TaxTMI 
TaxTMI 
2026 (2) TMI 1354
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....nfirming the stand of the Ld. ACIT to treat normal business loss as speculation loss. 2. The Ld. CIT(A) erred in upholding and confirming the stand of the Ld. ACIT to hold bad debts as speculation loss and further erred in upholding and confirming the stand of the Ld. ACIT to reject the claim of bad debts amounting to Rs. 2,75,47,930/-. 3. The Ld. CIT(A) erred in upholding and confirming the stand of the Ld. ACIT to reject the claim of business expenses under various heads." 3. The registry has marked delay of 1299 days in filing the present appeal. When the appeal was taken up for hearing Learned Authorized Representative for the Assessee appearing before us submitted that the delay in filing the present appeal be condoned and in this regard reliance was placed upon the affidavit filed by the Assessee along with application seeking condonation of delay in filing the appeal which reads as under: "1. That I am regularly assessed to tax for more than four decades and have been regularly filing my Return of Income from year to year. 2. That I am presently assessed by ACIT, Circle 17(1), Mumbai under PAN AAEPD6376J. 3. That aggrieved by t....
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.... & others AIR 1987 1353 (SC) the Hon'ble Supreme Court has, while dealing with the issue of condonation of delay, emphasized that substantial justice should prevail over technical considerations. Every day's delay must be explained does not mean that a pedantic approach should be taken and that the aforesaid doctrine must be applied in a rational common sense and pragmatic manner, more so in circumstances where a litigant does not stand to benefit by lodging the appeal late (as is the case in appeal before us). Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. Accepting the explanation given by the Assessee to be reasonable, we hold that in the present case the Assessee was prevented by the sufficient cause from filing the present appeal before the Tribunal within the prescribed time. Accordingly, we condone the delay of 1299 days in filing appeal before the Tribunal and proceed to adjudicate the grounds raised on merits. 4. The relevant facts in brief are that the Assessee is a resident indi....
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....was informed by its broker that NSEL had issued press release on July 15, 2013 and a circular on July 16, 2013 which specified that NSEL had received a directive from the Department of Consumer Affairs (DCA) requiring NSEL to Submit and undertaking that new contract would not be launched until further instruction from the concerned authority. Ultimately a circular was issued on 31 July, 2013 suspending trading and deferring settlement of one day forward contract. A copy of circular is enclosed herewith (Annexure 2). As a result there was total loss of trading interest in the market due to underlying uncertainties. 10. After these developments no payment were received and it was unilaterally decided by NSEL to stagger the outstanding payments indefinitely. 11. Subsequently there were failures on the part of NSEL to honour the commitments of assured payments time and again. Accordingly the broker expressed his inability to honour the commitment due to non payment of dues by NSEL 12. These developments broke out in public and police case was filed against NSEL and its Associates. 13. After marathon efforts from all corners no payment could be realis....
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....s, i.e. traders were required to buy on the near contract and sell on the far side in every commodity. Thus, it operated in both the spot and future contracts for commodities since spot delivery contracts are ready delivery contracts as defined in clause (i) of section 2 of Forward Contracts (Regulation) Act, 1952, which put these transactions outside commodity derivatives. Thus, the losses accruing to assessee from trading on NSEL falls squarely within the ambit of speculative transaction and the gains or loss resulting from such transaction should rightly be characterized as speculative in nature. Flowing from the discussion above, the losses amounting to Rs 2,62,71,507/- are being treated as speculative losses and in accordance with provision of section 73, such losses can only be set off against profits and gains of another speculation business. The details of speculative losses is given in below mentioned table:- Particulars Amount (in INR) Amount (in INR) Sales (Vyaj Badla NSP) 19,32,83,253 Purchase (Vyaj Badla NSP) 12,88,22,466 (19,04,95,553) Add: Opening stock (Vyaj Badla NSP) 6,16,73,086 Profit from Speculative Transactions &nb....
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....r the Appellant recognized Purchases of Commodities (NSEL) amounting to INR. 19,04,95,553.27/- and Sales of Commodities (NSEL) amounting to INR. 19,32,83,253.03/-. The Assessee also debited to the Profit & Loss Account INR. 28,764,372.06/- as bad debts written off during the relevant previous year being part of consideration from Sale of Commodities (NSEL) not realized on account of NSEL scam. The Assessing Officer treated the commodities transactions as speculative transactions and computed loss of INR 2,62,71,507/- arising from the same. In appeal preferred by the Assessee, the CIT(A) declined to interfere with the order passed by the Assessing Officer on this issue. Thus, in effect, the CIT(A) concluded that all the transactions undertaken by the Assessee were speculative in nature. During the course of hearing before this Tribunal the Learned Authorised Representative for the Assessee had placed reliance upon the decisions of the Delhi Bench of the Tribunal in the case of Chowdray Associates Vs. Assistant Commissioner of Income Tax [ITA No.3298/Del/2019, Assessment Year 2015-2016, dated 11/03/2020], the relevant extract reads as under: "25. We have also gone through th....
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....TJ Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, Dated 30th May, 2016 Subject: - Admissibility of claim of deduction of Bad Debt under section 36(1)(vii) read with section 36(2) of the Income-Tax Act, 1961- reg. Proposals have been received by the Central Board of Direct Taxes regarding filing of appeals/pursuing litigation on the issue of allowability of bad debt that are written off as irrecoverable in the accounts of the assessee. The dispute relates to cases involving failure on the part of assessee to establish that the debt is irrecoverable. 2. Direct Tax Laws (Amendment) Act, 1987 amended the provisions of sections 36(1)(vii) and 36(2) of the Income Tax Act 1961, (hereafter referred to as the Act) to rationalize the provisions regarding allowability of bad debt with effect from the April, 1989. 3. The legislative intention behind the amendment was to eliminate litigation on the issue of the allowability of the bad debt by doing away with the requirement for the assessee to establish that the debt, has in fact, become irrecoverable. However, despite....
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.... the NSEL not to allow the bad debts claim would be legally untenable owing to the provisions of the Act, Circular of the CBDT and ruling of the Hon'ble Apex Court in the case of TRF Ltd. Vs CIT (323 ITR 397). 30. Further, we have also perused the order in the case of M/s Omni Lens Pvt. Ltd. in ITA No. 2818/Ahd./2010 wherein the matter was referred back to the file of the AO to examine the issue of speculation/non-speculation business after taking note of crucial aspect of actual delivery of the commodity, if any, as claimed and to ascertain as to how the entire debt has turned bad when the assessee was purportedly in possession of the goods purchased. The issue before us is clear on this aspect. 31. The matter before us deals with the non-recovery of the advances given to the brokers. The AO, for the instant year held that the assessee is dealing in speculative transactions and invoked provisions Section 43(5) of the Act. The AO has also held that the assessee has been carrying trade in commodity derivatives. Section 43(5)(e) considers an eligible transaction in respect of trading in commodity derivatives carried out in a recognized association shall not be deeme....