TMI Blog2019 (1) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 36(2)(i) are fulfilled where a part thereof is taken into account in computing the income of the assessee - Decided in favor of the assessee. Disallowance on account of loss on trading - AO disallowed it treating the same as speculation loss as per section 73 - Held that:- The loss claimed by the assessee does not fall within the purview of section 73 of the Act. On the identical issue the decision of Ahmedabad ITAT in the case of ITO vs. Rajvi Securities Pvt. Ltd. [2012 (4) TMI 207 - ITAT AHMEDABAD] supports the contention of the assessee - Decided against revenue Addition on account of prior period expenses - such expenses are to be considered in the year in which it pertains - Held that:- CIT(A) was of the opinion that the assessee has rightly claimed the said expenditure in the year under consideration as it was crystallized in the year under consideration only and also it is following the said accounting practice consistently. Accordingly, the disallowance made by the Assessing Officer was deleted by the ld. CIT(A).- Decided against revenue - ITA No.2675/Ahd/2015 - - - Dated:- 3-12-2018 - Shri Pradip Kumar Kedia, Accountant Member And Shri Mahavir Prasad, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee submitted that from the above details it can be appreciated that all the bad debt pertains to his client which was not recovered from the client has been written off as bad debt. It was further submitted by the assessee that he is in the business of commodities broking. Assessee had purchased the commodities on behalf of his client in the exchange and against the purchase of the said commodities, he had paid the money to the exchange on behalf of the said client. The brokerage received by the assessee was shown as income in his books of account of the immediate previous year. Since the balance amount could not be received from the clients on whose behalf the aforesaid commodities were purchased, the assessee during the year in question had written off the said sum as a bad debt/business loss. 4. Against the addition of ₹ 61,26,915/- assessee preferred first statutory appeal before the ld. CIT(A) who granted relief to the assessee. Now the Revenue is before us. In this case appellant had claimed ₹ 61,26,915/- as bad debt but the Assessing Officer was not satisfied with the contention of the assessee and held that condition laid down in section 36(2) of the Act wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in appeal before the ld.CIT(A) submitted that the said loss was on account of difference with the parties while entering into the transaction for purchase and sale on behalf of the client the amount was debited to the clients account and ultimately the assessee had to pay the amount to the exchange. Assessee has also submitted that the decision citied by the Assessing Officer of Pankaj Oil Mills is not applicable because the assessee has not claimed that the transactions are entered into for his own self for the purpose of hedging. Assessee had also relied upon the decision of Parkar securities Ltd. vs. DCIT 8 SOT 257 (Ahd) and ITO vs. Rajvi Securities Pvt. Ltd. 19 Taxmann.com 274 (Ahd.). Ld. CIT(A). The ld. CIT(A) was of the view that the loss claimed by the assessee does not fall within the purview of section 73 of the Act. The ld. CIT(A) observed that on the identical issue the decision of Ahmedabad ITAT in the case of ITO vs. Rajvi Securities Pvt. Ltd. 19 Taxmann.com 274 (Ahd.) supports the contention of the assessee, the relevant paragraph of the said decision as reproduced by the CIT(A) reads as under :- Section 28(i), read with section 73 of the Income Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... logies Limited and it was making such type of payment on year on year basis. The assessee is accounting for the expenses as and when the bill is received by it. The amount gets crystallised only on receipt of the bill from the said party. Assessee is consistently following the said method of accounting. Assessee had also pointed out that the said party is raising the bills for calendar year from January to December. The assessee had also submitted copy of invoices for the said party for previous and succeeding assessment year. Further, no such disallowance was made by the A.O. in the past or in succeeding year. The assessee had relied upon the decision of Saurasthra Cement Chemicals Industries vs. CIT 213 ITR 523. The relevant extract from the said decision, as reproduced by the ld. CIT(A) in his order, is reproduced as under :- . 8. Question No.4 relates to the claim of the assessee for deduction of ₹ 2,79,057 on account of surtax liability as deductible expenses for the purpose of business. It has been brought to our notice that the answer is squarely covered by a decision of this Court in the case of S.L.M. Maneklal Industries Ltd. v. CIT [1988] 172 ITR 176 , in fav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cantile basis and that it related to a transaction of the previous year. The true profits and gains of a previous year are required to be computed for the purpose of determining tax liability. The basis of taxing income is accrual of income as well as actual receipt. If for want of necessary material crystallising the expenditure is not in existence in respect of which such income or expenses relates, the mercantile system does not call for an adjustment in the books of account on estimate basis. It is actually known income or expenses, right to receive or liability to pay which has come to be crystallised, is to be taken into account under mercantile system of maintaining books of account. An estimated income or liability, which is yet to be crystallised, can only be adjusted as contingency item but not as an accrued income or liability of that year. To illustrate, we find from the details of the expenses that certain expenses are related to the fees paid to the experts, out of pocket expenses incurred by the consultation firm and discharge of liability on account of demurrages claimed by the port authorities. Such items without investigation into the fact about the crystallizatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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