TMI Blog2017 (9) TMI 1354X X X X Extracts X X X X X X X X Extracts X X X X ..... computing the income referred to in Section 28. However, Clause-(i) of sub-section-(2) provides that, in making any deduction for bad debt or part thereof, no such deduction shall be allowed unless such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year. This therefore, means that the assessee has to prove satisfaction of both Section 36(1)(vii) and Section 36 (2)(i), viz. that the bad debt has been written off and that the bad debt has been taken into account in computing the income of the assessee in any one of the years mentioned in Clause-(i) of sub-section (2) of Section 36. A r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red during the previous year relevant to the Assessment Year and hence, cannot be allowed as business expense. Accordingly, the claim of the assessee was disallowed and assessment was completed. 2. In the appeal filed before the first appellate authority, the assessee submitted that it is a sub-broker to the principal broker based at Mumbai, and that as per the directions of the SEBI, the share broker has remitted DP charges for the transaction carried out by the customers served by the sub-broker. It was stated that the principal broker had debited in the account of the appellant with ₹ 31,457.59/- during the previous year 2002-03 and ₹ 85,064.02/- during the previous year 2003-04. According to the assessee, the principal br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2005-06, relevant to the assessment year 2006-07? b) The Appellant having already been assessed on the brokerage income from the shares and the amount written off as bad debt being amount receivable from customers, is not the claim for bad debts legal and valid under section 36(1)(vii)? On that basis is the contrary decision taken by the Appellate Tribunal legal, valid and sustainable? c) Is the Appellate Tribunal justified in failing to consider the principles of law laid down by the Apex Court in the decision reported in 155 ITR 152 (SC), where the facts are identical, in which the Apex Court held that if the assessee had taken into account the income from transactions with customers in computing the income of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereof is written off or of an earlier previous year. 7. This therefore, means that the assessee has to prove satisfaction of both Section 36(1)(vii) and Section 36 (2)(i), viz. that the bad debt has been written off and that the bad debt has been taken into account in computing the income of the assessee in any one of the years mentioned in Clause-(i) of sub-section (2) of Section 36. 8. A reading of the order passed by the Tribunal does not show that an enquiry in that regard has not been undertaken and therefore, we are of the view that the matter requires reconsideration by the Tribunal and the Tribunal should decide the matter afresh giving the assessee an opportunity to substantiate his case, if necessary, by production of additi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
