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2012 (11) TMI 812 - AT - Income TaxDisallowance u/s 14A – Expenditure incurred in relation to exempt income - CIT(A) has directed the AO to determine the quantum of disallowance with reference to the ratio of the total expenditure debited to P&L Account in proportion that the value of transaction in shares which has yielded exempt income bears to the value of total transaction in shares – Held that:- Matter should be go back to AO with a direction to readjudicate the issue as per the provisions of law by taking into consideration the decision in case of GODREJ AND BOYCE MFG. CO. LTD. (2010 (8) TMI 77 - BOMBAY HIGH COURT). Issue remand back to AO Disallowance u/s 40(a)(ia) – Held that:- Though for A.Y 2006-07 the issue has been restored back to the file of CIT(A) but it was the request of assessee that since the issue regarding disallowance under section 14A of the Act is being restored to the file of AO this matter may also be restored back to the file of AO with similar direction. Issue remand back to AO Capital or revenue expenditure – Disallow repairs and maintenance under various heads of accounts - aluminum patti work, net working charges, expenditure for administration department – Held that:- As concluding from the facts of the case that all these expenditure were incurred in the regular course of business, after hearing both the parties we see no justification in sustenance of such disallowance. Issue decides in favour of assessee Bad debts u/s 36 – Bad debts includes total debts amount or only brokerage in hand of share broker – Held that:- Following the decision in case of Shri Shreyas S. Morakhia (2012 (3) TMI 103 - BOMBAY HIGH COURT) that bad debt relating to transaction of shares in the hands of share broker is allowable u/s 36(1)(vii) r.w.s. 36(2) as the same is an amount which could not be recovered by the share broker from his client as brokerage receivable from client was part of the debt which was taken into account while computing the income. Issue decides in favour of assessee Disallowance of penalty u/s 37 – Nature of payment made to stock exchange - Whether payment made to stock exchange for violation of trading beyond exposure limit, late submission of margin certificate and delay in marking delivery of shares due to deficiency is in nature of penalty – Held that:- Following the decision in case of PRASAD & CO (2012 (2) TMI 124 - DELHI HIGH COURT) & in case of GOLDCREST CAPITAL MARKETS LTD. (2009 (1) TMI 553 - ITAT, MUMBAI) that NSE was an independent body and the bye laws made by it for the regulation of its members did not have the force of the law. Such bye-law could be, at the best be seen as private contracts entered between assessee and stock exchange and any violation, therefore, cannot be, in our opinion, equated with an offence or with an act prohibited by law, in the nature of assessee’s business, as a member of NSE payments related to switching on the terminals, switched off for not abiding by the regulations of such exchange, or for delay in settlement or furnishing of data can only be considered as incidental. Issue decides in favour of assessee
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