THE ACIT 4(3), MUMBAI v. M/S. JAMNADAS VIRJI SHARES & STOCK BROKERS PVT. LTD, MUMBAI

ITA 584/MUM/2008 | 2004-2005
Pronouncement Date: 09-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 58419914 RSA 2008
Assessee PAN AAACJ2773L
Bench Mumbai
Appeal Number ITA 584/MUM/2008
Duration Of Justice 3 year(s) 7 month(s) 15 day(s)
Appellant THE ACIT 4(3), MUMBAI
Respondent M/S. JAMNADAS VIRJI SHARES & STOCK BROKERS PVT. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted J
Tribunal Order Date 09-09-2011
Date Of Final Hearing 06-09-2011
Next Hearing Date 06-09-2011
Assessment Year 2004-2005
Appeal Filed On 24-01-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND RAJENDRA SINGH(A .M ) ITA NO.584/MUM/2008 (ASSESSMENT YEAR : 2004-05) ASSISTANT COMMISSIONER OF INCOME TAX 4(3) 6 TH FLOOR ROOM NO.649 AAYAKAR BHAVAN M.K.ROAD MUMBAI-400020 M/S JAMNADAS VIRJI SHARES & STOCK BROKERS PVT.LTD. 811-812 STOCK EXCHANGE TOWERS DALAL STREET FORT MUMBAI-400023 PAN:AAACJ2773L APPELLANT V/S RESPONDENT ITA NO.3964/MUM/2009 (ASSESSMENT YEAR : 2004-05) M/S JAMNADAS VIRJI SHARES & STOCK BROKERS PVT.LTD. 811-812 STOCK EXCHANGE TOWERS DALAL STREET FORT MUMBAI-400023 PAN:AAACJ2773L INCOME TAX OFFICER 4(3)(1) MUMBAI. APPELLANT V/S RESPONDENT DATE OF HEARING : 6.9.2011 DATE OF PRONOUNCEMENT : 9.9.2011 REVENUE BY : SHRI S.K.SINGH ASSESSEE BY : SHRI ASHOK J.PATIL O R D E R PER D.K.AGARWAL (JM) THESE CROSS-APPEALS BY THE REVENUE AND ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 15.11.2007 PASSED BY THE ITA NO.584/MUM/2008 ITA NO.3964/MUM/2009 (ASSESSMENT YEAR : 2004-05) 2 LD. CIT(A) FOR THE ASSESSMENT YEAR 2004-05. BOTH T HESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR T HE SAKE OF CONVENIENCE. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF SHARE AND S TOCK BROKERS. IT FILED RETURN DECLARING TOTAL INCOME AT RS.47 00 831/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS INTERALIA OBSERVED BY THE AO T HAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.28 69 951/- UNDER THE HEAD BUSINESS LOSS. THE ASSESSEE WAS ASKED TO SUBMIT DETAILS OF BAD DEBTS THE YEAR OF DEBT NATURE OF D EBT AND NOTE AS TO HOW THE SAME COMPLIED WITH THE REQUIREME NTS OF SECTION 36(2) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). THE AO AFTER CONSIDERING THE ASSESSEES SUBMISSION S HELD THAT THE SAME IS NEITHER ALLOWABLE AS BAD DEBT NOR THE BUSINESS LOSS AND HENCE HE DISALLOWED RS.28 69 951 /- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE AO AFTER MAKING OTHER DISALLOWANCE U/S 14A RS.4 464/- COMP LETED THE ASSESSMENT AT AN INCOME OF RS.75 75 240/- VIDE ORDER DATED 27.6.2006 PASSED U/S 143(3) OF THE ACT. ON AP PEAL BEFORE THE LD. CIT(A) IN THE ABSENCE OF ANY CONFIRMATION/SUPPORTING MATERIAL FROM THE PARTIES C ONFIRMED THE DISALLOWANCE OF BAD DEBT TO THE EXTENT OF RS.1 4 96 064/- ITA NO.584/MUM/2008 ITA NO.3964/MUM/2009 (ASSESSMENT YEAR : 2004-05) 3 AND DELETED THE DISALLOWANCE TO THE EXTENT OF RS.13 73 887/- AND ACCORDINGLY PARTLY ALLOWED THE APPEAL. 3. BEING AGGRIEVED BY THE ORDER OF THE LD.CIT(A) T HE REVENUE AND ASSESSEE BOTH ARE IN APPEAL BEFORE US. 4. GROUND NO.1 AND 2 TAKEN BY THE REVENUE READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE DISAL LOWANCE OF RS.13 73 885/- CLAIMED AS BAD DEBTS HOLDING TH AT THE SAME IS ALLOWABLE AS BUSINESS LOSS ELIGIBLE FOR DED UCTION U/S 28(1) OF THE I.T.ACT 1961; 2. FURTHER PLACED IN THE ABOVE FACTUAL AND LEGAL SCENARIO THE IMPUGNED ORDER OF THE LD. CIT(A) IS THE APPELLANT PRAYS PATENTLY PERVERSE AND CONTRARY TO LAW AND CONSEQUENTLY MERITS TO BE SET ASIDE AND THAT OF THE AO BE RESTORED 5. GROUND NO.1 AND 2 TAKEN BY THE ASSESSEE READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX ERRED IN CONFIR MING THE DISALLOWANCE OF BUSINESS LOSS OF RS.14 96 064 /-. 2. WITHOUT PREJUDICE TO GROUND NO.1 THE APPELLANT CRAVES LEAVE TO RAISE AN ALTERNATIVE GROUND I.E. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW TH E COMMISSIONER OF INCOME TAX IN THE ALTERNATIVE OUGH T TO HAVE ALLOWED THE DEDUCTION UNDER THE HEAD BAD DEBTS OF RS.14 96 064/-. 6. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE AGAINST THE REVENUES APPEAL FILED AN AP PLICATION ITA NO.584/MUM/2008 ITA NO.3964/MUM/2009 (ASSESSMENT YEAR : 2004-05) 4 UNDER RULE 27 OF THE APPELLATE TRIBUNAL RULES 1963 RAISING FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN PARTLY CONFIRMING THE B USINESS LOSS AMOUNTING TO RS.14 96 064/-. 2. WITHOUT PREJUDICE TO GROUND NO.1 THE APPELLANT CRAVES LEAVE TO RAISE AN ALTERNATIVE GROUND THAT T HE CIT(A) OUGHT TO HAVE ALTERNATIVELY ALLOWED THE DED UCTION UNDER THE HEAD BAD DEBTS OF RS.14 96 064/-. HE FURTHER SUBMITS THAT IN VIEW OF THE ABOVE HE I S NOT PRESSING THE APPEAL FILED BY THE ASSESSEE WHICH IS OTHERWISE BARRED BY LIMITATION BY 551 DAYS. 7. AT THE TIME OF HEARING BOTH THE PARTIES HAVE AG REED THAT THIS ISSUE STANDS COVERED BY THE RECENT DECISI ON OF THE SPECIAL BENCH OF THE TRIBUNAL IN DCIT V/S SHREYAS S.MORAKHIA 131 TTJ 641 (SB); (2010) 5 ITR (TRIB) 1 (MUM)(SB) THEREFORE IN THE INTERESTS OF JUSTICE T HE ISSUE MAY BE SET ASIDE TO THE FILE OF THE AO TO DECIDE TH E SAME IN THE LIGHT OF THE SAID DECISION OF THE SPECIAL BENC H OF THE TRIBUNAL. 8. HAVING CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND MERIT IN THE PLEA OF THE PARTIES THAT THE I SSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE SPECIAL BENCH OF THE TRIBUNAL IN SHREYAS S. MORAK HIA ITA NO.584/MUM/2008 ITA NO.3964/MUM/2009 (ASSESSMENT YEAR : 2004-05) 5 (SUPRA) WHEREIN IT HAS BEEN HELD (PAGE 4 OF HEADNOT ES) AS UNDER :- HELD THAT THE AMOUNT RECEIVABLE BY THE ASSESSEE A SHARE BROKER FROM HIS CLIENTS AGAINST TRANSACTIONS OF PURCHASE OF SHARES ON THEIR BEHALF CONSTITUTED A TR ADING DEBT. THE BROKERAGE INCOME ARISING FROM SUCH TRANSACTIONS VERY MUCH FORMED PART OF THE DEBT AND WHEN THE AMOUNT OF SUCH BROKERAGE HAD BEEN TAKEN INTO ACCOUNT IN COMPUTATION OF INCOME OF THE ASSESSEE OF THE RELEVANT PREVIOUS YEAR OR ANY EARLIER YEAR IT SATI SFIED THE CONDITION STIPULATED IN SECTION 36(2)(I) AND THE AS SESSEE WAS ENTITLED TO DEDUCTION UNDER SECTION 36(1)(VII) BY WAY OF BAD DEBTS AFTER HAVING WRITTEN OFF THE SAID DEBT S FROM HIS BOOKS OF ACCOUNT AS IRRECOVERABLE. IN THE ABSENCE OF ANY RELEVANT DETAILS OF BROKERA GE BROUGHT ON RECORD BY THE PARTIES AND IN THE INTERESTS OF J USTICE WE CONSIDERED IT FAIR AND REASONABLE THAT THE ENTIRE MATTER OF DISALLOWANCE OF RS.28 69 951/- SHOULD GO BACK TO THE FILE OF THE AO AND ACCORDINGLY WE SET ASIDE THE ORDER PASS ED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BA CK THE MATTER TO THE FILE OF THE AO TO DECIDE THE SAME A FRESH IN THE LIGHT OF THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL (SUPRA) AND ACCORDING TO LAW AFTER PROVIDING REASON ABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GRO UNDS TAKEN BY THE REVENUE AND THE GROUNDS TAKEN BY THE A SSESSEE IN PARAGRAPH 6 OF THIS ORDER ARE THEREFORE PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ITA NO.584/MUM/2008 ITA NO.3964/MUM/2009 (ASSESSMENT YEAR : 2004-05) 6 9. WITH REGARD TO THE ASSESSEES APPEAL WE FIND T HAT THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING HAS NOT PRESSED HIS APPEAL WHICH WAS NOT OBJECTED TO BY THE LD.DR AND KEEPING IN VIEW THAT THE ASSESSEE HAS FAI LED TO SHOW ANY REASONABLE CAUSE IN FILING THE APPEAL BELA TEDLY BY 551 DAYS WE ARE OF THE VIEW THAT THE ASSESSEES AP PEAL IS NOT MAINTAINABLE AND ACCORDINGLY THE SAME IS REJE CTED. 10. IN THE RESULT AS INDICATED ABOVE THE REVENUE S APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE ASSESSEES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9TH SEPTEMBER 2011. SD SD (RAJENDRA SINGH) (D .K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 9TH SEPTEMBER 2011 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI