TMI Blog2011 (1) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the course of business activity are to be treated as an allowable amount under section 36(2). Considering the facts of the case and the fact that assessee has written off the amount in the books of account, we are of the opinion that the amounts are allowable as bad debt. A.O. is free to bring it to tax in the year in which the assessee recovers the amount, if any. - ITA No. 530/Mum/2009 - - - Dated:- 12-1-2011 - Before Shri D. Manmohan, Vice President and Shri B. Ramakotaiah, Accountant Member Appellant by: Assessee in person Respondent by: Shri P.N. Devdasan O R D E R Per B. Ramakotaiah, A.M. This appeal by the assessee is against the order of the CIT(A)-IV, Mumbai dated 19.11.2008. 2. Assessee has raised the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure should not be disallowed on earning interest from incomes. It was the submission of the assessee that no expenditure was incurred by him as most of the shares were in his demat account for long years and dividend was automatically credited to the bank account as and when the companies declared dividend and interest on RBI bonds were also tax free interest and likewise PPF interest is also on the investments made for income tax purposes. It was his submission that none of these activities require any expenditure and as such no amount is disallowable under section 14A. The A.O. was of the view that assessee would have spent some amount for earning the tax free incomes and disallowed an amount of ₹ 20,000/- under section 14A. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and since the assessment year involved is before the introduction of sub-section (2) (3) of section 14A, there is no question of disallowing the amounts invoking Rule 8D. Therefore, the CIT(A)'s direction on this is set aside and the additions so made by the A.O. in the computation of business income is deleted. Ground is considered allowed. 5. Ground No. 2 pertains to the claim of bad-debts of ₹ 13,16,192/-. Assessee claimed the following three amounts of bad debts in the business of vyaj badla: i) Shri Samir Kedia ₹ 11,682 ii) Shri Sushil B. Gupta ₹ 2,04,510 iii) KNA Securities P. Ltd. ₹ 11,00,000 Total ₹ 13,16,192 It was assessee's submission that these amounts are advanced in the course of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid person had not returned the money due to certain family problems and business operations and assessee furnished the correspondence with the President of the Bombay Stock Exchange and letter addressed to various people about the steps taken to recover the amount and ultimately, after exhausting the legal requirements wrote off the amount in the impugned assessment year. It was submitted that the assessee is in the business of vyaj badla and monies were extended towards purchase of shares in the stock exchange and the amounts are to be allowed as bad debts. It was his submission that the amount has become bad and the A.O. and CIT(A) were not correct in disallowing the amount which could not be recovered. 6. The learned D.R., however, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same has to be considered at appropriate stage while dealing with the arguments raised by the Departmental Representative referring to the said limb. At this stage what is to be considered is whether the condition stipulated in the first limb of s. 36(2)(i) is satisfied in the case of the assessee in as much as whether the debt representing amount receivable by the assessee as share broker from his clients against purchase of shares on their behalf or part thereof can be said to have been taken into account in computing the income of the assessee. Hence the amounts advanced by the assessee in the course of business activity are to be treated as an allowable amount under section 36(2). Considering the facts of the case and the fact that a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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