TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 792
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....d the same was disposed off in the following manner :- "The Court : After hearing the learned Advocates appearing for the parties the matter is remanded to the learned tribunal to reconsider the matter in the light of the judgement in the case of Badridas Daga vs CIT reported in (1958) 34 ITR 10 wherein the following views were adopted:- a. the theory that once moneys were put into the bank they had 'got home' and their subsequent withdrawal from the bank would be de hors the business was inapplicable to a business such as banking or money-lending; b. as the business of the appellant consisted in lending moneys, realizing them and making fresh loans, a continuous operation on the bank account by the agent was incidental to the conduct of the business ; c. once it was established that the agent was in charge of the business, that he had authority to operate on the bank account and that he withdrew moneys in the purported exercise of that authority, his action was referable to this character as agent and any loss resulting from misappropriation of funds by him was a loss incidental to the carrying on of the business; and d. the loss sustained by the appellant as a result....
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....issions and perused the materials available on record. The Learned AR filed the sequence of events before us about the conduct of the said broker and the difficulties underwent by him due to his fraudulent acts committed earlier. It is not in dispute that the broker Shri.Pallav Sheth was declared a defaulter and suspended by the Bombay Stock Exchange from entering the capital markets due to his involvement in securities scam in the year 1992. The sequence of events filed by the Learned AR is reproduced herein below for the sake of convenience :- List of Dates and Events May 20, 1992 A sum of Rs. 2 crores was advanced to Pallav Sheth under of portfolio management scheme June 6, 1992 Special Court (Trial of Offences relating to Transactions in Securities) Ordinance, 1992 was promulgated, subsequently replaced by the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992 ("the Special Court Act"). The said law was made because of large scale irregularities and malpractices indulged in by some brokers in collusion with the employees of various banks and financial institutions resulting in diversion of funds from the banks and financial institutions to t....
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....treated the irrecoverable trade debts amounting to Rs. 11,62,253/- and decided to write off the same by crediting the concerned debtor's account. It is not in dispute that the assessee had duly offered income emanating out of this trade debts and hence the assessee is entitled for deduction u/s 36(1)(vii) read with section 36(2) of the Act. 4.4. We find that the reliance placed by the Learned AR on the following decisions squarely supports the case of the assessee:- * 326 ITR 315 (Mad) CIT Vs. Ramakrsihna & Sons Ltd Held, dismissing the appeal, that the transaction of the assessee of financing the subsidiary company was genuine and bonafide. The assessee paid further advances in its own interest with a view to recover the amount given earlier, to sustain a share and to avoid the guarantee being invoked. There mere fact of payment of money after stoppage of interest from the subsidiary company by itself could not be a ground to hold that the transactions were not in the course of the business. There was no bar in law for finacing the subsidiary company. The income received by the assessee from the subsidiary company by way of interest was subjected to tax and the advance made by ....
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....count, that would prima facie establish that it was bad debt unless the Assessing Officer for good reasons holds otherwise. The writing off in the accounts had to be bonafide. Once that the case, the assessee was not called upon to discharge any further burden. After the 1989 amendment in section 36(1)(vii) it was neither obligatory nor was the burden on the assessee to prove that the debt written off by him was indeed a bad debt as long as it was bona fide and based on commercial wisdom or expediency. [Para 10] In the instant case, the assessee has written off bad debt when it was felt that the amount is not recoverable. The satisfaction of the assessee is sufficient for claiming write off the bad debt. Moreover, both the companies have disappeared from Lucknow without making any payment. [ Para 13]. In the light of the above discussion and by considering the totality of the facts and circumstances of the case, there was no reason to interfere with the impugned order passed by the Tribunal. [ Para 14]". * Dy.CIT vs. Oman International Bank Saog in ITA No.7431 (Mum) of 1997 dated 17.5.2006 for Asst Year 1994-95 passed by Mumbai Tribunal Special Bench "Held the Direct Tax Laws....
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.... by the amendment and substituted by the expression "written off as irrecoverable". The word of the law are clear and the intent and purpose of the amendment are manifest. The earlier rule of establishing that the debt has become bad is omitted from the provisions of law. Therefore, there is no occasion or provocation to consider whether the assessee has again to establish that the debt has become dad. In fact, there is no provocation at all to go to that extent of discussion because the amendment has omitted the expression "debt which is established to have become a bad debt."When the amendment has been brought to cure a defect and the amendment has omitted the expression which has made way for such defect there is no reason to ponder over the past and to decide the matter still under the law which stood prior to the amendment [para 33]". In view of the aforesaid judicial decisions, we hold that the assessee is entitled to claim deduction towards write off of bad debts amounting to Rs. 11,62,253/- and we have no hesitation in directing the Learned AO to grant deduction towards the same. Accordingly, the grounds raised by the assessee in this regard are allowed. 5. Bad advances w....
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....events in tabular form stated hereinabove which shows the conduct of the broker Shri.Pallav Sheth. We find that on 27.7.1992, movable and immovable properties of Shri.Pallav Sheth were provisionally attached u/s 281B of the Income Tax Act which was later modified on 14.10.1993. We find in October 1992, the equity shares and debentures of various Indian companies were seized by CBI from the residential and office premises of Shri.Pallav Sheth. We also find that a notice was issued by Bombay Stock Exchange advising members not to deal in shares attached by the Income Tax Department including those seized by CBI. We find that Shri.Pallav Sheth had submitted to a consent decree for a sum of Rs. 50 crores upon application by the Custodian appointed under the Special Court Act which was agreed to be paid in installments. But he paid only Rs. 2 crores and defaulted in the payment of further installments. The Learned AR placed the copy of the Hon'ble Supreme Court judgement to prove these facts in the case of Pallav Sheth vs Custodian and Others reported in (2001) 7 Supreme Court Cases 549. We find that the assessee had patiently waited for recovery of the dues by watching the various judi....
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.... Sugar Co. Ltd reported in (1962) 46 ITR 649 (SC) . The facts before the Hon'ble Apex Court and decision rendered thereon is given below:-" Facts: The assessee who carried on the manufacture of sugar used to advance seedlings, fertilisers and money to sugarcane growers under an agreement by which the growers agreed to sell the next crop of the sugarcane grown by them exclusively to the assessee at current market rates and to have the advances adjusted towards the price of the sugarcane to be delivered to the company. In a certain year owing to drought the sugarcane growers could not grow sugarcane and the advances remained unrecovered. A Committee appointed by the Government recommended that the assessee should ex gratia forgo some of its dues. The assessee accordingly waived its rights in respect of Rs. 2,87,44 and claimed this amount as a deduction under sections 10(2)(xi) and 10(2)(xv) of the incomeITA tax Act. The question was whether the amount of Rs. 2,87,422 which was given represented a loss of capital or was a revenue expenditure: Held, that so far as the assessee company was concerned it was merely making a forward arrangement for the next year's crops and paying an am....