(PER DR.D.Y.CHANDRACHUD,J.)

1. This appeal by the Revenue arises from a decision of a Special Bench of the Income Tax Appellate Tribunal dated 16 July 2010.

The Special Bench of the Tribunal was constituted to decide the following question of law 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 clients apart from the commission earned by him.

The Special Bench answered the question referred in the affirmative and in favour of the assessee.

2. In the batch of appeals, a common question of law arises. We proceed to dispose of the appeal arising out of the decision of the Special Bench. The Court has, however, in the interest of fairness heard the counsel in the batch of appeals on the questions of law raised. The appeal by the Revenue raises the same question of law as was referred to the Tribunal as noted above. The appeal is admitted on the question formulated and taken up