TMI Blog2023 (4) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... eivable from the client has to be treated as debt and since it became bad, it was rightly considered as bad debt and claimed as such by the assessee in the books of account. Since this bad debt occurred in the year in question, it was shown by the assessee in that manner. Since the brokerage payable by the client is a part of the debt and that debt had been taken into account in the computation of the income, the conditions stipulated in sub-section (2) of section 36 read with section 36(1 )(vii) stand satisfied in this case. Thus when the debt included brokerage and amount receivable otherwise, Hon ble High Court has expounded if the entire debt becomes bad the same is allowable as bad debt. Decide the issue in favour of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding futures. Due to certain transactions in futures, the account of the client created debit balance of Rs.40,36,304/-. After making certain efforts, the assessee recovered certain amounts and finally the amount of Rs.24,01,075/- could not be recovered by the assessee inspite of recovery proceedings initiated by the assessee. This amount was claimed by the assessee initially as bad debts. As per the AO, the amount has never been taken into account in computing the income of previous year in which such debt or part has become irrecoverable, so he disallowed the same. According to the AO, it is a pre-condition to claim any amount of bad debts on revenue account. 4. Upon assessee s appeal, ld. CIT (A) confirmed the same. 5. Against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med as such by the assessee in the books of account. Since this bad debt occurred in the year in question, it was shown by the assessee in that manner. Since the brokerage payable by the client is a part of the debt and that debt had been taken into account in the computation of the income, the conditions stipulated in sub-section (2) of section 36 read with section 36(1 )(vii) stand satisfied in this case. Hence, question of law stands decided against the Revenue and in favour of the assessee. This appeal is accordingly dismissed. 10. Thus, in identical situation, when the debt included brokerage and amount receivable otherwise, Hon ble High Court has expounded if the entire debt becomes bad the same is allowable as bad debt. Respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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