TMI Blog2012 (3) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CIT (A). Gains arising out of sale of shares/units are treated as business income instead of short term capital gain - Held that:- We were informed that in earlier years when assessee suffered Capital Loss the AO treated them as business loss and Speculation loss. As seen from the paper book placed, the assessee had made specific request to the Assessing Officer to set off speculation losses determined in earlier year’s consequent to change of head from short term capital loss to speculation loss on the same set of transactions. This aspect of the claim has to be examined by the authorities, since earlier year orders were not available on record. Without going into merits of rival contentions, we are of the opinion that the additional ground being a legal ground can be admitted and we order accordingly. - ITA No. 1873/Mum/2010 - - - Dated:- 21-3-2012 - R. S. Padvekar (Judicial Member) And B. Ramakotaiah (Accountant Member) For the Appellant :. Nitesh Joshi For the Respondent : Dipak Ripote, DR ORDER B. Ramakotaiah (Accountant Member) This is an appeal by the assessee against the orders of the CIT (A)-8 Mumbai dated 20.01.2012. The assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebts on the reason that the assessee was offering only the brokerage income and debts with reference to the amounts not recoverable from the clients does not satisfy the condition prescribed under section 36(2). He also held that any debt cannot be allowed, only the bad debt can only be allowed under section 36(1)(vii). He made elaborate discussion from page 17 to page 25 of the order considering various case law on the issue and disallowed the claim. Before the CIT (A) the assessee made same submissions without success. 5. Before us the learned Counsel submitted, referring to the table extracted in the assessment order that Item Nos.15 and 16 are in the nature of service charges recoverable being depository/WDM receipts offered as income in the earlier years. He referred to page No.3 in the paper book about the details filed before the Assessing Officer explaining that these two charges were included as income in the previous years. Therefore, they satisfy the conditions of section 36(2). It was further submitted with reference to the balance amounts, the assessee has taken necessary steps to recover and when the management felt that there is no possibility of recovery the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench in the case of Shreyas S. Morakhia (supra) holding that even if accrual of brokerage income and accrual of debt against the clients in respect of share purchase are two different events which happen at two different times, the amount receivable by the assessee on account of brokerage is a part of debt receivable by the share brokers against its clients against the purchase of shares and once such brokerage is credited to the Profit Loss A/c of the broker and the same is taken into account in computing his income, the condition stipulated in section 36(2)(i) gets satisfied. This issue was elaborately considered, discussed and approved by the Hon'ble Bombay High Court in the case of CIT vs. Shreyas S. Morakhia (supra). Similar issue which was before the Hon'ble Delhi High Court in the case of CIT vs. Bonanza Portfolio Ltd 320 ITR 178 (Del.) was also followed in the above case. Therefore, we are of the opinion that the assessee satisfies the conditions stated under section 36(2) and accordingly the Assessing Officer is directed to allow the amounts. Ground No.1.1 is accordingly allowed. 8. Ground No.1.2 is with reference to disallowance under section 40(a)(i) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t examine the merits of the assessee s contention that the amounts are not covered by TDS provisions but only decided the issue on the basis of the Hon'ble Karnataka High Court in the case of Samsung Electronics 320 ITR 209. It was submitted that the Hon'ble Supreme Court in the case of GE India Technology Centre (P) Ltd 327 ITR 456 reversed the decision of the Hon'ble Karnataka High Court (supra) and held that the expression chargeable under the provisions of the Act in section 195(1) shows that the remittance has got to be of trading receipts, the whole or part of it is liable to tax in India. If tax is not so assessable, there is no question of tax at source being deducted. It was submitted that the assessee is covered by the provisions of the DTAA as there was no PE in India. On the basis of the CA certificate, the amount was remitted without any TDS. However, it was fairly submitted that arguments of the assessee are not examined by the CIT (A) as he followed the decision of the Karnataka High Court in the case of Samsung Electronics 320 ITR 209 to confirm the additions so made. 11. The learned Departmental Representative while admitting that the above decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting the loss determined by the Assessing Officer in the earlier years. It was submitted that if this additional ground is allowed, the assessee would not prefer Ground No.2. The learned Departmental Representative, however, submitted that as per the provisions of the Act, the earlier year s determination as speculation loss has no bearing on the issue and further submitted that the orders in earlier years were not on record. Therefore, he is not in a position to offer his comments on the claim of the assessee. It was submitted that the Assessing Officer and the CIT (A) correctly treated the short term capital gain shown by the assessee as business income as the assessee was trading in the shares and units. 14. In reply the learned Counsel submitted that he has no objection if the matter is remitted back to the CIT (A) for consideration of the additional ground as the Hon'ble Bombay High Court in the case of Lokmat Holdings 322 ITR 43 has considered the scope of section 73 Explanation (2) and therefore, in view of the jurisdictional High Court judgment the assessee s contention made before the Assessing Officer during the assessment should be allowed and if that is consider ..... X X X X Extracts X X X X X X X X Extracts X X X X
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