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TMI Blog2011 (6) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... year or any earlier year, it satisfies the condition stipulated in section 36(2)(i) and the assessee is entitled to deduction u/s 36(1)(vii) by way of bad debts after having written of the said debts from his books of account as irrecoverable. Decided in favor of assessee. Credit of Total TDS on Gross Dividend-Net Dividend taxed in hands of Assessee-Share Broker-Held that:- What is to be assessed is the income derived from dividend. Out of the total dividend shown as income ,the assesse has refunded a part of dividend to the clients which have been rightfully reduced from his income and thereby it had offered net dividend amount for taxation along with TDS. Therefore, the total of TDS as well as the net dividend was shown as income. Decided in favor of the assessee. Losses in Speculation business-Share Broker- Rule of consistency to be followed--Held that:-Although principles of res judicata do not apply to Income Tax proceedings since every A.Y. is separate and distinct, However, Revenue cannot take a different view for a particular year and Rule of Consistency should be followed .Assessee should be allowed to set off loss on sale of investments against profit on shares. See CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no infringement of any law. We find similar issue had come up before the Tribunal in assessee s own case for A.Y. 2002-03 and the Tribunal vide order dated 23rd July, 2008 in ITA No. 438/Mum/06 has dismissed the appeal filed by the Revenue. Respectfully following the decision of the Tribunal in assessee s own case for A.Y. 2002-03 and in absence of any contrary decision brought to our notice by the ld. D.R., the ground raised by the Revenue is dismissed. 6. In grounds of appeal No. 3, the Revenue has challenged the order of the ld. CIT(A) in deleting the addition of bad debts of Rs. 6,59,780/- made by the A.O. 7. After hearing both the sides, we find the A.O. disallowed an amount of Rs. 6,59,780/- claimed by the assessee as bad debts on the ground that the assessee could not prove that the debts has become really bad and the same irrecoverable within the meaning of section 36(1)(vii) of the Act. He also held that merely writing off an amount from the books of account did not make the same as eligible for deduction. Further, the amount written off also included the principal amount of purchase consideration which otherwise was also not eligible for deduction within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs.10,27,401/- to the clients to whom the shares actually belong. According to the A.O. credit for TDS cannot be allowed to any person other than to whom the income actually belongs in view of provisions of section 199 of the Act. He, therefore, granted TDS credit of Rs. 8310/- only i.e. to the extent of dividend of Rs.79,150/- actually shown by the assessee. 10.1 In appeal, the ld. CIT(A) directed the A.O. to delete the addition by holding as under:- I have considered the submissions of the appellant and find merit in the same. What is to be assessed is the income derived from dividend. Even if for a moment, it is presumed that the total income from dividend amounting to Rs.11,06,551/- was to be shown by the appellant for claiming the credit of TDS thereon, from the details filed it is clear that Rs. 11,06,551.52 were shown as received by the appellant. Only Rs. 10,27,400.95 were remitted to the clients which have been rightfully reduced from its income. Thus, only an amount only a difference of Rs. 79,150.57 remained which was shown by the appellant as income. Therefore, the total of TDS of Rs.1,15,585.07 as well as the net dividend was shown as income. As such, no additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NSE and is carrying on the business activity in secondary as well as primary market. During the course of assessment proceedings, the A.O. noted that the assessee has made profit in trading in shares/derivatives of Rs.37,30,171/-. The assessee has set off this profit against loss on sale of investment amounting to Rs. 41,35,004/-. On being questioned by the A.O., it was submitted by the assessee that in view of provisions of section 73, the business of purchase and sale of shares, irrespective of their treatment in the books of account, shall be treated as speculation business. Correspondingly, the loss on sale of investment could be treated as business loss eligible to be set off against business income. 13.2 However, the A.O. was not satisfied with the explanation given by the assessee. According to him, the disposal of shares earlier held by the assesse as investment cannot be brought under the ambit of share transaction covered by explanation to sec. 73 of the Act. He, accordingly, adopted the income of the assessee on account of profit in shares/derivatives transactions at Rs.37,30,171/- and disallowed the claim of set off of loss of sale of investments of Rs. 41,35,004/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on income. Even in subsequent A.Y. i.e. for A.Y. 2005-06 also the A.O. has accepted the speculation income. He submitted that from A.Y. 1997-98 onwards the assessee has never offered capital gain. The assessee being a share broker offered income from sale of shares on account of clients as well as on its own account as business income although the shares were shown as investment in the balance sheet since it has to be treated as adventure in nature of trade. Referring to a number of decisions, he submitted that entries in the books of account are not conclusive. He submitted that the principal business of the assessee is brokerage. Referring to the letter addressed to CIT(A) (copy of which is placed at paper book page 28) he submitted that the various submissions filed before him were not at all considered by him properly. He submitted that no one has accepted as to what are the parameters to be followed. Referring to the decision of the Hon ble jurisdictional High Court in the case of CIT vs. Gopal Purohit reported in 122 TTJ 87, he submitted that Rule of Consistency should be followed and the assessee should be allowed to set off loss on sale of investment Rs. 41,35,004/- against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erly. The Tribunal in assessee s own case for A.Y. 2005-05 while deciding the issue had not gone into the facts on this issue. He accordingly submitted that the order of the ld. CIT(A) on this issue be upheld. 14.2 The ld. Counsel for the assessee in the rejoinder relied on the decision of the Hon ble Supreme Court in the case of Radhasoami Satsang vs. CIT reported in 193 ITR 321 and submitted that where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other as the parties have allowed that portion to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 15. After hearing both the sides, we are of the considered opinion that the matter requires fresh adjudication at the level of the A.O. The assesse undisputedly had shown income from sale of shares and had also incurred loss on shares held by it as investment. From the various submissions made by the ld. Counsel for the assessee, we find that the assessee all along was showing speculative income which has been accepted by the Department in 143(3) assessments. However, whether during tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire amount as not recoverable and the same was claimed as business loss u/s 28 of the Act. 16.2 However, the A.O. did not accept the contention of the assessee. He noted that non-recovered debt cannot be treated as a bad debt u/s 37(1)(vii) of the Act since the amount has not been offered for taxation in any earlier years as income of the assessee. Further, the loss cannot be treated as business loss for A.Y. 2003-04 since the loss does not pertain to the year. He accordingly made addition of Rs.7,96,255/-. In appeal, the ld. CIT(A) upheld the action of the A.O. for which the assessee is in appeal before us. 16.2 After hearing both the sides, we find no infirmity in the order of the ld. CIT(A). Admittedly, the provisions of section 37(1)(vii) r.w.s. 36(2) are not complied with. Therefore, the same cannot be allowed as bad debts. Further, the amount also cannot be allowed as business loss since the same relates to a different assessment year and does not relate to the impugned assessment year. We, therefore, find no infirmity in the order of the ld. CIT(A) in upholding the action of the A.O. The ground raised by the assessee is accordingly dismissed. 17. Ground No. 6 by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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