2016 (2) TMI 669

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..... hi a/w Mr Atul Jasani ORDER P. C. This Appeal under Section 260-A of the Income Tax Act, 1961 (the Act) challenges the order dated 19th April, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal). The Assessment Year involved is A. Y. 2004-2005. 2. The Appellant has urged the following questions of law, for our consideration:- (1): Whether on the facts and in the circumstances of the case and in law, the Tribunal after having noted that the SEBI had cancelled the registration of the Company and SEBI's order was confirmed by the Supreme Court ought to have held that as no legal business activity could be undertaken the loss on account of trading in shares could not be construed as business loss? (2): Wh .....

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..... ction 2(24)(x) r/w S.36(1)(va) of the Income Tax Act? 3. Regarding Questions 2 3:- (a) The Respondent Assessee in its return of income had claimed bad debts in respect of eight parties aggregating to ₹ 38.68 Crores. This was on account of amounts not recoverable pertaining to its stock broking business. The Respondent-assessee had offered the brokerage due from the eight parties as part of its income in an earlier assessment year. During the subject assessment year, the Respondent-assessee claimed bad debts not only in respect of the brokerage amount but also the principal amount which was not forthcoming from their constituents. The Assessing Officer disallowed the entire claim for bad debts on the ground that the Respondent .....

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..... a reported in 342 ITR 285 in allowing the relief of bad debts in respect of the seven independent parties who are its constituents in the share brokerage business. So far as the associated party is concerned, the issue has been restored to the Assessing Officer for fresh consideration. Thus, allowing the appeal of the Respondent-Assessee. (d) Mr. Pinto, learned counsel for the Revenue does not dispute that the issue arising herein is covered by the decision of this Court in Shreyas S. Morakhia(supra) in respect of the seven independent parties and offering of a brokerage as income would satisfy the conditions of Section 36(i)(vii) of the Act read with Section 36(2)(i) of the Act so as to claim as bad debts the entire amount not received. .....

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