TaxTMI 
TaxTMI 
2022 (8) TMI 1476
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....er for claim of Bad Debts written off of Rs.1,79,73,982/- by the assessee disregarding Hon'ble Supreme Court Decision in TRF Ltd. and CBDT Circular No.12/2016 dated 30.05.2016 and the reasons assigned by him are totally wrong and are contrary to the provisions of Income Tax Act, 1961 and rules made there under. 2. The Learned CIT (A) has further grossly erred in confirming the alternate view taken by the Assessing Officer treating the claim of loss on account of non receipt of debtors of Rs.1,79,73,982/- "as loss on account of speculation trading and allowing the same to be carried forward and the reasons assigned by him are totally wrong and are contrary to the provisions of Income Tax Act, 1961 and rules made there under. ....
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....ting thereto are that the assessee has carried out trading in commodities in National Spot Exchange Ltd. (NSEL) through her broker M/s. Anand Rathi Commodities Ltd. The NSEL is a spot exchange for on the spot purchase and sale of commodities. Before the Assessing Officer the assessee submitted that it has purchased and sold commodities on delivery basis through its broker in NSEL Platform. However, the trading operations in NSEL was stopped from 31st July 2013 due to scam and payment crisis. The assessee submitted that she has not received the above mentioned sum of Rs.1,79,73,982/-, since the NSEL has stopped payments to brokers/agents/clients etc., Hence the assessee has decided to write off the amount of Rs. 1,79,73,982/- as bad de....
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....Assessing Officer relied on certain decisions and expressed the view that it is necessary for the assessee to prove bonafides of the claim of bad debts. Accordingly the Assessing Officer held that the claim of bad debts is liable to be rejected and accordingly, he disallowed the claim of bad debts. The Ld CIT(A) confirmed the order so passed by the AO. The Ld CIT(A) also expressed the view that the assessee should have shown the above said amount as its income in any of the years. 7. The Learned AR submitted that the assessee has actually sold goods Before 31.7.2013, but they were recorded in the books of account after 31.7.2013. He submitted that the assessee has included the purchase and sales of commodities in its trading accoun....
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....t the assessee has booked sales of commodities on 3.8.2013 and 17.8.2013 i.e. after the date of suspension of trading operations in NSEL. Admittedly, the assessee could not have sold the commodities after suspension of trading operations in NSEL. However, the learned AR submitted that the commodities have been sold by the assessee prior to 31.7.2013. Thus there is contradiction between the assessee and the Assessing Officer with regard to the date of sales of commodities. Secondly, the learned CIT(A) has expressed the view that the assessee has not complied with the provisions of section 36(2) of the Act i.e. the assessee has not proved the amount written off as bad debts has been declared as her income in any of the years. Howe....
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....d in the preceding paragraph. The assessee may, if so advised, may raise alternative claim of business loss, which may be examined by the AO, if so raised. 13. The ground numbers 2 and 3 relate to the action of the AO in treating the claim of bad debts as speculation loss. The facts relating thereto are that the Assessing Officer noticed that the investigation conducted by Economic Offences Wing showed that the broker M/s. Anand Rathi Commodities Ltd. did not ensure existence of stocks in NSEL warehouses and that they have given false confirmation about availability of stock to the auditor of NSEL. Hence, the Assessing Officer also took an alternative view in this matter, i.e., he held that the trading activities ....
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....ssessee has given false confirmations on availability of the stock, yet there is no proof to show that the stocks dealt within by the assessee were not available. Hence the view taken by the assessing officer, in our view, is not supported by any material. We notice that the assessee has carried on trading operations prior to the sale of two commodities referred above and has declared business income therefrom. The AO has accepted the same as trading of commodities on delivery basis. Hence, we are of the view that the AO was not justified in treating the loss as speculative loss in respect of this transaction alone, when he has accepted the business income declared by the assessee in respect of other transactions. 16. In fact....