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TMI Blog2011 (1) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... d to only one factor of dividend and as such the complete implication of interest factor towards the factional out-come factor i.e. entitlement of dividend through the application of rule 8D is improper and unjust and need to be deleted/set aside. II. Claim of Bad debts: - the learned CIT erred in disallowing the claim of bad debts of Rs.1316192/- without appreciating the facts on record and the law pertaining to allowance of Bad Debts." 3. Assessee is an individual who is also a stock broker and member of the Bombay Stock Exchange. He is the proprietor of M/s. Pawankumar Parmeshwarlal dealing in shares and securities. Assessee has filed return of income declaring total income of Rs. 14,34,977/- for the impugned assessment year which inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and arguments of the learned D.R. we are of the opinion that no disallowance is called for under section 14A. Obviously the assessee is maintaining separate books of account for the purpose of business and these investments are in his personal capacity. The A.O. also has not disallowed any expenditure of personal nature out of the income from business or profession in the computation of income in the assessment order. In view of this we are of the opinion that the expenditure claimed in the business of share dealings cannot be correlated to the incomes earned in personal capacity that too on dividend, PPF interest and tax free interest on RBI bonds. In view of this, we are of the opinion that estimation of expenditure of Rs. 20,000/- out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, otherwise should be treated as business loss. The A.O. discussed the issue on three reasons: (i) whether the claim is allowable as bad debt, (ii) whether the claim is allowable as loss, and (iii) whether irrecoverable loss and advances can be written off as bad debts in the case of person who is not a money lender. He discussed the issue elaborately and held that the assessee's claim on account of bad debts is not allowable and disallowed the entire amount. Assessee contested the issue before the CIT(A) both on legal principles as well as on factual basis and made detailed submissions which was extracted by the CIT(A) in the order and rejected the contention holding that the debt has not become bad and the conditions under section 36(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has advanced money as part of business activity, being stock broker. The amount advanced by the stock broker and claim of bad debt was considered by the Special Bench in the case of DCIT vs. Shreyas S. Morakhia (Mum) (SB) 5 ITR TRIB.1wherein it was held as under: - The condition stipulated in the first limb of cl. (i) of sub-s. (2) of s. 36 is that no deduction on account of bad debt or part thereof shall be allowed unless such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year. As per the second limb of cl. (i) of sub-s. (2) of s. 36, the said condition is not applicable where such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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