TaxTMI 
TaxTMI 
2017 (5) TMI 1040
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....wever the cruxes of the issue are that:- i. The Ld.CIT(A) has erred in sustaining the order of the Ld. AO who had disallowed the claim of bad debts amounting to Rs. 1,56,47,105/- ii. The Ld.CIT(A) has erred in sustaining the order of the Ld.AO who had made addition of Rs. 2,23,019/- by invoking provisions of Section 14A read with Rule 8D of the Rules. 3. The brief facts of the case are that the assessee is a limited company engaged in the business of share broking, filed its return of income for the relevant assessment year on 15.09.2010 declaring income of Rs. 2,49,52,000/-. The case was selected for scrutiny and assessment was completed u/s.143(3) of the Act on 30.03.2013, wherein the Ld. AO disallowed the claim of bad debts amounting ....
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....of bad debts relating to brokerage income and bad debts relating to purchase of shares against which payment was not received, was not produced. iii. Some of the parties against whom bad debts were claimed relating to purchase of shares against which payments were not received, gave contradictory statements viz.:- a) Shri P.S. Kathirvel against whom bad debts of Rs. 29,193/- was written off stated that he did not have any knowledge about the share transaction made in his name. b) Shri R. Sivasankar against whom bad debts of Rs. 12,061/- was written off stated that the assessee company had adjusted such loss from the salary of the employees who had allegedly traded in shares without the knowledge of the client. iv. Bad debts written of....
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.... 131 of the IT Act that the parties have never invested in or associated with the assessee company. I have also perused the report in of the Inspector of Income tax wherein one Mr. Bichitra Behra has denied to have invested or associated with the assessee company. During the course of assessment proceedings, the AO had recorded statements of the few persons on test check basis and all of them have denied the relevant transaction. The AR of the appellant did not avail opportunity of cross examination of the persons before AO. At the time of assessment proceedings, the AR of the appellant kept silent without doubting the veracity of the contents of the replies given by the persons. Further, the AR of the appellant did not furnish any details ....
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....hares. He further argued that, based on the statements of few clients who did not have good relationship with the assessee and who had defaulted payment to the assessee, the Ld.AO had arrived at the harsh decision of disallowing the entire claim of bad debts. It was therefore pleaded the claim of bad debt may be allowed and the addition made by the Ld.AR on this ground may be deleted. The Ld.DR on the other hand argued in support of the Revenue authorities. 4.3 We have heard the rival submissions and carefully perused the materials on record. From the facts of the case, it is apparent that the assessee who is a share broker had incurred loss on account of two counts:- 1) Non-payment of brokerage charges by the client of the assessees whic....
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....uld be entitled to claim deduction on account of the same. In the case of the assessee the Ld.AR had explained before the Ld.AO that the loss was either due to failure on the part of the clients of the assessee to make payment for the purchase of shares on behalf them by the assessee or due to failure on their part to deliver the shares traded by the assessee on behalf of the clients and further nonpayment of the brokerage charges which was booked as income by the assessee on mercantile basis. The Ld.AR had further clarified before the Ld.AO that while claiming such loss, due adjustment with respect to sale of shares had been taken into account and only the actual loss is claimed as deduction. Considering the above facts, it is evident that....
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....1,56,47,105/- in the hands of the assessee is not warranted only on the pretext of the lame finding of the Revenue that the details with respect to the claim of deduction is not provided. For the above stated reasons we hereby direct the Ld.AO to delete the addition of Rs. 1,56,47,105/-. 5. Ground No. 2(ii) : Disallowance under Section 14A read with Rule 8D of the Rules: During the course of scrutiny assessment it was observed by the Ld.AO that the assessee had made investment to the tune of Rs. 1,25,80,877/- as on 31.03.2010, wherein it has received dividend income of Rs. 2,70,892/-. The assessee had only disallowed Rs. 5,418/- being the demat charge as expense incurred for earning exempt income. Since, the assessee had not taken into c....