TaxTMI 
TaxTMI 
TaxTMI 
2025 (2) TMI 1408
X X X X Extracts X X X X
X X X X Extracts X X X X
....t this issue stands covered by the decision of the Tribunal in assessee's own case for the A.Y.2014-15 wherein, on similar issue the Tribunal has deleted the said addition. Even the ld. CIT(A) has followed the Tribunal order. For the sake of ready reference, the relevant facts and finding of the Tribunal is reproduced hereunder:- "2. Briefly stated, the assessee company which is engaged in the business of financing. trading and sub-broking of shares and securities, agro commodities and investment broking had e- filed its return of income for A.Y 2014-15 on 27.11.2014, declaring its total income at Rs. Nil (after claiming current year loss of Rs. 2,06,99,797/-). The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act. 3. During the course of the assessment proceedings it was observed by the A.O that the assessee company had inter alia claimed 'bad debts' of Rs. 1,98,70,000/-. On being queried, it was submitted by the assessee that it had carried out purchase and sale of commodities on the platform of National Spot E....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... attached. In fact, the A.O observed that the assessee in part discharge of its outstanding dues was in itself in receipt of amount from NSEL even after FY. 2013-14. Apart from that, the A.O held a conviction that since the trading transactions were guaranteed by NSEL, therefore, compensations against non-delivery of commodities bought on the exchange platform were legally enforceable. On the basis of his aforesaid observations, the A.O was of the view that the claim of bad debts' raised by the assessee due to non-delivery of stock was premature and hence could not be allowed. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(A) Observing, that the matter was sub judice and the recovery was still in progress, the CIT(A) was of the view that as the 'writing off of part of the outstanding amount of Rs. 1,98,70,000/- by the assessee was not backed by any sound reasoning, therefore, the A.O had rightly disallowed the claim of the assessee. Accordingly, the CIT(A) dismissed the appeal of the assessee. 5. The assessee being aggrieved with the order of the CIT(A) has carried matter in appeal before us. The Learned Authorized Representative (f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oduced the concept of paired traders contracts and would from time to time issues circulars regarding the commencement of spot trading in a particular commodity. The traders would deal in purchase and sale of commodities on the exchange platform by trading in the paired traders contract through brokers over an electronic platform. As per the bye-laws of NSEL, it acted as a legal counter party in respect of transactions executed and also guaranteed the settlement of net financial obligations. The traded commodities were claimed to be kept in the designated warehouses controlled by NSEL. The exchange used to issue delivery allocation report for the purchase transaction. The warehouse receipts were kept in the custody of exchange and the same were tendered by NSEL against the commodity pay-in obligation of the client. 8 As is discernible from the orders of the lower authorities, the assessee had entered into numerous paired traders contracts in which it bought the commodities and obtained allocation report in lieu of warehouse receipts. As observed by us hereinabove, a scam was unearthed in July, 2013, which revealed that NSEL had defaulted in its payment obligation to its va....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erefore, it would be premature to treat any part of the amount receivable by the assessee from NSEL as bad debt. We have given a thoughtful consideration and are unable to persuade ourselves to subscribe to the view taken by the lower authorities. As per the post-amended Sec. 36(1)(vii), as had been made available on the statute vide the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 01.04.1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the 'debt" is 'written off as irrecoverable in the accounts of the assessee. Admittedly, in the case before us, the assessee company had 'written off 25% of the balance outstanding from NSEL i.e. Rs. 1,98,70,000/- as a 'bad debt in its books of accounts for the year under consideration. As observed by us hereinabove, the only reasoning for declining of the aforesaid claim of the assessee by the lower authorities was that as the case was under investigation and the seized assets were yet to be realized, therefore, the aforesaid claim of the assessee was premature. In our considered view, the aforesaid observations of the lower authorities are not in conformity wi....