2010 (10) TMI 1111 - AT - Income Tax

Summary

Issues involved: Appeal against deletion of addition made by AO u/s 36(1)(vii) of the Act for bad debts claimed by the assessee in broking business.

Summary:

Issue 1: Deletion of addition u/s 36(1)(vii) of the Act
The revenue appealed against the deletion of addition of Rs. 19,57,735 made by the AO, arguing that the assessee's claim was outside the purview of section 36(1)(vii) of the Act due to following cash payment of accounting. However, the Tribunal found that the AO disallowed amounts claimed as bad debts receivable from customers of the assessee engaged in broking business. Referring to a previous decision, the Tribunal held that the amount receivable by the assessee from clients against share transactions constituted trading debt, making the assessee eligible for deduction u/s 36(1)(vii) for bad debts after writing off the debts as irrecoverable. Consequently, the Tribunal decided this issue against the revenue, leading to the dismissal of the revenue's appeal.

Conclusion:
The Tribunal dismissed the revenue's appeal based on the findings related to the deletion of addition u/s 36(1)(vii) of the Act for bad debts claimed by the assessee in the broking business, in accordance with the legal position established in a previous judicial pronouncement.