The Commissioner Of Income Tax – 4, Mumbai v. M/S.santoor Leafin Private Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2604 OF 2011 The Commissioner of Income Tax – 4, Mumbai..Appellant. Versus M/s.Santoor Leafin Private Limited ..Respondent. Mr.Suresh Kumar with Ms.P.S. Cardozo for the appellant.None for the respondent. CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 13[th] March 2013 P.C. : 1.In this appeal by the Revenue for assessment year 2006-07, following questions of law have been proposed for our consideration. “a)Whether, on the facts and circumstances of the case and in law, the assessee, who is a share broker, is entitled to deduction by way of bad debts under Section 36(1)(vii) read with Section 36(2) of the Income Tax Act, 1961 in respect of the amount which could not be recovered from its clients in respect of transactions effected by him on behalf of his client apart from the commission earned by him ?assessee, who is a share broker, is entitled to deduction by way of bad debts under Section 36(1)(vii) read with Section 36(2) of the Income Tax Act, 1961 in respect of the amount which could not be recovered from its clients in respect of transactions effected by him on behalf of his client apart from the commission earned by him ? b)Whether, on the facts and circumstances of the case and in law, the Tribunal was justified in allowing the claim of the assessee as bad debt over-looking the provision of Section 36(2) which provides that unless such debt or part thereof have been included in the computation of income of previous year or earlier years it cannot be Tribunal was justified in allowing the claim of the assessee as bad debt over-looking the provision of Section 36(2) which provides that unless such debt or part thereof have been included in the computation of income of previous year or earlier years it cannot be allowed as bad debt under Section 36(1)(vii) ? c)Whether, on the facts and circumstances of the case and in law, the Tribunal was right in deleting the dis-allowance of Rs.4,82,467/- made in respect of Transaction charges and Rs.1,10,000/- made in respect of VSAT charges, without realizing the fact that these were composite charges for professional and technical services rendered by the exchange to its members and the assessee has failed to deduct TDS thereon ?”Tribunal was right in deleting the dis-allowance of Rs.4,82,467/- made in respect of Transaction charges and Rs.1,10,000/- made in respect of VSAT charges, without realizing the fact that these were composite charges for professional and technical services rendered by the exchange to its members and the assessee has failed to deduct TDS thereon ?” 2.In so far as questions (a) and (b) are concerned, the Tribunal by the impugned order has followed the decision of the Special Bench of the Tribunal in the matter of DCIT V/s. Shreyas S. Morakhia. The Revenue had preferred an appeal from the order of the Special Bench in the case of Shreyas S. Morakhia. This Court in the matter of Commissioner of Income Tax V/s. Shreyas S. Morakhia reported in (2012) 342 ITR 285 (Bom) upheld the conclusion reached by the Special Bench of the Tribunal. In this view of the matter, we see no reason to entertain questions (a) and (b). 3.In so far as question (c) is concerned, so far as VSAT charges are concerned, the same is covered against the Revenue and in favour of the assessee by the decision of this Court in the matter of Commissioner of Income Tax V/s. Angel Capital & Debit Market Limited, being Income Tax Appeal (L) No.475 of 2011. In that view of the matter, the issue with regard to VSAT charges does not arise for consideration. 4.In view of the above, question (c) is admitted, to the extent set out herein below. 3.In so far as question (c) is concerned, so far as VSAT charges are concerned, the same is covered against the Revenue and in favour of the assessee by the decision of this Court in the matter of Commissioner of Income Tax V/s. Angel Capital & Debit Market Limited, being Income Tax Appeal (L) No.475 of 2011. In that view of the matter, the issue with regard to VSAT charges does not arise for consideration. 4.In view of the above, question (c) is admitted, to the extent set out herein below. “Whether, on the facts and circumstances of the case and in law, the Tribunal was right in deleting the dis-allowance of Rs.4,82,467/- made in respect of Transaction charges, without realizing the fact that these were composite charges for professional and technical services rendered by the exchange to its members and the assessee has failed to deduct TDS thereon ?” (M.S. Sanklecha, J.)(J.P. Devadhar, J.)