2015 (4) TMI 1257

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....r. It is submitted that the appellant, a share broker, could not be recovered a sum aggregating to Rs. 2,61,09,809/- from its clients in respect of the transactions effected on their behalf including brokerage and having written off the irrecoverable amount is entitled to deduction as bad debts under Section 36(1)(vii) read with section 36(2) ofthe Income-tax Act 1961. 2. Without prejudice and in an alternate, the learned Commissioner of Income-tax (Appeals) erred in not allowing the said amount of Rs. 2,61,09,809/- as business loss. It is submitted that the appellant, a share broker, had suffered the said loss in the normal course of its business and as such same is ought to be allowed as deduction in computing the income for the yea....

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....tared its operation with the assessee on 18.04.2000 with a transaction raising a debit of Rs. 1,66,93,881/-. The assessee did not recover the said amount till the closure of the financial year and in fact the debit balance increased to Rs. 3,28,15,200/- at the year end 31.03.2001. He observed that no prudent businessman will allow its sub-broker to run up huge debit balance right from the day one. The assessee has even issued cheques to the said party despite there was a huge debit balance. Thus, such an action of the assessee defies business and commercial logic. The said payments quite at best can be considered as advance and assessee cannot be entitled to written off the advance to be allowable as revenue expenditure. After noting down i....

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....sessee clearly establish that liability on account of loss had not crystallized in this year. 4. Before us, learned counsel Shri Nitesh Joshi submitted that, it is an undisputed fact that assessee had business transaction with M/s. Kiraj Consultants Pvt. Ltd.. The huge debit balance had arisen during the course of business only. Since amount was irrecoverable during the year the assessee has written off the said amount as bad debt and therefore, same is allowable in view of the decision of Hon'ble Supreme Court in the case of TRF Ltd. vs. CIT reported in 323 ITR 397. He also filed a copy of general ledger account and also the party account of Kiraj consultants to show that the amount has been written off as bad debt. He also pointed out th....