TMI Blog2012 (11) TMI 1280X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer, while making this disallowance has observed as under:- From examination of Balance Sheet of Premium Brands Mktg. Pvt. Ltd. it was noticed that provision for doubtful debts had been made of ₹ 1,46,289/- the same has been debited in the P L A/c. Vide this office letter dt. 13.1.97 the assessee was asked to furnish details regarding the same as well as the reasons for writing off the said debts. The assessee in its reply dt.12.3.97 has stated that they had written off debtors of ₹ 1,46,289/- because even after reminding several times to the parties on telephone for making payments, the parties are not responded and accordantly these debts have been considered as doubtful for recovery and hence written off in accounts while making provision of doubtful debts. The reply of the assessee was considered. However, the assessee company has not fulfilled the statutory condition laid down for admissibility of bad debt u/s 36(1)(vii) of the Act. The ITAT Delhi Bench-B in the case of Dy. CIT vs. India Thermit Corpn. Ltd. reported in 56 ITD 307 held that after reading the provision before and after the amendment carefully, we find that as per law p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be decided afresh by the A.O. in the light of Hon'ble Supreme Court decision in the case of T.R.F. Ltd. vs. CIT reported in 323 ITR 327 after ascertaining whether the amount was ever offered as income or not. The ground is allowed for statistical purpose. 6. Ground No.2 relates to addition of ₹ 14,14,06,326/- on account of difference between the estimated market value and disclosed sale of Arvind Mills Ltd. showed by the assessee. 7. The facts in respect of this addition as they emerge from the order of ld. CIT(A) are as under:- 4.2 The facts of the case are that the appellant had sold through broker M/s Chimanlal Lalbhai, Ahmedabad 2,21,037 debentures Part B of Arvind Mills Ltd. to M/s Pinnacle Exports Pvt. Ltd., Ahmedanagar and M/s Rajkumar Engineering Pvt. Ltd. Ahmednagar for a total declared sale price of ₹ 19,01,49,175/-. These were sold by bills dated 14-2-94. Out of the total 2,21,037 debentures sold by the appellant 1,46,037 debentures were sold @ ₹ 839.85 per debentures and the bills dated 14-12-1994 for the sale referred to contracts dated 24-11-1993 and 25-11-1993 and the remaining A.Y. 1994-95 75000 debentures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made @ ₹ 839.75 per debenture vide bills dated 14-2-94 by the appellant's sister concern M/s Marvell Marketing Pvt. Ltd. and A.Y. 1994-95 those bills also referred to contracts dated 24-11-93 and 25- 11-93. Neither the appellant company, nor its sister concern nor the broker and not even the purchasers of the debentures could produce before the Assessing Officer, the copies of the original contracts dated 24/25/26 November, 1993. They could produce only contract notes dated 14-2-94 which were marked duplicate. It was claimed that the original contract notes were lost and on that account duplicate contract notes were prepared on which inadvertently the date of preparing the duplicates contract notes i.e. 14-2-94 was written in place of the dates of original contracts. The broker had also been unable to produce original contract note vouchers for the months of November and December 1993 January 1994 which were claimed to have been lost. iv. The only original evidence produced by the broker was original 'Sauda Book' where the purported transactions were entered into in the month of November, 1993 but the same could not be relied upon because of the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s might have been used for recording the transactions. In view of this, the Assessin Officer referred that the transactions of the appellant ought to have been entered Into the Sauda Book after the transactions of the day on the floor of the Stock Exchange. But the Assessing Officer found that the transactions of 26-11-1993 on the floor of the Stock Exchange were entered from pages 372 to 379 and the appellant's transactions of 26-11-1993 in respect of 75000 debentures was entered on page 378 and not on page 379 as was to be expected. The Broker's explanation that this was a clerical error has not been accepted by the Assessing Officer who has held that this clearly proves that the said transaction was recorded as an after thought only to accommodate the ante-dating of the said transaction between the contracting parties. v) The delivery of the shares was made in the month of Feb, 1994 whereas the delivery of the securities generally takes place within 15 days of the contracts between the parties. The explanation of the broker that the difference between the date of contracts and the date of the bills was on account of the fact that the bills were prepared only whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st by the appellant requiring the parties to procure duplicate contract notes were forwarded to the purchasers by the appellant only and the bills submitted by the parties contained the dates of original contract notes. The broker had produced Sauda Book which is a primary record and in which the transactions are duly recorded and broker had not been able to produce the carbon copies of the original contract notes dated November 1993 as they were lost and as per the Stock Exchange Regulation, the assessee was not bound to retain and produce the same. The Assessing Officer has not accepted this explanation on the ground that none of the A.Y. 1994-95 parties have bean able to produce copy of the original contract notes. (d) In regard to notional 'loss of interest* the appellant explained to the Assessing Officer, that the delays In delivery of securities and realisation of sale proceeds is normal and no prudent business man would charge interest for such delays, The Assessing Officer did not find this explanation satisfactory. (e) The appellant's contention that the across examination statements of Shri Hemant Rasiklal Shah and Shri Munir R Sheth partner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Against this addition, the submission of the assessee has been discussed by ld. CIT(A) in paragraph 4.4 to 4.7 of his order and after taking into consideration these submissions of the assessee ld. CIT(A) deleted this addition by observing as under:- 4.8 I have carefully considered the reasons given by the Assessing Officer and the submissions made on behalf of the appellant. My findings in regard to the three categories of claims made on behalf of the appellant are as under:- i) As regards the claim that the transactions were made in November 1993, I tend to agree with the appellant for interalia, the following reasons: a) Para 2 of the C.B.D.T.'s Circular No.704 dated 28.4.1995 fully covers the case of the appellant who has completed the transactions by actual delivery of scrips and the transfer deeds. b) There is nothing to show that there is any connection between the appellant and the purchasing companies and the transactions appear to be at an arms length. c) The broker and specially his employee Shri Dipen Shah who was no more in employment with the broker have confirmed the contemporaneousness of the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As regards the claim of the appellant that irrespective of the date of contract which is adopted and the market value of the Debenture B on that date, no addition can be made in the case of the appellant as only the real income can be taxed under the I.T. Act, I agree with this claim for the following reasons: a) It is neither the case of the Assessing Officer nor is there anything to show that more price is received by the appellant than that is declared by the appellant and the purchasers. b) Even in respect of assessment of capital gains and for the period for which there was specific provision in the form of section 52(2) to replace sale price by market value the Supreme Court held that it cannot be done unless it was proved that more price was actually received than what was declared. c) There is no provision in the Act for replacing the sale price of traded things by their market value on date of sale. d) The Decisions referred to by the appellant unequivocally show that it is the real income only which can be taxed. e) In my opinion decisions referred to by the Assessing Officer do not apply at all to the facts of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sstatement of value of the shares sold was made by the assessee. This is a case where the assessee had sold the shares at a value admittedly lower than the market price. Yet the shares could not be assessed on the difference amount being her income because no inference can be drawn in the facts and circumstances of the case that the design of the assessee was such that she concealed certain facts and she received the difference of the value by fraudulent means. There was no evidence direct or inferential, nor was there any finding by any income-tax authority that the assessee indulged in such a practice. We are fortified in our view by a judgment of the Supreme Court in the case of CIT v. Shivakami Co. Pvt. Ltd. [1986] 159 ITR 71 (SC). We also find support in our view from a Division Bench judgment of the Bombay High Court in the case of India Finance and Construction Co. Pvt. Ltd. v. B.N. Panda, Dy. CIT [1993] 200 ITR 710. A.Y. 1994-95 We further find that the order of ld. CIT(A) is in conformity with the decision of jurisdictional High Court in the case of Marghabhai Kishabhai Patel Co. (supra) wherein Hon'ble Court referred to the case of Madras High Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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