The Commissioner Of Income Tax-4 v. M/S.techno Shares & Stocks Ltd

srk IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL NO. 2020 OF 2011 The Commissioner of Income Tax-4 ...Appellant Versus M/s.Techno Shares & Stocks Ltd. ...Respondent Mr.N.A.Kazi for appellant.None for respondent. CORAM: DR.D.Y. CHANDRACHUD & M.S.SANKLECHA, JJ. February 28, 2012. P.C. 1.The present appeal arises from the order of the ITAT dated 21 January 2011 for AY 2005-06. The following questions of law have been raised by the Revenue in this Appeal under Section 260A of the Income Tax Act, 1961 (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; (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 overlooking 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 ITAT was right in deleting the disallowance of Rs.11,24,353/- made in respect of VSAT, Transaction charges and Lease Line 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; and (d)Whether on the facts and circumstances of the itxa-2020-11 case and in law, the ITAT was right in deleting the addition of Rs.15,504/- on account of contribution of employees provident fund under Section 36(1)(va)? 2. Counsel for the Revenue states that the first two questions of law would stand covered in favour of the assessee and against the Revenue by the judgment delivered today i.e. 28/2/2012 in Commissioner of Income Tax, Central-II, Mumbai Vs. Shri Shreyas S. Morakhia.[1] In so far as third question is concerned, counsel states that the issue stands covered against the Revenue in view of the judgments of the Division Bench in The Income Tax Commissioner, Mumbai City-4 Vs. Angel Capital & Debit Market Ltd.[2] and in Commissioner of Income Tax v. Kotak Securities Ltd.[3]. So far as the fourth question is concerned, the counsel states that the question would be governed against the Revenue by the judgment of the Supreme Court in Commissioner of Income Tax vs. Alom Extrusions Ltd.[4] . The Division Bench of this Court in its judgment in Kotak Securities observed that the transaction 1. Income Tax Appeal No.89 of 2011 2. Income tax Appeal (L) No.475 of 2011 decided on 28 July 2011 3. (2011) 62 DTR 339 4. [2009] 319 ITR 306 itxa-2020-11 charges payable to the Stock Exchange would constitute fees for technical services in respect of which provisions of Section 194J would stand attracted. However for AY 2005-06, the Division Bench held that since both the Revenue and the assessee had proceeded on the basis that withholding tax was not attracted for nearly a decade, no fault could be found with the assessee for not deducting tax at source. The said decision would apply to the facts of the presence case. Hence no substantial question of law would arise. The appeal is accordingly dismissed. (DR.D.Y. CHANDRACHUD,J.) (M.S.SANKLECHA, J.)