M/S. PRAVIN RATILAL SHARE AND STOCK BROKERS LTD.,AHMEDABAD vs. THE ACIT, CIRCLE-3,, AHMEDABAD

The assessee has raised following grounds of appeal:- “1.0 The order passed by the Commissioner of Income tax (Appeals) is bad in law. The order is contrary to the provisions of law and the facts of your appellant's case.

0 The CIT(A) erred in upholding disallowance of Rs. 18,565/- The appellant submits that no expenditure was incurred by the appellant for the purpose of earning dividend and therefore disallowance of Rs. 18,565/- is contrary to the facts and contrary to the law. The disallowance of Rs. 18,565/- be quashed.

1 The appellant further submits that the disallowance of Rs. 18,565/- made by the assessing officer is excessive. The appellant submits that on basis of the audited accounts and return of income there being surplus in account of interest, the AO ought not to have considered Rs. 18,565/- while making disallowance under section 14A. The appellant submits that it be so held now. The appellant submits that disallowance if any to be upheld on any technical ground be restricted to a nominal amount. The appellant submits that appropriate relief be allowed.

2 The appellant further submits that provisions of Rule 8D have not been properly applied. The assessing officer be directed to apply correct provisions of Rule 80D.

0 The CIT(A) erred in upholding disallowance of Rs. 1,66,730/- as bad debts. The appellant submits that all the conditions of section 36(1)(vii) r.w.s. 36(2) stood fulfilled in respect of bad debts of Rs. 166730/-. The disallowance of 1,66,730/- be quashed.

1 The appellant without prejudice to above submits that the disallowance of Rs. 1,66,730/- made by the assessing officer is excessive. The appellant submits that disallowance if any to be upheld on any technical ground be restricted to a nominal amount. The appellant submits that appropriate relief be allowed.

0 The CIT(A) erred in upholding computation of tax at Rs. 66,829/-. The appellant submits that computation made by the assessing officer is erroneous and contrary to the facts. The appellant submits the assessing officer be directed to allow credit in respect of securities transaction tax in view of considering short term capital gain as business income. It is submitted that appropriate relief be allowed.”

At the time of hearing, the ld. counsel has not pressed the Ground Nos. 1 to 2.2, so, the same are dismissed as not pressed. Ground nos. 3 to 4 are being adjudicated below.

In this case, return of income declaring income of Rs. 57,18,640/- was filed on 29th September, 2009. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) on 16th September, 2010. During the course of assessment proceedings, the assessing officer noticed that assessee had debited bad debt amounting to Rs. 1,66,730/-. The assessing officer asked the assessee to prove the genuineness of bad debt in view of the provision of section 36(1) and 36(2) of the act. The assessing officer stated that assessee has not furnished the proof that the bad debt claimed had been considered for the computation of income in the year in which the debt was created. He further stated that assessee was a share broker showing only income from brokerage and I.T.A No. 1342/Ahd/2014 A.Y. 2009-10 Page No 3 M/s. Pravin Ratilal Share & Stock Brokers Ltd. vs. ACIT

Aggrieved against the decision of the assessing officer, the assessee preferred appeal before the Ld. CIT(A). The ld. CIT(A) has sustained the addition by simply stating that the provision of section 36(2) were not satisfied.

We have heard rival contentions and perused the material on record. We have noticed that assessee was a public limited company and engaged in the business of providing its services as share broker, investment advisory of IPO and other investment services. The asssesee stated that the parties whose accounts have been written off had effected the business transaction with the assessee whereby income by way of brokerage was derived. He further stated that the brokerage income have been reflected in the computation of total income of the assessee in the earlier assessment year. It was contended that these facts substantiate that the requirement of section 36(2) has been fulfilled. In the paper book submitted during the course of appellate proceedings, the copies of account of the parties, documentary evidences and evidences of legal action taken by the assessee against the parties u/s. 138 of Negotiable Instruments Act were furnished. However, we have noticed that the ld. CIT(A) has sustained the additions by stating as under:- “4.1 As seen from the assessment order, the disallowance was made as per the working furnished by the appellant. Hence this ground of appeal is dismissed as devoid of merit.”

Regarding fourth ground of appeal of the assessee pertaining to computation of tax, we find nowhere in the assessment order, the assessing officer has mentioned that capital gain of the assessee was to be assessed as business income, therefore, we do not find any reason to interfere in the findings of the ld. CIT(A). Accordingly, this ground of appeal of the assessee is dismissed.

In the result, the appeal of the assessee is partly allowed.