TMI Blog2016 (3) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... 36 - DELHI HIGH COURT] , as assessee offered brokerage income which was taken into account in the books, the principle amount has to be considered as full amount of debt for claim of deduction. Even if a fraud was committed on that account the same is allowable as bad debt. We, therefore, uphold the order of the CIT(A) in allowing assessee’s claim of bad debts. - Decided against revenue - ITA Nos. 353 & 354/Hyd/2014 - - - Dated:- 19-2-2016 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The Revenue : Smt. K. Mythili Rani For The Assessee : Shri V. Raghavendra Rao ORDER PER B. RAMAKOTAIAH, AM: Both these appeals are preferred by Revenue against a common order of ld. CIT(A) - IV, Hyderabad, dated 20/12/2013 for the AYs. 2007-08 and 2009-10. 2. Briefly the facts of the case are that assessee is engaged in the business of stock and share broking, portfolio management services and provision of depository services. The AO completed the assessment by making the following additions/disallowances: Sl.No. Particulars 2007-08 2008-09 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a change in the assumptions based on which investments decision was originally made. c. If there was an urgent requirement of funds for which it was necessary to liquidate the investment. It was also submitted that assessee maintained separate DMat accounts and transactions are shown in Investment accounts only and was accepted in earlier years as such. The AR relied upon various decisions in support of assessee s claim, which were mentioned by the CIT(A) in his order at page 7 8. 5. The CIT(A) after examining the issue elaborately with Board Circulars, judgements of Hon ble Supreme Court and Hon ble AP High Court for both the years under consideration, held that the gains on shares categorized as investment in assessee s books was assessable as capital gains and not as profits from business. After detailed analysis Ld. CIT(A) summarised the reasons as under: a. The shares were classified as investment in the books of account. b. The transactions were delivery based, except for two transactions for each of the two years for which assessee has furnished a reasonable explanation. c. Assessee had not used borrowed funds for the purpose of investment. d. The freq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,78,83,305 (STT) 3 2004-05 1,49,71,404 - 4 2003-04 8,49,869 2,08,139 5 2002-03 23,61,011 5,68,190 6 2001-02 73,98,933 (63,580) 7 2000-01 10,15,948 18,85,882 8 1999-00 3,82,462 2,08,682 9 1998-99 3,33,004 23,863 10 1997-98 3,08,946 - Referring to the above table, the ld. AR submitted that assessee was having short term capital gains right from the early existence of the company and regular substantial dividends could also show the objective of assessee is earning the dividend income. It was also submitted that AO did not disturb the treatment given to sale of shares in investment account as long term capital gains, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the years under consideration are dismissed. 10. As regards the second issue pertaining to the claim of bad debts of ₹ 58,84,364 written off by assessee in AY 2008-09. Assessee had claimed that there was a fraud at one of its branches by its employees to the extent of ₹ 1,05,74,635/- of which a sum of ₹ 46,90,271 was recovered and the balance sum of ₹ 58,84,364 was claimed as a bad debt. Assessee submitted that it did not file a complaint with the police for the following reasons: a. The business of the company was sensitive in nature and its reputation was of paramount commercial importance. b. The employees concerned had left a suicide note due to which the focused on recovery of the amounts instead of taking action against the persons concerned. Assessee also submitted that due to its efforts, it had recovered a sum of Rs,46,90,271 from the perpetrators who had also submitted confession letters. 11. The Assessing Officer did not accept assessee s plea. He held that for a claim of bad debt to be allowed, it should be written off in the books of account and that assessee had admitted in its letter dated 26.10.2010 that a sum of ₹ 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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