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2018 (7) TMI 61 - AT - Income TaxNature of loss - allowability as busniss loss - assessee settled the account with the client and agreed to bear the losses - Held that:- Since the assessee is in share business and looking to the future business prospects and in order to retain the client agreed to bear the loss to the extent of ₹ 3,78,440/- and claimed the same as expenditure. Existing position of the client Mr. Jagdish Jhawar was squared off in January 2004 and to settle the matter and maintain trade relationship, the assessee had agreed to bear the loss on which settlement was agreed upon in March 2004 and the amount was claimed as expenditure/loss. We also find that the trades with this client were resumed from 15.03.2004 and the assessee had earned brokerage from the said client immediately in the next year amounting to ₹ 3,29,492/- in respect of F&O trade and brokerage at ₹ 1,40,870/- in respect of share trading. We find that due to the said relationship only the assessee was able to make good the loss suffered due to settlement with the client. CIT(A) confirmed the disallowance by holding that the transaction cannot be held to be revenue in nature. Loss borne by the assessee is in the nature of a business loss. The business and commercial expediency of making the settlement with the client and agreeing to bear the loss to the extent of ₹ 3,78,440/- is very well established on records. - decided partly in favour of assessee.
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