2016 (2) TMI 669

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....tion:- (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): Whether on the facts and in the circumstances of the case, the Tribunal was justified in allowing deduction of bad debts under section 36 of the Income Tax Act, in respect of amounts that could not be recovered from its clients with regard to transactions effected by the Company on behalf of its clients? (3) Whether on the facts a....

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....ondent-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-assessee was not a dealer in purchase and sale of shares. Therefore, bad debts on account of not receiving the value of shares could not be allowed as it was not on account of sale of some shares. In the above view, the Assessing Officer disallowed the entire claim of bad debts of Rs. 38.68 Crores as not satisfying the condit....

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....see. (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. Similarly, so far as the issue of writing of bad debts of associated person is concerned, the impugned order has without any observation merely restored the issue to the Assessing Officer for fresh examination. (e) In view of the above agreed position, questions 2 and 3 do not give rise to any substantial question of law. Hence, n....