9911796707
TMI Blog2024 (3) TMI 1403X X X X Extracts X X X X X X X X Extracts X X X X ..... e following facts: (a) The assessee is not in the business of banking or money lending. (b) The assessee was not a broker of NSEL. The transactions were done through the broker M/s Phillips Commodities Pvt. Ltd. in NSEL. It was the broker who paid margin money to NSEL and not the assessee. The amount if any, is re fundable by the NSEL to the broker M/s Phillips Commodities Pvt. Ltd. and not to the assessee and hence the assessee cannot claim the dues from NSEL directly. (c) The Ld. CIT(A) also failed to examine whether the amount of margin money paid by the broker M/s Phillips Commodities Pvt. Ltd. was also claimed as bad debt by the broker from NSEL resulting into double claim of the same amount in the hands of the assessee as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive expenses of Rs. 2,00,000/-. 5. During the hearing before us, the ld. AR specIfically argued that the non- satisfaction as required u/s 14A(2) has not been recorded with reference to the claim of the assessee in respect of the expenditure in relation to the income which was not includable in the total income. On the other hand, the ld. DR vehemently argued that the AO has mentioned from page nos. 3 to 12 about the dissatisfaction and the disallowances have been completed in accordance with the provisions of Rule 8D(2). He relied on the judgments in the case of Haryana Land Reclamation and Development Corporation 302 ITR 218 (P&H), Dhanuka & Sons 12 Taxmann 227 (Col. ), Abhishek Indus tries 286 ITR 128 (P&H) 6. Rebutting the argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. ] [(2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, If the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the statute, as is evident from the mandate of the first part of Section 14A(2). That apart, significantly, the question of applying the statutorily prescribed method would arise only and only If the AO expresses an opinion rejecting the assessee's methodology and the figure offered at the time of assessment. This is material because the jurisdiction to go into the method prescribed in the Rules arises only if the amounts the assessee offers does not have any realistic correlation with the tax exempt income. For instance, in a given case, If a tax exempt income is to the tune of Rs. 5 crores and the assessee is able to satisfy that expenditure relatable to that income or the reasonable nexus to such income is Rs. 25 lakhs, there has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the assessee has invested Rs. 1,50,66,407/- with NSEL in the month of July 2013 and lost the amount owing to the scam. Out of which an amount of Rs. 49,01,320/- is yet to be recovered. This amount has been written off in the P&L account. The Assessing Officer held that since this amount of Rs. 49,01,320/- has not been taken into account while calculating the income in the previous year, the deduction u/s 36(2) is not allowable. 14. Be fore the ld. CIT (A), the assessee has taken twofold arguments, one that the amount is allowable u/s 36(2)(ii), the other being the amount is allowable u/s 28 of the Income Tax Ac t, 1961. The ld. CIT (A) held that since the amount has not been offered to tax hither to, it cannot be considered for applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss but to business expenditure. In the instant case, the assessee paid amount to Philip Commodities India Pvt. Ltd. in the month of June 2013 of Rs.1, 50,66,407/- and also got the amounts till March 2014 and could not receive money of Rs.47, 58, 533/- owing to crash of NSEL. This gives rise to a situation where the assessee incurred business loss owing to his transaction with M/s Philip Commodities India Pvt. Ltd. Hence, the loss will have to be allowable at loss incidental to the business while computing the income u/s 28. Since, it is not an expenditure, the provisions u/s 30 to 37 are not attracted in this case. We hold that loss must be during the course or of incidental to business. It is the nexus with the business which is more rel ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
