ITO 4(1)(2), MUMBAI v. HTS SECURITIES P. LTD, MUMBAI

ITA 2051/MUM/2011 | 2001-2002
Pronouncement Date: 30-03-2012 | Result: Dismissed

Appeal Details

RSA Number 205119914 RSA 2011
Assessee PAN AAACH2781C
Bench Mumbai
Appeal Number ITA 2051/MUM/2011
Duration Of Justice 1 year(s) 16 day(s)
Appellant ITO 4(1)(2), MUMBAI
Respondent HTS SECURITIES P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 30-03-2012
Date Of Final Hearing 26-03-2012
Next Hearing Date 26-03-2012
Assessment Year 2001-2002
Appeal Filed On 14-03-2011
Judgment Text
ITA NO.2051 OF 2011 HTS SECURITIES P LTD MUMBAI PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL 'H' BENCH MUMBAI BEFORE SHRI D.K. AGARWAL JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO.2051/MUM/2011 (ASSESSMENT YEAR: 2001-02) INCOME TAX OFFICER 4(1)2 VS HTS SECURITIES (P) LTD ROOM NO.678 508 ROTUNDA STOCK EXCHANGE AAYAKAR BHAVAN TOWER DALAL D STREET MK ROAD MUMBAI 400020 FORT MUMBAI PAN NO. AAACH 2781 C (APPELLANT) (RESPONDENT) APPELLANT BY: MR. V.V. SHASTRI SR.DR RESPONDENT BY: NONE DATE OF HEARING: 26/03/2012 DATE OF PRONOUNCEMENT: 30/03/2012 O R D E R PER B. RAMAKOTAIAH A.M. THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDERS OF THE CIT (A)-10 MUMBAI DATED 23/12/2010. THERE ARE NOTICES I SSUED BY WAY OF RPAD AND THROUGH DEPARTMENTAL REPRESENTATIVE TO THE ASSESSEE BUT NONE APPEARED ON BEHALF OF THE ASSESSEE. ACCORD INGLY THE CASE WAS DECIDED AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE EX-PARTE RESPONDENT. 2. THE REVENUE HAS RAISED THE FOLLOWING TWO GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) ERRED IN DELETING THE DISALLOWANCE OF ` .30 06 278/- MADE ON ACCOUNT OF BUSINESS LOSS/BAD DEBTS AS IT DID NOT SATISFY THE PROVISIONS OF SECTION 36(2) R.W.S. 36(I)(VII) OF TH E ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT (A) ERRED IN NOT ALLOWING SUB BROKE RAGE DEDUCTION OF ` .28 81 873/- AND NOT CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE VIDE ITS LETTER. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A BROKER MEMBER OF BOMBAY STOCK EXCHANGE TRADING IN STOCK AN D SECURITIES ITA NO.2051 OF 2011 HTS SECURITIES P LTD MUMBAI PAGE 2 OF 4 AND BROKING IN THE SAME. THE ASSESSING OFFICER PASS ED AN ORDER UNDER SECTION 143(3) DATED 26 TH MARCH 2004 MAKING THE DISALLOWANCES OF BAD DEBTS OF ` .30 06 278/- AND SUB-BROKERAGE PAID OF ` .28 81 873/-. THE ASSESSEE FILED APPEAL AGAINST THI S ORDER BEFORE THE CIT (A)-IV MUMBAI ON 23.4.2004 AND THE S AID APPEAL WAS DISMISSED BY THE CIT (A)-IV BY HIS ORDER DATED 18-1 1-2004. THE ASSESSEE FILED APPEAL AGAINST THIS ORDER ON 07-02-2 005 BEFORE ITAT MUMBAI. THE SAID APPEAL WAS DISPOSED BY ORDER OF IT AT MUMBAI BENCH-E ON 08-05-2008 WITH DIRECTION TO THE ASSESSI NG OFFICER TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTE R PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 4. THE ASSESSING OFFICER IN THE CONSEQUENTIAL PROCEED INGS DISALLOWED THE AMOUNT OF BAD DEBT AND SUB-BROKERAGE AGAIN. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE CI T (A) ALLOWED THE AMOUNTS AS UNDER: BAD DEBT: 1.3 I HAVE CONSIDERED THE FACTS AND PERUSED THE MATERIAL ON RECORD. I FIND THAT THE APPELLANT HAS C LAIMED DEDUCTION ON ACCOUNT OF BAD DEBTS ARISEN ON ACCOUNT OF BROKERAGE BUSINESS AS THE AMOUNTS COULD NOT BE RECOVERED FROM THE CLIENTS WHO DEFAULTED IN PAYMENT S THAT THE APPELLANT HAS ACCOUNTED FOR THE SAID BROKE RAGE INCOME IS ITS BOOKS THEREFORE THE DEBT WAS INCURR ED AS NORMAL INCIDENCE OF BUSINESS. FURTHER THE ISSUE STA NDS COVERED BY SPECIAL BENCH DECISION IN THE CASE OF DC IT V. SHREYAS S. MORAKHIA (2010) 42 DTR (MUMBAI)(SB) (MUM)320 CIT V. DB (INDIA) SECURITIES PVT LTD (200 9) 318 ITR 26 (DELHI) CIT VS. BONANZA PORTFOLIO LTD (2010 )320 ITR 178 (DELHI) AND M.J. PATEL 109 ITR 35 (MUM). THEREFORE RESPECTFULLY FOLLOWING AFORESAID DECISIO NS THIS GROUND OF APPEAL IS ALLOWED IN FAVOUR OF THE APPELL ANT. SUB BROKERAGE: 3.3.3 I HAVE CONSIDERED THE FACTS AND PERUSED THE MATERIAL ON RECORD. I FIND THAT IN THE CASE OF BROK ERAGE PAYMENTS OF ` .5 27 937/- MADE TO RAUNAK SECURITIES LIMITED THE APPELLANT HAD PAID ` .5 27 937/- BY CHEQUE NO.331727 DATED 21-04-2001 COPY OF ACCOUNT WITH SA ID PARTY FILED ACCORDING TO WHICH TOTAL BROKERAGE PAID AMOUNTS TO ` .7 22 770/-. HOWEVER THE ASSESSING OFFICER ITA NO.2051 OF 2011 HTS SECURITIES P LTD MUMBAI PAGE 3 OF 4 ALLOWED DEDUCTION OF ` .1 94 883/- AND ONLY DISALLOWED BALANCE OF ` .5 27 937/- WITHOUT ANY BASIS WHICH CANNOT BE SAID AS CORRECT APPROACH. THE DEDUCTION ALLOWED OF PART AMOUNT OF SAME PARTY MEANS THAT THE CLAIM IS GENUINE. IT IS ALSO SEEN THAT THE COPY OF CONFIRMAT ION WAS FILED BEFORE THE ASSESSING OFFICER IN RESPONSE TO N OTICE UNDER SECTION 133(6) ISSUED TO THE SAID PARTY THE AFFIDAVIT OF SHRI PRADEEP KUMAR MANAGING DIRECTOR IS ALSO FILED. THE PAYMENT IS REFLECTED IN THE BANK STATEMENT. THEREFORE THE ONUS HAS BEEN FULLY DISCH ARGED BY THE APPELLANT. IT IS FOR THE ASSESSING OFFICER IF HE IS NOT SATISFIED THEN HE SHOULD CROSS EXAMINE THE SAID PARTY HAVING NOT DONE SO THE ASSESSING OFFICER CA NNOT NOT DISALLOW THE LEGITIMATE/GENUINE CLAIM. SIMILARL Y IN THE CASE OF BROKERAGE PAYMENTS OF ` .23 53 936/- MADE TO M/S PEONY INVESTMENT LIMITED THE APPELLANT HAD PAID ` .23 50 000/-BY CHEQUE BETWEEN 26 TH FEBRUARY 201 TO 22 ND MARCH 2001. A COPY OF ACCOUNT WITH SAID PARTY IS FILED. IT IS ALSO SEEN THAT THE COPY OF CONFIRMATIO N WAS FILED BEFORE THE ASSESSING OFFICER IN RESPONSE TO T HE NOTICE UNDER SECTION 133(6) TO THE SAID PARTY AFFI DAVIT OF SHRI RAJESH SRIVASTAVA DIRECTOR OF M/S PEONY INVEST MENT LIMITED IS ALSO FILED. FURTHER THE COMPANY WAS TAKE N OVER BY THE NEW MANAGEMENT AND THEY HAVE SHIFTED THEIR BASE TO INDORE THEREFORE IT WAS NOT POSSIBL E FOR THE APPELLANT TO PRODUCE THE SUB-BROKER PARTY AS THE MANAGEMENT HAS GONE CHANGED AND SHIFTED OUT OF MUMBAI. THE PAYMENT IS REFLECTED IN THE BANK STATEM ENT. THEREFORE THE ONUS HAS BEEN FULLY DISCHARGED BY TH E APPELLANT. THIS VIEW IS ALSO SUPPORTED BY DECISION RELIED BY THE AUTHORIZED REPRESENTATIVE IN THE CASE OF KANHAIYA AGARWAL V. ACIT (2008) 14 ITD 1(AGRA). THE HON'BLE SUPREME COURT IN THE CASE OF MEHTA PARIKH & CO. V CIT (1956) 30 ITR 181 (SC) HAS HELD THAT WHEN A PERSON SUBMITS AN AFFIDAVIT AND IT IS NOT CROSS EXA MINED THEN LATER ON IT IS NOT OPEN FOR THE REVENUE TO CH ALLENGE THE CORRECTNESS OF THE STATEMENT MADE IN THE AFFIDA VIT. THEREFORE IN VIEW OF THESE CIRCUMSTANCES I AM OF THE CONSIDERED VIEW THE DISALLOWANCE OF SUB-BROKERAGE A RE MADE WITHOUT ANY BASIS HENCE SAME ARE DELETED. ACCORDINGLY THIS GROUND OF APPEAL IS ALLOWED. 5. AFTER CONSIDERING THE ARGUMENTS OF THE LEARNED DEPA RTMENTAL REPRESENTATIVE AND EXAMINING THE RECORD WE ARE OF THE VIEW THAT THERE IS NO NEED TO DISTURB THE FINDINGS OF THE CIT (A) ON THESE ISSUES. AS FAR AS THE CLAIM OF BAD DEBT IS CONCERNE D THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF DCIT V. SHREYAS S. MORAKHIA IN ITA NO.2051 OF 2011 HTS SECURITIES P LTD MUMBAI PAGE 4 OF 4 ITA NO 89 OF 2011 DT 28-02-2012 UPHELD THE DECISIO N OF THE SPECIAL BENCH WHICH WAS FOLLOWED BY LD. CIT(A). CONSEQUENTL Y THE BAD DEBTS ARISING ON ACCOUNT OF BROKERAGE ON THE AMOUNT S THAT COULD NOT BE RECOVERED FROM THE CLIENT IS ALLOWABLE AS BA D DEBT. ACCORDINGLY WE UPHOLD THE ORDER OF THE CIT (A) ON THE ISSUE. 6. WITH REFERENCE TO THE SUB-BROKERAGE ALSO THE CIT ( A) CONSIDERED THE ISSUE ON FACTS AND ON AVAILABLE DETA ILS ON RECORD. SINCE THIS IS ONE OF THE FACTUAL VERIFICATION WE U PHOLD THE ORDER OF THE CIT (A). REVENUE HAS NOT BROUGHT ON RECORD ANYT HING TO COUNTER THE FINDINGS OF THE CIT (A) ON THE ABOVE ISSUE. THE REFORE THE ORDER OF THE CIT (A) IS UPHELD AND THE RESPECTIVE GROUNDS RA ISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH 2012. SD/- SD/- (D.K.AGARWAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED 30 TH MARCH 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR H BENCH ITAT MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI