2018 (1) TMI 242

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....A) was not justified in confirming the action of the Ld. A.O. in making disallowance of loss Rs. 7,.13,392/- out of the total loss of Rs. 15,80,213.70 suffered by the assessee due to brazen embezzlement during the course of share trading business by the errant officials of Religare Securities Ltd." 3. The Assessee is an individual. He is an advocate by profession. For A.Y.2009-10 he filed return of income declaring total income of Rs. 4,33,400/-. In computing total income the assessee had claimed deduction a sum of Rs. 15,80,125/- being the loss on account of share trading. The assessee had appointed M/s. Religare Securities Ltd, who is carrying on share and share brokerage activity as a corporate member of Bombay Stock Exchange Ltd. He ....

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....ed to the AO and he was not in a position to give the exact contract notes for some of the transactions as the broker has not furnished the same to the assessee in view of the pending dispute before the arbitrator. The AO was of the view that since the assessee had not filed any supporting evidence to prove the remaining loss the claim of the assessee cannot be entertained. Hence, loss to the extent of Rs. 7,13,392/- was not allowed as deduction in computing total income of the assessee. 5. On appeal by the assessee the CIT(A) confirmed the order of the AO. Aggrieved by the order of CIT(A) the assessee is in appeal before the Tribunal. 6. The ld. counsel for the assessee reiterated the submissions made before the CIT(A). He also filed....

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....sown the loss. M/s. Religare Securities Ltd had not disputed the quantum of loss as of Rs. 15,76,022/-. The arbitrator ultimately found no substance in the claim of the assessee and dismissed the claim of the assessee against M/s. Religare Securities Ltd. In my opinion this evidence is sufficient to prove the claim of the assessee that he had incurred a loss of Rs. 15,76,022/-. The loss is directed to be allowed as deduction. Ground no.1 is allowed. 8. Ground No.2 raised by the assessee reads as follows :- "2. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the disallowance of Rs. 85,743/- made by the A.O. on account of interest on IL & FS for margin funding in Future an....

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....he basis of revised balance sheet e accepted. Accordingly, assessee's appeal on ground no 3 is dismissed." 12. Aggrieved by the order of CIT(A) the assessee has raised ground no.2 before the tribunal. 13. After considering the rival submissions, I am of the view that the assessee claims that interest need not be capitalized as cost of investment . Therefore the claim for allowing as revenue expenditure ought to have been allowed by the Revenue authorities. I therefore direct the AO to allow the claim of the assessee. However it is made clear that the assessee cannot claim this interest as cost of investment in future. The ld. Counsel for the assessee has made a statement across the bar that the assessee undertakes not to make such....