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TMI Blog2013 (10) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... m to the extent of Rs.27.87 lacs could be claimed thus, i.e., for the current year, on the ground that the debt written off pertains to the current year to that extent, is without merit. What is relevant is not the year to which the debt/s written off pertains, but the year in which the loss in its respect, which is signified by its write off in its accounts as irrecoverable, relates to – Decided in favor of Assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... n offence inasmuch as the said regulations, being prescribed in pursuance to the SEBI guidelines, have force of law. The assessee had also not furnished the break-up of the debts claimed, i.e., in terms of the margin money received, and the value of the shares held there-against. The same was, accordingly, disallowed vide order u/s. 143(3) dated 26.12.2008. In appeal, the assessee relied on the decision by the Special Bench in the case of Dy. CIT vs. Oman International Bank [2006] 100 ITD 285 (Mum) (SB), besides by the tribunal in the case of Dy. CIT vs. Shreyas S. Morakhia, a group concern, as in fact followed by it in the case of Angel Capital & Debt Market Ltd. vs. ACIT [2008] 118 TTJ (Mum) 351. The first appellate authority was of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently, the entire amount of Rs.34.46 lacs came to be disallowed, i.e., Rs.6.59 lacs, as confirmed in the first round (by the first appellate authority), and Rs.27.87 lacs in the second round. In appeal, a remand report was called for by the ld. CIT(A); the assessee having failed to furnish any details in the assessment proceedings. The assessee submitted party-wise details, clarifying of its various attempts to recover the amounts from its clients as being in vain and, further, relied on the decision by the hon'ble court in the case of CIT vs. Shreyas S. Morakhia [2012] 342 ITR 285 (Bom.). The same, however, did not find favour with the ld. CIT(A), who held as under, confirming the disallowance, so that the assessee is in second appeal: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the assessment on the basis of the material on record, applying his best judgment thereto. The appellate authority cannot, by doing so, covertly convert a section 144 assessment into a section 143(3) assessment, even as explained by the hon'ble court in the case of CIT v. Rayala Corporation P. Ltd. [1995] 215 ITR 883 (Mad). The assessee's reliance on the decision in the case of Shahrukh Khan vs. Dy. CIT [2007] 13 SOT 61 (Mum) would in the facts of the case, thus, be of no assistance. So however, it cannot be denied that the A.O. has to in sec. 144 assessment take into account all the relevant facts, arriving at a judicious decision. The only surviving issue before the A.O. was consideration of the assessee's claim toward bad debts writte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce clarified by the hon'ble high court in the case of Shreyas S. Morakhia (supra). As such, we are unable to appreciate the insistence of the Revenue on the assessee showing the entire amount claimed as being routed through the profit and loss account, so as to qualify as a debt u/s.36(1)(vii). As regards the adjustment of margin money, the same is apparent in-as- much as the said sum would only stand to be credited to the client's account, the balance outstanding per which only is recoverable, and which stands written off in the accounts. This, in fact, stands clarified by the assessee to the ld. CIT(A) in the party-wise break-up of the claim furnished again in the appellate proceedings (PB-II pgs.28-33). Like-wise for the objection with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by its write off in its accounts as irrecoverable, relates to. The assessee claiming the loss on the basis that the debt is in its view irrecoverable and, therefore, written off, would, in the absence of anything to the contrary, imply the loss on that account to be for the year of its write off. We have already stated that the genuineness of the write off has not been doubted by the Revenue. In fact, no part of the sundry debtor was considered as doubtful (for recovery) as at the end of the immediately preceding year (Schedule V to the balance-sheet). We have endeavored to consider separately all the objections assumed by the Revenue, i.e., including in the original proceedings, as the A.O. had specifically referred to the earlier asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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