SPS SHARE BROKERS P. LTD, MUMBAI v. ACIT CIR 4(2), MUMBAI

ITA 5305/MUM/2009 | 2002-2003
Pronouncement Date: 11-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 530519914 RSA 2009
Assessee PAN AABCS9622C
Bench Mumbai
Appeal Number ITA 5305/MUM/2009
Duration Of Justice 1 year(s) 5 month(s) 25 day(s)
Appellant SPS SHARE BROKERS P. LTD, MUMBAI
Respondent ACIT CIR 4(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 11-03-2011
Date Of Final Hearing 08-03-2011
Next Hearing Date 08-03-2011
Assessment Year 2002-2003
Appeal Filed On 16-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI BEFORE SHRI R.S.SYAL AM AND SHRI VIJAY PAL RAO JM ITA NO.5305/MUM/2009 : ASST.YEAR 2002-2003 M/S.SPS SHARE BROKERS PRIVATE LIMITED 1 ST FLOOR 4/5 HAJI KASAM BUILDING 66 TAMARIND LINE MUMBAI 400 001. PAN :AABCS9622C. VS. THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 4(2) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KIRAN PANDOLE RESPONDENT BY : SHRI D.SONGATE O R D E R PER R.S.SYAL AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 03.06.2009 IN RELATION TO ASSESSMENT YEAR 2002-2003 . 2. FIRST GROUND IS AGAINST THE CONFIRMATION OF DISA LLOWANCE OF DEPRECIATION OF RS.11 60 156 ON BSE MEMBERSHIP CARD. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AFTER CONSIDERING THE RELEVANT FACTS OF THE CASE WE FIND THAT THE ISSUE RAISED IN THIS GROUND IS NO MORE RES INTEGRA IN VIEW OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN TECHNO SHARES & STOCKS LTD. VS. CIT (2010) 327 ITR 323(SC) HOLDING THAT D EPRECIATION IS ALLOWABLE ON BSE MEMBERSHIP CARD ACQ UIRED AFTER 1.4.1998. WHICH IS A BUSINESS OR COMMERCIAL RIGHT IN NATURE OF `LICENCE OR `AKIN TO LICENCE. IN VIEW OF THIS BINDING PRECEDENT WE OVE RTURN THE IMPUGNED ORDER ON THIS ISSUE AND ORDER FOR THE GRANTING OF DEPRECIATION. T HIS GROUND IS ALLOWED. ITA NO.5305/MUM/2009 M/S.SPS SHARE BROKERS PRIVATE LIMITED. 2 4. THE ONLY OTHER GROUND IS AGAINST THE CONFIRMATIO N OF DISALLOWANCE OF BAD DEBT AMOUNTING TO RS.65 08 796. BRIEFLY STATED THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE A MEMBER OF BOMBAY STOCK EXCHANGE CLAIME D DEDUCTION IN RESPECT OF BAD DEBTS AMOUNTING TO RS.65 08 796. THE ASSESSING OFFICER MADE DISALLOWANCE WHICH CAME TO BE UPHELD IN THE FIRST APPEAL. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SED THE RELEVANT MATERIAL ON RECORD WE FIND THAT IN PRINCIPLE THE QUESTION OF BA D DEBT IN THE HANDS OF STOCK BROKER STANDS SETTLED IN ASSESSEES FAVOUR BY THE J UDGEMENT OF THE HONBLE DELHI HIGH COURT IN CIT VS. D.B. (INDIA) SECURITIES [(2009) 318 ITR 26 (DELHI)] HOLDING THAT THE UNRECOVERED AMOUNT BY THE SHARE BROKER ON BEHALF OF ITS SUB-BROKER HAS TO BE TREATED AS DEBT AND DEDUCTION IS ALLOWABLE. IT H AS FURTHER BEEN LAID DOWN IN THIS CASE THAT THE SHARES REMAINING IN THE POSSESSION OF THE ASSESSEE CAN BE SOLD IN THE MARKET FOR WHATEVER CONSIDERATION AND ADJUSTED AGA INST THE BALANCE OUTSTANDING PAYABLE BY THE DEBTORS AND THE NET FIGURE WHICH RES ULTS THEREAFTER HAS TO BE ALLOWED AS BAD DEBT. THE SPECIAL BENCH OF THE TRIBU NAL IN DCIT VS. SHREYAS S.MORAKHIA [(2010) 5 ITR (TRI.) 1 (MUM.) (SB)] HAS ALSO DECIDED THIS ISSUE IN ASSESSEES FAVOUR BY HOLDING THAT THE SUM RECEIVABL E BY SHARE BROKER FROM CLIENTS FOR TRANSACTIONS UNDERTAKEN OR ON THEIR BEHALF IS A TRADING DEBT. UNRECOVERED PART HAS TO BE ALLOWED AS DEDUCTION. IN VIEW OF THE ABOV E JUDGEMENT AND SPECIAL BENCH ORDER WE HOLD THAT THE ASSESSEE IS ENTITLED TO DED UCTION IN RESPECT OF THE AMOUNT BECOMING UNRECOVERABLE FROM ITS CLIENTS. HOWEVER TH E DEDUCTION HAS TO BE RESTRICTED TO THE AMOUNT DETERMINED AFTER REDUCING THE AMOUNT RECOVERABLE FROM SALE PROCEEDS OF SHARES WITH ASSESSEE IF ANY IN T ERMS OF THE JUDGEMENT IN D.B. (INDIA) SECURITIES (SUPRA). WE THEREFORE SET ASIDE THE IMPUGNED ORDER ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF A.O. FOR TAKI NG A FRESH DECISION ACCORDINGLY AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE. ITA NO.5305/MUM/2009 M/S.SPS SHARE BROKERS PRIVATE LIMITED. 3 6. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 11 TH DAY OF MARCH 2011 . SD/- SD/- (VIJAY PAL RAO) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 11 TH MARCH 2011. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) IV MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.