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TMI Blog2012 (2) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-2-2012 - MR. JUSTICE SANJIV KHANNA, MR. JUSTICE R.V.EASWAR, JJ. For Appellant: Mr. Kamal Sawhney, Adv. For Respondent: Mr. Piyush Kaushik, Adv. O R D E R This appeal by Revenue under Section 260A of the Income Tax Act, 1961 (Act, for short) impugns the order dated 31st March, 2010 passed by the Income Tax Appellate Tribunal (for short, the tribunal) in the case of Prasad and Company Pvt. Ltd. The appeal pertains to the assessment year 2000-01. 2. The following two issues have been raised by the Revenue:- (i) Disallowance of bad debt of Rs.1,62,96,953/- made by the Assessing Officer, which has been deleted by the tribunal. It is submitted that the bad debt was not incurred. (ii) Disallowance of Rs.1,99,856/- paid by the respondent-assessee to the National Stock Exchange and Delhi Stock Exchange (NSE and DSE, respectively), which again has been deleted by the tribunal. Case of the Revenue is that this payment was in nature of penalty for violation of law and, therefore, is not allowable as an expenditure under Section 37 of the Act. First Issue 3. Learned counsel for the Revenue submits that the assessee had failed to file relevant contract notes and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad debt were undertaken in the individual capacity of Berijender Ahuja or on behalf of the company employing him. The Assessing Officer did not doubt that the transactions were undertaken and sale/purchase of shares had taken place. There is clear distinction between the two. This becomes apparent when we examine the next paragraph of the assessment order, which for the sake of convenience is reproduced below:- During the course of assessment proceedings, summons u/s 131 were issued to Shri Brijender Ahuja and in his statement recorded u/s 131 on oath, he categorically denied having entered into any share transactions with M/s Prasad and Co. (P) Ltd. in his individual capital. He was also shown the copies of ledger a/cs appearing in the boosk of M/s Prasad Co. (P) Ltd. showing a bad debt of Rs.46296953/- in his name which he told to be totally false and fictitious, stating that these did not pertain to him to all. He has also stated that all the shares transactions were entered with M/s Prasad Co. (P) Ltd. on behalf of M/s First Capital-(India) Ltd.,s he was woking as Vice President of the company. Summons u/s 131 were also issued to M/s First Capital (India) Ltd., the empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondence and efforts made for arbitration etc but he could not file the same. It is simply stated that he has made an effort to recover money from him by going to him personally and requesting him to pay whatever he could simply saying that personal efforts were made to recover the bad debt is not sufficient evidence to substantial the claim of the bad debt. 7. The Revenue along with this appeal has not filed the questionnaire/order sheet entries raised by the Assessing Officer and the reply and documents, which were submitted by the respondent-assessee. It is, therefore, clear that the contention of the learned counsel for the Revenue is different from the contention raised by the Revenue before the tribunal and even the findings/reasons recorded in the assessment order. The Revenue had not doubted that the transactions were reflected in the stock exchanges in question. It appears that the Assessing Officer did not doubt that the transactions itself had taken place, but had doubted and made observations whether the transactions had been correctly recorded in the name of Berjinder Ahuja. 8. On the question whether or not the amount should be allowed as bad debt, the tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent year. I is also not the case of the Assessing Officer that brokerage income on account of these transactions are not accounted for by the assessee in its books of accounts. Hence, as per the judgment of Hon‟ble Delhi High Court being the jurisdictional High Court rendered in the case of CIT v. Bonanza Portfolio Pvt. Ltd. (supra), in the case of share broker where the share broker is purchasing share for his clients and paying money against purchase and money is receivable from clients, if becomes bad and written off by the assessee as bad debts, deduction is allowable as bad debts written off because the conditions stipulated in section 36(1)(vii) and 36(2) are satisfied. It is so held on the basis that since the brokerage payable by the clients is a part of debt and that debt has been taken into account in the computation of income, the conditions stipulated in sub section (2) of section 36 read with section 36(1)(vii) stands satisfied. In the present case also, this is not the case of the Assessing Officer that brokerage income was not declared by the assessee company on account of these share transactions. Once the brokerage income has been declared by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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