Ratio decidendi of a judgment prevails upo the contrary obiter dicta of another judgment

In the case of ACIT, Circle 4(2), Mumbai v. Rishti Stock and Shares Pvt. Ltd. in ITA No. 112/Mum/2012, Hon’ble ITAT, Mumbai in its order dated 02-08-2013 has examined the decision of the Hon’ble Allahabad High Court (supra) as regards to section 40(a)(ia) of the Act and concluded that the same was an ‘orbiter dicta’ while the decisions of the Hon’ble Gujarat and Calcutta High Court (supra) were ‘ratio decidendi’. The ITAT accordingly applied the view taken by the Hon’ble Gujarat and Calcutta High Court as ratio decidendi prevails over an orbiter dicta.

INCOME TAX APPELLATE TRIBUNAL, MUMBAI

Before Shri R.S.Syal, AM and Shri Vivek Varma, JM

ITA No. 112/Mum/2012 : Asst.Year 2008-2009

CO No. 263/Mum/2012 : Asst.Year 2008-2009

The Asst. Commissioner of Income-tax

Vs.

M/s. Rishti Stock and Shares Pvt.Ltd.

Date of Pronouncement : 02.08.2013

OR D E RPer R.S.Syal (AM) :

This appeal by the Revenue and cross objection by the assessee arise out of the order passed by the Commissioner of Income-tax (Appeals) on 28.10.2011 in relation to the assessment year 2008- 2009.

2. First ground of the Revenue’s appeal is against the deletion of addition of Rs. 20,05,328 on account of bad debts. Briefly stated the facts of this ground are that the assessee, a stock broker, claimed certain deduction on account of bad debts. The Assessing Officer restricted the allowance to the extent of brokerage which passed through profit and loss account amounting to Rs. 19,00,789. The remaining amount of Rs. 20,05,328 was disallowed. The learned CIT(A) deleted the disallowance.