Dy. CIT v. Zen Securities Ltd. v. DIT

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The Tax Publishers2016 TaxPub(DT) 1294 (Hyd-Trib) Dy. CIT v. Zen Securities Ltd. INCOME TAX ACT, 1961 --Head of income--Business income or capital gainsPurchase and sale of shares--Assessee company was engaged in business of stock and share broking depository services and portfolio management services. It also had purchase and sale transactions of shares and profit thereof was offered to tax as short-term capital gain for over 10 years. The assessments were completed after scrutiny-holding nature of such income as capital gains. AO alleged as holding period of the shares was very small, its motive could not be for earning of dividend and, therefore, this income was taxable as business income. *Held:* AO must be considered to have applied his mind to all the aspects, while making assessment under section 143(3) and there should always be principle of consistency and since the gains from purchase and sale of shares were treated as capital gains over to earlier assessment years under section 143(3), the gain arised from such transactions would be liable for capital gains. Income Tax Act, 1961, Section 14 *REFERRED :* FAVOUR : In assessee's favour A.Y. : 2007-08 & 2008-09 INCOME TAX ACT, 1961 --Business deduction under section 36(1)(vii)--Bad debtsDebt written off as irrecoverable --Assessee was engaged in the business of stock and share broking, depository services and portfolio management services. It had claimed bad debts of Rs. 58.84 lakhs, as there was fraud by its employees to the extent of Rs. 105.74 lakhs, out of which Rs. 46.90 lakhs were recovered. Assessee did not file police complaint considering business sensitivity, reputation and employee leaving a suicide note upon discovery. AO disallowed the claim. *Held:* Once the bad debt was written off as irrecoverable in the books, the claim could not be disallowed. Income Tax Act, 1961 Section 36(1)(vii) *Followed:*TRF Ltd. v. 323 ITR 397 (SC). *REFERRED :* FAVOUR : In assessee's favour A.Y. : 2007-08 & 2008-09 IN THE ITAT, HYDERABAD BENCH 'B', HYDERABAD P. MADHAVI DEVI, J.M. & B. RAMAKOTAIAH, A.M. Dy. CIT v. Zen Securities Ltd. ITA Nos. 353 & 354/Hyd/2014 A.Ys. 2007-08 & 2008-09 19 February, 2016 Revenue by: K. Mythili Rani Assessee by: V. Raghavendra Rao SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2016 TaxPub(DT) 1294 (Hyd-Trib)

Dy. CIT v. Zen Securities Ltd.

INCOME TAX ACT, 1961

--Head of income--Business income or capital gainsPurchase and sale of shares--Assessee company was engaged in business of stock and share broking depository services and portfolio management services. It also had purchase and sale transactions of shares and profit thereof was offered to tax as short-term capital gain for over 10 years. The assessments were completed after scrutiny-holding nature of such income as capital gains. AO alleged as holding period of the shares was very small, its motive could not be for earning of dividend and, therefore, this income was taxable as business income. Held: AO must be considered to have applied his mind to all the aspects, while making assessment under section 143(3) and there should always be principle of consistency and since the gains from purchase and sale of shares were treated as capital gains over to earlier assessment years under section 143(3), the gain arised from such transactions would be liable for capital gains.

Income Tax Act, 1961, Section 14

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2007-08 & 2008-09

INCOME TAX ACT, 1961

--Business deduction under section 36(1)(vii)--Bad debtsDebt written off as irrecoverable --Assessee was engaged in the business of stock and share broking, depository services and portfolio management services. It had claimed bad debts of Rs. 58.84 lakhs, as there was fraud by its employees to the extent of Rs. 105.74 lakhs, out of which Rs. 46.90 lakhs were recovered. Assessee did not file police complaint considering business sensitivity, reputation and employee leaving a suicide note upon discovery. AO disallowed the claim. Held: Once the bad debt was written off as irrecoverable in the books, the claim could not be disallowed.

Income Tax Act, 1961 Section 36(1)(vii)

Followed:TRF Ltd. v. 323 ITR 397 (SC).

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2007-08 & 2008-09

IN THE ITAT, HYDERABAD BENCH 'B', HYDERABAD

P. MADHAVI DEVI, J.M. & B. RAMAKOTAIAH, A.M.

Dy. CIT v. Zen Securities Ltd.

ITA Nos. 353 & 354/Hyd/2014

A.Ys. 2007-08 & 2008-09

19 February, 2016

Revenue by: K. Mythili Rani

Assessee by: V. Raghavendra Rao