The ACIT, Ahmedabad Circle-3,, Ahmedabad v. Innovate Securities (P) Ltd.,, Ahmedabad

ITA 371/AHD/2005 | 2001-2002
Pronouncement Date: 23-08-2010 | Result: Partly Allowed

Appeal Details

RSA Number 37120514 RSA 2005
Bench Ahmedabad
Appeal Number ITA 371/AHD/2005
Duration Of Justice 5 year(s) 6 month(s) 15 day(s)
Appellant The ACIT, Ahmedabad Circle-3,, Ahmedabad
Respondent Innovate Securities (P) Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 23-08-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 23-08-2010
Date Of Final Hearing 23-08-2010
Next Hearing Date 23-08-2010
Assessment Year 2001-2002
Appeal Filed On 07-02-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND MAHAVIR SINGH JUDICIAL MEMBER) ITA.NO.371/AHD/2005 WITH CO NO.91/AHD/2005 [ASSTT.YEAR : 2001-2002] ACIT CIR.3 AHMEDABAD. VS. INNOVATE SECURITIES P. LTD. 1 ST FLOOR DAVASHISH NR.NEST HOTEL SARDAR PATEL NAGAR ROAD AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI R.K. DHANESTA ASSESSEE BY : SHRI SANJAY R. SHAH O R D E R PER G.D. AGRAWAL VICE-PRESIDENT: THIS IS REVENUES APPEAL AND THE ASSESSEES CO AGAINST THE ORDER OF THE COMMISSI ONER OF INCOME-TAX (APPEALS)-IX AHMEDABAD DATED 8.11.2004 ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOM E TAX ACT 1961. 2. THE APPEAL IN ITA NO.371/AHD/2005 WAS DISPOSED O F BY THE ITAT ALONG WITH OTHER APPEALS VIDE ORDER DATED 27-2-2009 . HOWEVER IN MA NO.345/AHD/2009 IN ITA NO.371/AHD/2005 VIDE ORDER D ATED 11-6-2010 THE ORDER OF THE ITAT IN ITA NO.371/AHD/2005 WAS RECALL ED FOR THE LIMITED PURPOSE OF ADJUDICATING THE GROUND NO.3 IN REVENUE S APPEAL. SIMILARLY THE CO. NO.91/AHD/2005 ALSO REMAINED TO BE ADJUDICATED THEREFORE VIDE ITATS ORDER MA NO.345/AHD/2009 DATED 11-6-2010 THE CO NO .91/AHD/2005 WAS ALSO RECALLED. ITA.NO.371/AHD/2005 WITH CO NO.91/AHD/2005 -2- 3. IN PURSUANCE TO THE ABOVE ORDER OF THE ITAT IN M A THE MATTER WAS FIXED FOR HEARING FOR THE LIMITED PURPOSE OF ADJUDI CATING THE GROUND NO.3 OF THE REVENUES APPEAL AS WELL AS THE CO BY THE ASSESSEE. GROUND NO.3 OF THE REVENUES APPEAL READS AS UNDER: 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN ALLOWING BAD DEBT OF RS.63 784/- AS TRADING LOSS. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. WE FIND THAT THE CIT(A) ALLOWED THE RELIEF TO THE ASSESSEE WITH THE FOLLOWING FINDING 6.2 I HAVE CAREFULLY CONSIDERED THE ISSUE AND I FI ND THAT THE APPELLANT IS A SHARE BROKER AND TRANSACTIONS IN RESPECT OF WH ICH THESE DEBTS WERE CLAIMED AS BAD DEBTS WERE NEVER INCORPORATED FOR WO RKING OUT PROFITS OF THE APPELLANT. THEREFORE CONDITIONS TO SECTION 36 (2) WERE NOT SATISFIED. THIS ISSUE HAS ALSO BEEN DISCUSSED BY ITAT AHMEDAB AD BENCH IN THE CASE OF ITO VS. ASHOKKUMAR LALITKUMAR REPORTED IN 5 3 ITD PAGE 326 AND THE HONBLE ITAT HAS HELD THAT THE SAME CANNOT BE ALLOWED AS A BAD DEBT U/S.36(1)(VIII). THUS AOS ORDER ON THIS GROUND IS UPHELD. 6.3 HOWEVER THE AO HAS HIMSELF CONSIDERED THE CLA IM U/S.28(1) WHICH AGAIN IS PROPER IN VIEW OF ITATS DECISION RE FERRED TO ABOVE. HOWEVER I FIND THAT THOUGH THE AO HAS ALLOWED THE MAJOR AMOUNT AS TRADING LOSS BUT HE HAS DISALLOWED SMALL AMOUNT IN RELATION TO VARIOUS PERSONS WITHOUT ASSIGNING ANY REASON AS TO WHY THE SE COULD NOT BE TREATED AS TRADING LOSS. FROM THE DETAILS I FIND T HAT THESE ITEMS ARE IN RESPECT OF SHARING TRADING DONE ON BEHALF OF THESE CLIENTS AND THE SAME WAS NOT RECOVERED. THE AMOUNTS ARE ALSO VERY SMALL AND FOR RECOVERY OF SUCH SMALL AMOUNTS NO PRUDENT BUSINESSMAN WOULD TAK E RECOURSE TO LEGAL ACTION. THE AO HAS NOT GIVEN ANY REASONS AS TO WHY THESE AMOUNTS WERE NOT ALLOWABLE. AS THESE AMOUNTS WERE OUTSTANDING AS A RESULT OF BUSINESS ACTIVITIES OF THE APPELLANT THEY WOULD ALSO AMOUNT TO TRADING LOSS SPECIFICALLY CONSIDERING SMALLNESS OF AMOUNT WHICH COULD BE EVEN BE ALLOWED AS A DISCOUNT IN ABSENCE OF ANY REASONS AS TO WHY THESE AMOUNTS COULD NOT BE ALLOWED. I FIND NO REAS ON FOR THE DISALLOWANCE MADE BY THE AO AND THE SAME IS DELETED . 4. AT THE TIME OF HEARING BEFORE US THE LEARNED DR WAS UNABLE TO CONTROVERT THE ABOVE FINDING OF THE FACT RECORDED B Y THE CIT(A). THE ASSESSEE ITA.NO.371/AHD/2005 WITH CO NO.91/AHD/2005 -3- IS A SHARE BROKER AND THE AMOUNT WRITTEN OFF WAS IN RESPECT OF THE CUSTOMERS ON WHOSE BEHALF THE SHARE TRADING WAS DONE BY THE ASSE SSEE. THE CIT(A) HAS ALSO RECORDED THE FINDING THAT THE SIMILAR AMOUNT WAS AL LOWED AS TRADING LOSS BY THE AO HIMSELF. HOWEVER THE AO MADE THE DISALLOWANCE FOR THE SMALL AMOUNT OF TRADING LOSS AMOUNTING TO RS.63 784/- WITHOUT ASSIG NING ANY SPECIFIC REASON. CONSIDERING THE ABOVE FACTS THE CIT(A) DIRECTED TH E AO TO ALLOW THE LOSS AS A TRADING LOSS. 5. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDE S AND THE FACTS OF THE CASE WE DO NOT FIND ANY JUSTIFICATION IN INTERFERI NG WITH THE ORDER OF THE CIT(A). THE SAME IS SUSTAINED. 6. THE CO FILED BY THE ASSESSEE IS ONLY IN SUPPORT OF THE ORDER OF THE CIT(A) WHICH DOES NOT REQUIRE ANY SPECIFIC ADJUDIC ATION. 7. IN RESULT GROUND NO.3 OF THE REVENUES APPEAL I S REJECTED AND THE CO OF THE ASSESSEE IS REJECTED AS BEING IN FRUCTUOUS . ORDER PRONOUNCED IN OPEN COURT ON 23 RD AUGUST 2010. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 23-08-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD