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TMI Blog2015 (1) TMI 1009X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee vide its letter dated 31.01.1996 explained that the said share broker from whom the amount was due to the assessee was declared a defaulter by Ahmedabad Stock Exchange. As on 13.11.1992, a sum of Rs. 13,17,300/- was receivable from the said share broker. The assessee also stated before the Assessing Officer that the Ahmedabad Stock Exchange required the brokers who were to receive the money due from Shri Nagindas Chandulal Shah to lodge a claim with them. Accordingly, the assessee vide letter dated 27.11.1992 lodged a claim for Rs. 14,14,187.50 including interest on this sum due from the said broker. The assessee also received in the Financial Year 1993-94 an interim installment of Rs. 10,000/- in respect of dividend which the assessee had shown as income in Assessment Year 1994-95. Thereafter, in September 1994, the assessee received Rs. 12,25,187/- by cheque from Ahmedabad Stock Exchange. Further, an amount of Rs. 6 lacs was also received by the assessee by cheque from Shri Nagindas Chandulal Shah directly in the month of March 1995 and the total amount of Rs. 18,25,187/- was shown as income in Assessment Year 1995-96 and taxes were paid during that year. In this background ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear or in the earlier assessment year. He, therefore, held that the 600 shares of TISCO given by the assessee to share broker for badla transaction cannot be treated to represent the money lent in the course of money lending business. Therefore, he held that the relevant amount does not represent a debt which can be considered for allowing as deduction as the conditions of section 36(2) are not fulfilled. Accordingly, he disallowed the deduction of Rs. 13,17,300/-. 5. On appeal, the CIT(A) allowed the claim of the assessee. 6. The Departmental Representative supported the order of the Assessing Officer, whereas the Authorized Representative of the assessee supported the order of the CIT(A). 7. We have heard the rival submissions and perused the orders of the lower authorities and material available on record. The undisputed facts of the case are that the assessee is engaged in the business of trading in shares. During the year, the assessee delivered 600 shares of TISCO to a broker namely Shri Nagindas Chandulal Shah in a badla transaction and earned badla interest of Rs. 1,86,365/-. Further, it is also not in dispute that the badla interest of Rs. 1,86,365/- was assessed as bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receivable by the assessee from Shri Nagindas Chandulal Shah who was declared as defaulter by the stock exchange. Thus, in our considered view, as the broker from whom the debt was receivable has in fact become bad during the year under consideration and the assessee had not acquired any legal right to receive the same debt from Ahmedabad Stock Exchange. In our view, merely lodging of a claim does not give rise to a legal right in favour of the assessee. 11. Further, in our considered view, after assessing badla interest as business income of the assessee, it was not open to the Assessing Officer to allege on the same breath that the transactions of giving shares in the badla transaction was not a business of the assessee. Further, in such a transaction, as per the system of accounting, simply because net badla interest was credited in the profit and loss account, it cannot be held that the entire sale value of the shares was not taken into consideration for computing the income of the assessee. Moreover, we find that it is an admitted fact that the amount in question when received in the subsequent year by the assessee, the same was assessed to tax by the Revenue in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer, whereas the Authorized Representative of the assessee supported the order of the CIT(A). 16. We have heard the rival submissions and perused the orders of the lower authorities and material available on record. In the instant case, the Assessing Officer disallowed Rs. 3,32,034/- out of Foreign Travelling Expenses claimed of Rs. Rs. 5,42,694/-. The assessee incurred total foreign travelling expenses of Rs. 5,42,694/- and out of the same, treated Rs. 43,704/- as not allowable being fare of children of Directors and claimed the balance amount of Rs. 4,98,990/- as business expenditure. According to the Assessing Officer, the expenses of the assessee's wife was also non-business expenditure. Further, the assessee has disallowed only fare expenses of children and not disallowed other expenses relating to children which ought to have been disallowed in absence of complete details; he treated Rs. 3,32,034/- as relating to ticket of wife and other expenses of wife and two children and disallowed the same. 17. On appeal, the CIT(A) deleted the disallowance by observing as under:- "3.2 I have considered the submissions made by the A.R. of the appellant and the observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 80I. 20. The brief facts of the case are that the Assessing Officer observed that the assessee has claimed deduction u/s 80-I in respect of profits of pigment division. The amount of Rs. 8,97,195/- being 25% of the profit of that division was directly reduced from the profit of Rs. 35,88,781/- of pigment division and in the computation of total income, only the net profit was included. He examined the salary and attendant's register maintained at the factory of the assessee during the course of assessment proceedings and observed that in pigment division two supervisors and 8 workers were employed. He further observed that from December 1992 to March 1993, one more worker was employed and there were 9 workers apart from supervisors working in the pigment division. As per letter dated 23.02.1996, the assessee was required to show cause as to why the claim for deduction u/s 80-I should not disallowed as the condition referred to in section 80-I(2)(iv) is not satisfied. After considering the reply in response to the aforesaid show-cause notice and being not satisfied with the same, the Assessing Officer disallowed the assessee's claim of deduction u/s 80-I amounting to Rs. 8,97,195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Duty draw back received by the appellant is not eligible for deduction u/s 80I, as it cannot be said to be 'derived from' the business. As regards other three items, no interference with the claim made is called for, keeping in view the contentions of the appellant. A.O. is directed to restrict the deduction claimed by excluding the amount of duty draw back received (which is claimed to be Rs. 2,53,710/-). This ground of appeal is partly allowed." 22. The Departmental Representative supported the order of the Assessing Officer, whereas the Authorized Representative of the assessee supported the order of the CIT(A). 23. We have heard the rival submissions and perused the orders of the lower authorities and material available on record. We find that in the instant case, the Assessing Officer disallowed the claim made by the Assessing u/s 80I on the ground that the conditions specified in section 80I(i)(iv) were not fulfilled. The CIT(A) deleted the disallowance without recording any specific finding on the above issue. We, therefore, set aside the order of the CIT(A) on this issue and restore this issue back to the file of the CIT(A) for adjudicating the issue afresh by passing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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