TMI Blog2015 (5) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... incipal, i.e. SC-STCI, as well who did not pay her in line of their receipts from business and as per clause 6.15. We, therefore, hold that it was a business loss for the year under consideration.We, therefore, direct the revenue authorities to allow ₹ 21,20,714/- as business loss and consequential benefits attached to it. - Decided in favour of assessee. Disallowance of Bad Debts - assessee had been that the money could not be recovered from her clients, which were due to be paid to SCSTCI - Held that:- The issue in question is exactly the same was that in Ground above but neither the assessee nor the DR has made any attempt either to reconcile or to differentiate the amounts involved in Ground A and B. It is apparent that the figures too would tally. In such a case it would be better that the AO give an exact finding of fact. We, therefore, set aside the orders of the revenue authorities on this issue and direct the AO to adjudicate afresh. - Decided in favour of assessee for statistical purposes. Disallowance of commission paid - Held that:- The fact that the assessee was in business and has shown brokerage received at ₹ 42,28,330/- has not been disputed or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Disallowance of Commission paid 4,08,872 D Disallowance u/s 40(a)(ia) 40,000 E Addition on account of unexplained cash credit credit under section 68 of the Act 31,427 F Addition on account of unexplained under expenditure u/s 69C of the Act 68,941 A. Additions on account of Gross Receipts - R21,20,714/- Shri Gunjan Nikhil Chandna 2. The Ld. CIT(A) erred in upholding the action of the A.O. in making addition of R21,20,714/- by alleging that the same has been accrued to the Appellant from M/s. Standard Chartered STCI Capital Markets Ltd. The addition of ₹ 21,20,714/- is not at all justified and the same may be deleted. 3. The Ld. CIT(A) failed to appreciate that the amount of ₹ 21,20,714/- has been retained by M/s. Standard Chartered - STCI Capital Markets Ltd for non clearance of dues by various clients registered through the Appellant. The Appellant, therefore prays that the addition of ₹ 21,20,714/- is not at all justified and hence, the same may be deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. The Appellant prays that the disallowance of ₹ 40,000/- is not at all justified and hence, the same may be deleted. 11. The Ld. CIT(A) failed to appreciate that the amount of R40,000/- represents the payment made to the Mr. R. Shri Gunjan Nikhil Chandna Vishwanathan one of the employee of the Appellant. The Appellant therefore prays that the provisions of Section 40(a)(ia) is not at all attracted to the facts of the Appellant's case. Hence, the disallowance of R40,000/- under Section 40(a)(ia) is not at all justified and the same may be deleted. E. Addition on account of unexplained cash credit under Section 68 of the Act - ₹ 31,427/- 12. The Ld. CIT(A) erred in confirming the action of the AO in making addition of R31,427/- treating the same as unexplained cash credit under the provisions of Section 68 of the Act without appreciating the facts and circumstances of the case. The Appellant prays that the addition of R31,427/- is not at all justified and hence, the same may be deleted. F. Addition on account of unexplained expenditure under Section 69C of the Act-Rs 68,941/- 13. The Ld. CIT(A) erred in confirming the action of the AO in making an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute is with regard to money not received. The assessee has been pleading that STCI retained the money in line of money not paid to them by the assessee. The assessee says that she could not pay the money because this money was not received by the assessee from clients and now these monies have become unrecoverable. 11. The revenue authorities on the other hand are of the view that since the amount had become due and accrued to the assessee for which even the TDS certificate is also submitted to the current year, has to be brought to tax in the current year. The AR submitted that being a sub broker, the assessee had entered into Booking Franchise Agreement dated 02.12.2003 between UTI Securities Ltd. (Now Standard Chartered Securities (India) Ltd.) and Mr. Gunjan N Thakkar (assessee), wherein clause 6 pertained to obligations of Franchisee and sub clause 6.4 reads as under 6. immediately on signing of the agreement to register himself/herself/itself with NSF and BSE as sub-broker by completing all necessary formalities and by complying all necessary legal. and operational formalities as required by the Franchisors. 6.2 that the entire cost of the hardware involved such as co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Under these circumstances, the AR submitted that neither the due amounts were recovered nor were they recoverable from clients. On these grounds, the Franchisor forfeited the payment that was due to the assessee. The AR submitted that the assessee had shown the income which has actually resulted in income to her. In so far as the exclusion of retention money was concerned, he placed reliance on the decision of Hon ble Bombay High Court in the case of CIT vs Associated Cables (P) Ltd., reported in 286 ITR 596, wherein the Hon ble Court held, Retention money withheld by contractee pending completion of contract work does not accrue to the assessee-contractor in the year in which the amount is retained . 15. The AR therefore submitted that the money/brokerage held back by the franchisor cannot be taken to be the income of the year, as has been held by the Hon ble Bombay High Court. 16. The DR relied on the orders of the revenue authorities and submitted that the sum was rightly brought to tax. 17. We have heard the facts of the case and have perused the agreement and the case law as cited by the AR. 18. At the outset, we agree with the revenue authorities that sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld tally. In such a case it would be better that the AO give an exact finding of fact. We, therefore, set aside the orders of the revenue authorities on this issue and direct the AO to adjudicate afresh. 29. Ground no. B6 B7 are thus allowed for statistical purposes. 30. Grounds no. C8 C9 D10 D11 pertains to disallowance of commission paid. 31. Though the grounds may be partly linked to ground No. A, but here the dispute pertains to payment of commission by the assessee to its constituents. 32. The fact that the assessee was in business and has shown brokerage received at ₹ 42,28,330/- has not been disputed or disturbed by the revenue authorities. It is also a fact that as per the AO, the assessee would have received income from brokerage at ₹ 67,33,211/-, but declared only ₹ 42,28,330/- which was actually received. To earn that much brokerage, the assessee who in the business must have paid the commission to her brokers/agents and also employed certain staff. On the other hand, the revenue authorities have disallowed the payment of commission u/s 40(a)(ia), which patently means that the assessee has paid the commission and has paid salary to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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