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2013 (8) TMI 107 - AT - Income TaxDisallowance u/s.14A r.w.r. 8D - Held that:- CIT(A) following the decision of Godrej & Boyce Manufacturing Co. Ltd (2010 (8) TMI 77 - BOMBAY HIGH COURT) substituted the same with an illogical formula, i.e.,total expenditure (direct and indirect) x the value of transactions yielding tax-exempt income/value of the total transactions in shares. The same has no basis in facts. In fact, in the assessment for A.Y. 2005-06 u/s. 143(3), 2% of the dividend income had been disallowed by the Assessing Officer (AO). A similar disallowance for the current year would, it was pleaded by him, meet the ends of justice. Against assessee. Bad debts disallowed - assessee-company a share broker has only the brokerage as embedded in the value of shares purchased or sold, i.e., as included in the debt being written off, that could be subject to an allowance u/s.36(1)(vii) in view of section 36(2)(i) - Held that:- As in CIT vs. Shreyas S. Morakhia [2012 (3) TMI 103 - BOMBAY HIGH COURT] clarified that both the brokerage as well as the principal sum of the shares transacted by a broker on behalf of his clients form part of the debt realizable there-from and, thus, is to be considered as taken into account in computing the income of the assessee-broker in terms of s.36(2)(i). Thus entire such amount would stand to be considered as eligible for deduction u/s. 36(1(vii). In favour of assessee. Penalty levied by the Stock Exchange - Held that:- As it has been consistently held by the tribunal as being not toward any default constituting any offence in law, so as to attract disallowance with reference to Explanation to Section 37(1). The same is clarified to be in respect of procedural defaults, which cannot be equated with any violation or contravention of any law, therefore, direct its deletion. In favour of assessee.
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