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2008 (9) TMI 612 - AT - Income TaxBusiness expenditure - Disallowance on account of remissery charges/sub-brokerage charges - Addition on account of loan taken from Shri Hitesh Joshi and Smt. Hansa Jhaveri - Disallowance of bad debts. Business expenditure - Disallowance on account of remissery charges/sub-brokerage charges - assessee failed to prove the genuineness of such expenditure - HELD THAT:- It is the settled proposition of law that for claiming any expenditure the onus is always on the assessee to discharge the burden cast on him. In the instant case, the assessee failed to discharge the onus cast on him. The assessee at no point of time has furnished the details to substantiate the genuineness of payment of such commission/sub-brokerage. We find the AO in the body of the assessment order has given a finding that the assessee has earned brokerage income - We further find at no point of time the assessee has given the details of clients which were introduced by late Shailesh Sheth or the nature of services rendered by him to prove the genuineness of the payment. The various papers filed in the Paper Book are only self serving documents without proving the genuineness of the payments - In this view of the matter, we do not find any infirmity in the order of the CIT(A) in confirming the disallowance of sub-brokerage made by the AO. The ground raised by the assessee is dismissed. Addition on account of loan taken from Shri Hitesh Joshi and Smt. Hansa Jhaveri - assessee failed to prove the identity and creditworthiness of the loan creditors and the genuineness of the transactions - HELD THAT:- Assessee has also not brought any other evidence before us so as to prove the identity and creditworthiness of the two persons and the genuineness of the transactions. Mere submissions by the ld counsel for the assessee that the matter may be sent back to the file of the AO so as to enable the assessee to produce the parties, in our opinion, has got no merit and do not find much force, especially in the absence of any fresh material - Therefore, we do not find any infirmity in the order of the ld CIT(A) sustaining the addition in the case of Shri Hitesh Joshi and in the case of Smt. Hansa Jhaveri as unexplained cash credit. Grounds of appeal Nos. 2 and 3 by the assessee are accordingly dismissed. Disallowance of bad debts - assessee is a stock/share broker registered with the stock exchange - On account of bad delivery or non-recovery of brokerage and cost of the scrip became due from different parties - revenue’s contention is that, only brokerage which were taken into account while preparing the profit and loss account and in computing the income of the assessee, can only be considered as a bad debt for the purpose of deduction u/s 36(1)(vii) and not the remainder - HELD THAT:- It is also evident from the record that any part of these amounts i.e., cost of the scrips, were never taken into account by the assessee in computing its income of the relevant previous year, as such, the condition laid down in sub-section (2) is not complied with for these debts - We are of the considered opinion that assessee is entitled to claim for deduction of the bad debt on its writing off in the books of account from its total income u/s 36(1)(vii) only with regard to the brokerage which has been taken into account while computing the total income of the assessee. Since the cost of the scrips were never taken into account, while computing the income of the assessee, it cannot be called to be the bad debt for the purpose of section 36(1)(vii). It can, at the most to be termed as the trading loss which can be allowed subject to fulfilment of other conditions prescribed in this regard. In the instant case, since the bifurcation of the brokerage and the cost of the scrip or compensation are not given, the matter is restored to the file of the AO to re-adjudicate the issue afresh. In the result, appeal of the assessee is allowed for statistical purposes.
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