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2012 (10) TMI 776 - AT - Income TaxPenalty paid to NSE for trading violation - Disallowance - Held that:- The nature of assessee’s business is that it is regulated by NSE and NSE as part of its exercise to keep check on members keep on checking books of accounts from time to time and for violation of procedure and norms generally imposes penalty, which are not in the nature of violation of law and hence cannot be termed as penalty. Moreover, the assessee has been paying these types of penalties from 1998 onwards till 2007-08 and in none of the years the so-called penalty was disallowed. Therefore, the first ground of appeal with respect to penalty for trading violation is allowed - in favour of assessee. Disallowance of Telephone expenses for personal usage - Held that:- It is clear from the facts of the case that the telephone was installed at the residence of the director and its personal use cannot be denied the disallowance of 20% is very reasonable disallowance which is based upon the facts and circumstances of the case - against assessee. Disallowance of business promotion expenses - Held that:- The facts of the case that assessee was generally engaged in trading of shares on its own account and had spent an amount of Rs.1,10,615/- as business promotion expenses, keeping in view the facts of the case, the disallowance of 20% is reasonable especially keeping in view the fact that as per assessment order, the assessee had very few clients. Disallowance of municipal tax - Held that:- It is seen that at the time of sale of property, the seller is required to clear all outstanding dues of municipal taxes if any. The Assessing Officer has made disallowance on the basis that the assessee had sold the property vide agreement to sell dated 29.8.2002 and whereas the date of tax was 19.9.2002 i.e. after the date of agreement to sell. However, AO has not appreciated the fact that past accrued taxes and liabilities before the date of sale has to be borne by the seller. Nor AO has brought out any contrary observation from the agreement to sell from where it could be said that municipal tax was to be paid by the purchaser. Therefore, the disallowance made by the AO and upheld by the Ld CIT(A) was not justified - in favour of assessee.
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