TaxTMI 
TaxTMI 
2010 (5) TMI 785
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.... Rs. 6 lacs. We shall now first take the issue with regard to the disallowance of deduction of Rs. 21,40,390/- on account of misappropriation of cash/shares by the accountant of the firm. 3. In this case, the assessee filed his return of income on 31.10.97 declaring total income at Rs. 22,11,660/-. The AO then completed the assessment u/s 143(3) on 28.2.2000 determining the total income at Rs. 45,39,526/-. In the assessment, the AO made addition of Rs. 21,40,390/- by way of disallowance of assessee's claim on account of misappropriation of cash/shares by Sandeep Gupta. In the assessment, the AO has mentioned that the assessee was engaged in the business of share broking. Apart from above, the assessee was deriving income from house property, capital gain and income from other sources. On scrutiny of the profit and loss account for the year ending on 31.3.1997 filed by the assessee, the AO noticed that the assessee has debited an amount of Rs. 21,40,390/-, being misappropriation of cash and difference in clearing of shares by Shri Sandeep Gupta. Assessee vide AO's letter dated 16.12.99 was specifically asked to file a detailed note in respect of the aforesaid claim. In reply t....
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....Tribunal vide order dated 7th December, 2005 disposed of the appeal. Regarding this issue about the claim of deduction on account of embezzlement of cash or shares by the accountant of the assessee, the Tribunal set aside the CIT(A)'s order and restored the matter back to him for taking decision afresh in accordance with law and after providing a proper and reasonable opportunity of being heard to the assessee. While setting aside the matter back to the file of the CIT(A), it was observed by the Tribunal that the CIT(A) has not examined the claim in right perspective and appears to have taken a decision on assessee's appeal in undue haste. In the light of the Tribunal's order, the matter again came up before the CIT(A), who has heard the matter afresh and passed the impugned order dated 21st October, 2009. With regard to this issue regarding disallowance of loss of Rs. 21,40,390/-, the CIT(A) has discussed the matter in para 6 to 6.4.5. In para 6.3 of his order, the CIT(A), in his opinion, has summarized the facts as under: 6.3.1 M/s Wazir Chand Nand and Co. was earlier a partnership firm, with the appellant and his father, Shri Wazir Chand Nanda, as partners, carrying on busine....
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....the appellant for the purpose of investment. Serious allegations of violating SEBI instructions, incomplete books of accounts and removal of books of account from office for making duplicate accounts are also levied by the members of the Kochhar Group against the appellant." 7. In the light of the aforesaid facts narrated by the CIT(A), the learned CIT(A) had drawn the following inferences: (i) The claims and counter claims with regard to the embezzlement of shares were made by the assessee and his clients. (ii) As per letter dated 11.1.96 written by the Kochhar Group (assessee's client), it was stated that shares were transferred by the assessee in his name and in the name of his wife and daughter while the assessee claimed before the Delhi Stock Exchange and Income-tax Department that the irregularities were in fact committed by Shri Sandeep Kumar Gupta. (iii) No FIR was lodged at any time against Sandeep Kumar Gupta. (iv) The assessee's letter dated 26.12.95 addressed to Shri Sandeep Kumar Gupta accusing him of misappropriation of funds of assessee's client and assessee's firm, and notice to the public on 23.11.95 intimating that Shri Sandeep Kumar Gupta has been ....
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....ad also given letter on 16.12.1995 to Delhi Stock Exchange as well as to police dated 30.12.95. All these documents have been considered as self- serving document by the learned CIT(A). We fail to understand that how the letter written to the employee accusing him of misappropriation of funds, giving a notice to the public about expulsion of employee and intimating the matter to Delhi Stock Exchange as well as to the police can be called self-serving documents. All these are relevant documents with regard to the event actually taken place at the relevant point of time. It is not the case that there was any conspiracy between assessee and Shri Sandeep Kumar Gupta for creating false claim particularly in view of the fact that a claim of Rs. 51.38 lacs was discharged by the assessee towards the claim made by his clients. and assessee has also made a claim before the insurance company to indemnify the assessee under Indemnity Insurance Policy. It is also not the case of the revenue that assessee has received the insurance claim during this year so as to set off the same against the loss incurred by the assessee. The details of the loss has been given by the assessee indicating therein ....
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....o disallowed the sum of Rs. 2 lacs on account of expenses. On an appeal, in the first round, the CIT(A) reduced the disallowance to Rs. 50,000/- by granting a relief of Rs. 1,50,000/-. This issue was not carried further before the Tribunal and, therefore, this issue is not a subject matter of the impugned CIT(A)'s order passed in the second round. Therefore, we are not concerned with this issue, which has been finally settled by disallowing the expenses of Rs. 50,000/- only as against Rs. 2 lacs made by the AO. 11. Now, we come to the issue about the determination of capital gain on sale of stock exchange ticket. 12. In the return of income, the assessee had shown sale of stock exchange ticket for Rs. 25 lacs. The assessee adopted the cost of stock exchange card at Rs. 6 lacs as on 1.4.81. Applying the cost inflation index, the assessee determined the indexed cost of acquisition at Rs. 16.86 lacs. Reducing the indexed cost of acquisition of Rs. 16.86 lacs from sale price of Rs. 25 lacs, the assessee arrived at a capital gain of Rs. 8.14 lacs, which was shown as income in the return of income filed by the assessee. In the assessment made by the AO, the capital gain shown by th....
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.... one cannot transact such business. This right can be disposed of by a member by nomination, though subject to the rules and regulations of the stock exchange and settlement of debts and liabilities of the members of the stock exchange. The judgment of the Supreme Court in Stock Exchange, Ahmedabad vs ACIT (2001) 248 ITR 209 applies only to cases where the membership has ceased and has vested with the stock exchange authorities. It cannot apply to cases of continuing membership. Accordingly, in the present case, the transfer of membership card by the assessee to A Ltd. was a transfer of a capital asset within the meaning of Section 2(14) of the Act and consequently the consideration for the transfer is exigible to capital gains tax." 14. In the present case, the assessee has sold the membership of stock exchange. Therefore, any capital gain arising on sale of stock exchange membership card is chargeable to tax as per the provisions contained in the Income-tax Act. Therefore, the income from capital gain on sale of stock exchange card is liable to be included in the assessee's hand as has been rightly included by the assessee himself in the return of income filed by him. 15. T....