TMI Blog2013 (12) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... ther in DCIT Vs. Shreyas S.Morakhia [2010 (7) TMI 455 - ITAT MUMBAI] - the sum receivable by share broker from clients for transactions undertaken on their behalf is a trading debt - Unrecovered part has to be allowed as deduction – Thus, the assessee is entitled to deduction in respect of the amount becoming unrecoverable from its clients - the deduction has to be restricted to the amount determined after reducing the sum recoverable from sale proceeds of shares with assessee, if any – Order set aside and the matter remitted back to the AO for fresh adjudication – decided against Revenue. Deletion of disallowance on account of Transaction charges – Held that:- Following CIT v. Kotak Securities Limited [2011 (10) TMI 24 - Bombay High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of brokerage which passed through profit and loss account amounting to Rs. 19,00,789. The remaining amount of Rs. 20,05,328 was disallowed. The learned CIT(A) deleted the disallowance. 3. After considering the rival submissions and perused the relevant material on record we find that in principle the question of bad debt in the hands of stock broker stands settled in assessee's favour by the judgment of the Hon'ble Delhi High Court in CIT Vs. D.B. (India) Securities [(2009) 318 ITR 26 (Delhi)] holding that the unrecovered amount by the share broker on behalf of its sub-broker has to be treated as debt and deduction is allowable. It has further been laid down in this case that the shares remaining in the possession of the assessee can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .)]. In view of the candid admission by the learned AR, we set aside the impugned order on this issue and restore the addition made by the Assessing Officer. 5. The only issue in the assessee's cross objection is against sustenance of the above addition of Rs. 98,198 u/s 40(a)(ia) on the ground that no amount was outstanding at the end of the year and hence the disallowance could not have been made u/s 40(a)(ia). This ground is based on the majority view of this Special Bench decision in Merilyn Shipping and Transports. The ld. AR was fair enough to accept during the course of his arguments that the Hon'ble Calcutta High Court, by a recent judgment in CIT v. Crescent Export Syndicate, has reversed the majority view of this Special Bench d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt has reiterated the same view vide its judgment dated 4.4.2013 in CIT VS. Md. Jakir Hossain Mandal. It is still further relevant to note that the Hon'ble Gujarat High Court, vide its judgment dated 9.5.2013, in a series of cases led by CIT VS. Sikandarkhan N. Tunvar has disproved the special bench order in the case of Merilyn Shipping (supra). 7. The ld. AR has relied on the judgment dated 9.7.2013 rendered by the Hon'ble Allahabad High Court in CIT VS. Vector Shipping Services (P) Ltd. to contend that in this case a view favourable to the assessee has been taken. We have gone through the said judgment. It is of paramount importance to note that the only question pressed by the Revenue in that case has been reproduced as under : - " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payable and not which has been paid by the end of the year. These passing remarks, which are only obiter dicta, seem to have been made because the tribunal in the impugned order before the Hon'ble High Court, apart from deleting the disallowance on the ground that M/s Mercator Lines Limited had deducted TDS on salaries paid by it on behalf of assessee. Under such circumstances assessee was not required to deduct TDS on reimbursement being made by it to M/s Mercator Lines Limited.', also referred to the special bench decision in the case of Merilyn Shipping (supra). As it is manifest from the solitary question of law reproduced above that there is no reference to the deletion of disallowance u/s 40(a)(ia) when the expenditure has been paid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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