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Issues involved: Disallowance of DP charges as revenue expenditure and claim of the same as bad debt.
Dispute over disallowance of DP charges: The assessee, a sub-broker dealing in shares, claimed `1,16,521/- towards DP charges as revenue expenditure. The principal broker had debited the amount without providing customer-wise details. The assessee argued that since it was unable to recover the charges due to lack of information from the principal broker, it should be treated as bad debt. The assessee relied on a tribunal decision in a similar case. Revenue's stance on disallowance: The Departmental Representative contended that the DP charges did not pertain to the assessment year in question and could not be allowed as revenue expenditure. Regarding the claim of bad debt, it was argued that without knowing if the charges were included in previous taxable income, they cannot be considered bad debt u/s 36(2) of the Income Tax Act. Judgment and reasoning: The Tribunal considered both arguments and found that the claimed expenditure was for a previous year, thus disallowing it as an expense for the current year. Regarding the bad debt claim, the Tribunal distinguished the case from the precedent cited by the assessee, as the charges were not related to brokerage income but were incurred as business expenditure. Without details of customers and charges, it could not be treated as bad debt. Therefore, the appeal was dismissed, confirming the lower authorities' decision. Conclusion: The Tribunal upheld the disallowance of DP charges as revenue expenditure and rejected the claim for treating it as bad debt, ultimately dismissing the assessee's appeal.
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