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2015 (6) TMI 169 - AT - Income TaxDisallowance of STT payment - CIT(A) allowed part relief - Held that - The AO has disallowed the relief to the assessee only on the technical ground of delay in filing the revised return. It is pertinent to note that the AO has to assess the correct income of the assessee on the basis of the provisions of the Act and in case if the assessee inadvertently has offered the higher income the same cannot be taxed by taking the excuse of technicalities. Even otherwise there is no restriction on the jurisdiction and the power of appellate authority to consider a fresh plea in view of the judgment of Hon ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT 1996 (12) TMI 7 - SUPREME Court . Accordingly, we do not find any error or illegality in the order of Ld. CIT(A) in allowing the correct amount of STT claimed by the assessee in the revised return of income. - Decided against revenue. Disallowance of excess donation paid on the basis of revised return - Held that - Since on merits the AO has not disputed the claim of the assessee, therefore we do not find any error or illegality in the order of the Ld. CIT(A) in allowing the correct figure of donation paid by the assessee in the revised return of income. - Decided against revenue. Disallowance of bad debts - Held that - The relevant finding of the AO and submitted that the Board of Directors of the assessee has approved the bad debts in the meeting held on 30.04.07, therefore the resolution is subsequent to the financial year closed on 31.03.07. We further note that the amount of bad debts written off represents the loan in the ordinary course of business of money lending which is carried on by the assessee, therefore when the interest on the said amount is offered to tax, then in view of the judgment of Hon ble Jurisdictional High Court in the case of CIT vs. Shreyas S. Morakhia 2012 (3) TMI 103 - BOMBAY HIGH COURT the same is allowable as business loss. Accordingly, we do not find any merits in the grounds raised by the Revenue when the bad debts were actually written off by the assessee being unrecoverable and it is regarding the advance given by the assessee in the business of money lending. - Decided against revenue. Disallowance of loss of commodity futures by treating as speculation loss - Held that - This ground is covered against the assessee by the decision of this Tribunal of Varsha Corporation Ltd. vs. DCIT 2015 (6) TMI 124 - ITAT MUMBAI wherein held provisions of clause (e) of the proviso to Section 43(5) did not exist during the period when the assessee carried out the transactions. Decided against assesse. Adjustment for computing book profit under section 115JB on account of bad debt disallowance - Held that - In view of our findings on the ground No.3, this ground of the Revenue s appeal is dismissed. Even otherwise when the assessee has actually written off the bad debts in the books of account, then no adjustment can be made while computing the book profit under section 115JB as this amount does not represent any provision on account of bad debts. - Decided against revenue. Disallowance of depreciation and boat expenses - Held that - Except the year under consideration the AO has accepted the claim of the assessee on account of depreciation and other expenses on boat. When there is no change in facts and circumstances in this year under consideration, then the AO has to maintain the rule of consistency. Accordingly, we do not find any error or illegality in the order of the Ld. CIT(A) for this issue - Decided against revenue. Disallowance of loss on share trading by treating the same as speculation loss - Held that - The gross total income for the purpose of explanation to section 73 of the Act shall be the aggregate income prior to giving the setting off under chapter VI of the Act. The authorities below have not dealt with this issue to give an factual finding about the allowable business loss and unabsorbed depreciation as well as the legal point whether the gross total income under the head Business and profession has to be computed after giving effect to the setting off of brought forward business loss as well as brought forward unabsorbed depreciation for the purpose of arriving to a decision that the income from other sources is more than the income from business and profession - this issue is set aside to the record of the AO to reexamine and reconsider the same by considering the claim of the assessee and then decide the same as per law. - Decided in favour of assesse for statistical purposes.
Issues Involved:
1. Disallowance of STT payment. 2. Disallowance of excess donation paid. 3. Disallowance of bad debts claimed. 4. Treatment of loss on commodity futures. 5. Adjustments for computing book profit under section 115JB. 6. Disallowance of depreciation and boat expenses. 7. Treatment of loss on share trading as business loss or speculation loss. Detailed Analysis: 1. Disallowance of STT Payment: The Revenue contested the deletion of an addition of Rs. 59,095/- made on account of disallowance of STT payment based on a revised return filed by the assessee beyond the time limit prescribed under section 139(5). The CIT(A) accepted the correct amount of STT as claimed in the revised return. The Tribunal upheld the CIT(A)'s decision, emphasizing that the AO should assess the correct income and not exploit technicalities to tax higher income inadvertently offered by the assessee. 2. Disallowance of Excess Donation Paid: The Revenue challenged the deletion of an addition of Rs. 28,500/- made on account of disallowance of excess donation paid, based on a revised return filed beyond the prescribed time limit. The CIT(A) accepted the claim of the assessee. The Tribunal found no error in the CIT(A)'s order, noting that the AO did not dispute the claim on merits. 3. Disallowance of Bad Debts Claimed: The Revenue disputed the deletion of an addition of Rs. 3,50,481/- made on account of disallowance of bad debts claimed, arguing that the amount was capital in nature and the approval by the Board of Directors was post the financial year. The CIT(A) allowed the claim following the Supreme Court's decision in "T.R.F. Ltd. vs. CIT." The Tribunal upheld the CIT(A)'s order, noting that the bad debts were revenue in nature and allowable as business loss, as the interest on the said amount was offered to tax. 4. Treatment of Loss on Commodity Futures: The Revenue contested the CIT(A)'s decision to treat a loss of Rs. 13,95,241/- on commodity futures as a business loss instead of speculation loss. The Tribunal referred to a previous decision in "Varsha Corporation Ltd. vs. DCIT," which held that transactions through MCX, not being a recognized stock exchange at the relevant time, should be treated as speculative. The Tribunal restored the AO's findings but remanded the issue for recomputation of the speculation loss. 5. Adjustments for Computing Book Profit Under Section 115JB: The Revenue challenged the CIT(A)'s decision that the AO was not justified in making adjustments for computing book profit under section 115JB concerning bad debts disallowed. The Tribunal dismissed this ground, noting that once bad debts are actually written off in the books, no adjustment is required while computing book profit under section 115JB. 6. Disallowance of Depreciation and Boat Expenses: The Revenue contested the deletion of an addition of Rs. 11,69,603/- made by disallowing depreciation and boat expenses, claiming them as personal expenses. The CIT(A) allowed the claim, noting that similar claims were allowed in earlier and subsequent years. The Tribunal upheld the CIT(A)'s order, emphasizing the consistency rule, as the AO had accepted the claim in other years without any change in facts and circumstances. 7. Treatment of Loss on Share Trading: The Revenue disputed the CIT(A)'s decision to treat a loss of Rs. 1,50,64,439/- on share trading as a business loss instead of speculation loss. The AO treated the loss as speculative based on the explanation to section 73. The CIT(A) held that the assessee fell under the exceptions provided in the explanation to section 73. The Tribunal remanded the issue to the AO for reconsideration, instructing to reexamine the gross total income after setting off brought forward business losses and unabsorbed depreciation to determine if the income from other sources exceeded the business income. Conclusion: The Tribunal partly allowed the Revenue's appeal for statistical purposes, maintaining the CIT(A)'s decisions on several grounds but remanding specific issues for further examination and recomputation. The order was pronounced in the open court on 15.05.2015.
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