9911796707
TMI Blog2017 (7) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... , the following substantial question of law was framed: "Whether the order of ITAT is perverse, inasmuch as having rejected the assessee's claim of debt, the ITAT ought to have dismissed the assessee's appeal and not remanded the matter to the AO for re-computation of the same as a speculative loss" 3. The facts leading to the present appeal are that the Respondent/Assessee is engaged in the business of finance and investment. The Assessee filed its return of income for the AY in question on 31st December, 1993 declaring an income of Rs. 93,38,110. The Assessee reduced its profits by writing off a sum of Rs. 71.82 lakh in the profit and loss account claiming it to be a bad debt. 4. During the course of the assessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced a sum of Rs. 3.01 crore to the aforementioned broker for investment in badla transactions. Some portion of the money was utilised by the broker for investment in badla transactions and a part was returned. It was stated that as of 30th September, 1992 the outstanding amount owed by the broker was Rs. 2,86,99,698. The Assessee volunteered that "the income generated on account of badla transactions has been duly included in income from badla transactions as shown in Profit and Loss account on page 39 of the printed accounts." 7. The Assessee further explained that the cheques issued by the broker towards repayment of the aforementioned sum were dishonoured. It was noticed that the broker had applied to the Delhi Stock Exchange to resign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformed the AO that the apprehension about the loss arising out of the transaction of being speculative in nature was misplaced since the Assessee had advanced money to be invested in badla transactions and the money was repayable by way of cheques. The Assessee maintained that "by no stretch of imagination, it can be said that the loss arising for non-payment of money due to the assessee can be in the nature of speculative loss." 11. As regards the observations of the AO that the money advanced to the broker had not been taken into account in computing the income of the previous year in which the amount of such debt was written off, it was contended by the Assessee that the badla income earned had been duly included in the P&L account. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade with the broker was in speculative business and the loss suffered on account thereof was a speculative loss "which can only be set off against the speculative income." It was concluded that since in the AY in question the Assessee had earned certain speculative income against which the set off of speculative loss should be allowed to the Assessee the matter should be restored to the file of the AO to re-compute the speculative loss after allowing the set off of speculative income and to carry forward the loss, if any, as per law. 15. The grievance of the Revenue, as articulated by Ms. Vibhooti Malhotra, learned counsel appearing on its behalf, is that the ITAT was in error in proceeding on the basis that the above sum claimed by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... off against the speculative income of the Assessee. He accordingly submitted that the impugned order the ITAT did not call for interference. 17. In the considered view of the Court, the ITAT appears to have misconstrued the nature of the transaction involving the Assessee and the broker Kamlesh Kamal & Co. It also overlooked the basic fact that the Assessee was a finance and investment company. This is evident from its observation in the impugned order that: "Since the assessee himself was not engaged in dealing of shares, it cannot be said to have been engaged in trading of shares." This was plainly contrary to the factual position. Thirdly, it was not the Assessee's case to begin with before the AO, that the amount written off by it was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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