT APPRECIATING THE FAC T THAT THE CONDITIONS OF SECTIONS 36(2) ARE NOT FULFILLED. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SECUR ITY BROKING CONSULTANCY. DURING THE YEAR UNDER CONSIDERATION AS THE SAME WERE ITA NO. 917/M/2011 BANHEM SECURITIES P. LTD. 2 WRITTEN OFF BAD DEBTS IN RESPECT OF THE UNRECOVERAB LE AMOUNT FROM ITS CLIENTS. THE AO DISALLOWED THE CLAIM OF THE ASS ESSEE ON THE GROUND THAT THE CONDITION U/S 36(2) HAS NOT BEEN CO MPLIED WITH. ON APPEAL, THE CIT(A) RECORDED THE FACT THAT THE AMOUN TS REGARDING CONSULTANCY AND OTHER FEES WERE REFLECTED IN THE TO TAL INCOME FOR THE FINANCIAL YEAR 1996-97 AND ACCORDINGLY BY FOLLO WING THE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL IN CASE OF DCIT V S SHREYAS S. MORAKHIA THE CLAIM OF THE ASSESSEE WAS ALLOWED. 4. WE HAVE HEARD THE LD. DR AS WELL AS LD. AR AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. DR HAS SUB MITTED THAT THE AO HAS DISALLOWED THE CLAIM OF THE ASSESSEE FOR WAN T OF DETAILS TO SATISFY THE CONDITIONS U/S 36(2). THE CIT(A) HAS AL LOWED THE CLAIM OF THE ASSESSEE BUT WITHOUT GIVING THE OPPORTUNITY TO THE AO TO VERIFY THE FACT THAT THE AMOUNT OF CONSULTANCY AND OTHER F EES HAS BEEN TAKEN INTO TOTAL INCOME FOR THE EARLIER ASSESSMENT YEARS. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE HAS SUBMITTE D THAT THE CIT(A) HAS VERIFIED THE DETAILS WHICH WERE ALREADY AVAILABLE BEFORE THE ASSESSING OFFICER AND ACCORDINGLY HELD THAT THE CONSULTANCY AND OTHER FEES IN RESPECT OF THE PARTIES IN QUESTION WE RE REFLECTED IN THE TOTAL INCOME FOR THE ASSESSMENT YEAR 1996-97. THUS, THE LD. AR HAS SUBMITTED THAT WHEN THE RELEVANT FACTS HAVE BEEN EX AMINED BY THE CIT(A) THEN THERE IS NO REQUIREMENT OF FURTHER VERI FICATION BY THE ITA NO. 917/M/2011 BANHEM SECURITIES P. LTD. 3 AO. HE HAS RELIED UPON THE DECISION OF HONBLE JURI SDICTION HIGH COURT IN CASE OF CIT VS SHREYAS S. MORAKHIA 342 ITR 285 AND SUBMITTED THAT THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL HAS BEEN UPHELD BY THE HONBLE HIGH COURT THEREFORE, TH E CLAIM OF THE ASSESSEE IS ALLOWABLE. 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD WE FIND THAT ON PRINCIPLE THE CL AIM OF THE ASSESSEE IS ALLOWABLE IF THE CONSULTANCY AND OTHER FEES HAVE ALREADY BEEN TAKEN INTO CONSIDERATION IN THE TOTAL INCOME OF THE EARLIER ASSESSMENT YEARS IN VIEW OF THE DECISION OF HONBLE JURISDICTION HIGH COURT IN CASE OF CIT VS SHREYAS S . MORAKHIA (SUPRA). THE CIT(A) HAS ALLOWED THE CLAIM ON THE GR OUND THAT THE AMOUNT OF CONSULTANCY FEE AND OTHER FEE IN RESPECT OF THESE PARTIES WRITTEN OF AS BED DATES WERE REFLECTED IN THE TOTAL INCOME FOR THE ASSESSMENT YEAR 1996-97. HOWEVER, IT IS NOT CLEAR F ROM THE IMPUGNED ORDER WHETHER THE DETAILS WHICH WERE CONSI DERED BY THE CIT(A) WERE AVAILABLE BEFORE THE ASSESSING OFFICER OR NOT BECAUSE THE AO HAS DISALLOWED THE CLAIM OF THE ASSESSEE BY RECORDING A SPECIFIC REASON OF ABSENCE OF DETAILS. ACCORDINGLY, WE DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE IF THE DETAILS E XAMINED BY THE CIT(A) ARE FOUND TO BE CORRECT. ITA NO. 917/M/2011 BANHEM SECURITIES P. LTD. 4 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF SEPTEMBER 2013 SD/- SD/- ( ) !' #$ ( RAJENDRA SINGH RAJENDRA SINGH RAJENDRA SINGH RAJENDRA SINGH ) ACCOUNTANT MEMBER ( & ) ' #$ (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 25 TH SEPTEMBER 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI