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2015 (10) TMI 594 - AT - Income TaxDenial of benefit of set off of the speculation loss - explanation to section 73 has to be applied on year to year basis and the set off of the loss cannot be allowed in the year in case the conditions laid down in the Explanation are not satisfied, irrespective of the fact that all the other circumstances when the Explanation to Section 73 was applied in A.Y. 2001-02 and that in A.Y. 2006-07 are same - Held that - Once the assessee is carrying on a speculation business and the profits and gains have arisen from that business during the course of the assessment year, the assessee is entitled to set off the Losses carried forward from a speculation business arising out of a previous assessment year. Thus, applying this judgment of the jurisdictional High Court, the assessee is entitled for the set off of the impugned amount of amount of loss brought forward from assessment year 2001-02. No contrary judgment has been brought to our notice by the Ld. DR. Thus, respectfully following the judgment of Hon ble Bombay High Court in the case of Lokmat Newspapers P. Ltd 2010 (2) TMI 94 - BOMBAY HIGH COURT we decide this issue in favour of the assessee company. Thus, the AO is directed to allow the set off the brought forward loss. - Decided in favour of assessee. Disallowance of claim of bad debts - Held that - The only objection of the authorities below was that the impugned amount was not allowable as deduction u/s 36(1)(vii). In our considered view the impugned amount is allowable to the assessee as business loss, in any case. We derive support from the judgment of Hon ble Bombay High Court in the case of Harshad J Choksi vs CIT 2012 (8) TMI 710 - BOMBAY HIGH COURT . Thus we hold that bad debts is allowable to the assessee as business loss having been incurred in the normal course of trading of shares.- Decided in favour of assessee.
Issues:
1. Disallowance under section 14A 2. Set off of speculation loss under section 73 3. Claim of bad debts under section 36(1)(vii) Issue 1: Disallowance under section 14A The appellant challenged the order of the Assessing Officer regarding disallowance under section 14A. However, the ground was not pressed by the appellant's counsel and was dismissed. Issue 2: Set off of speculation loss under section 73 The appellant contested the denial of set off of speculation loss by the Commissioner of Income Tax (Appeals). The appellant argued that the business remained the same, and therefore, the set off should be allowed. Citing the judgment of the Hon'ble Bombay High Court in CIT vs. Lokmat Newspapers P. Ltd., the Tribunal ruled in favor of the appellant, allowing the set off of the brought forward loss from the assessment year 2001-02. Issue 3: Claim of bad debts under section 36(1)(vii) The appellant claimed bad debts amounting to Rs. 14,39,878, which was disallowed by the Assessing Officer on the grounds of being capital in nature. The Commissioner of Income Tax (Appeals) upheld the decision. However, the Tribunal allowed the claim as a business loss, citing the judgment of the Hon'ble Bombay High Court in Harshad J Choksi vs CIT. The Tribunal held that the bad debts were allowable as business loss incurred in the normal course of trading shares. In conclusion, the Tribunal partly allowed the appeal of the assessee, directing the Assessing Officer to allow the set off of the brought forward loss and grant the benefit of deduction for bad debts.
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