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2007 (2) TMI 241 - AT - Income TaxDisallowance of Expenditure - incurred for running day-to-day business - Nature of fees and penalty - HELD THAT:- In the instant case, it is noticed that the assessee incurred the expenses in the shape of fines during normal course of business and there was no infraction of any statutory law. In such type of business it is beyond the control of share broker to know in advance that the trading volume will increase beyond the fixed exposure limit because trading depends upon the market trend and on certain dates there can be extraordinary increase in trading volume. On that increased trading volume, the concerned member also earns income in the shape of commission, etc. which is taxable so, the fine paid which was co-related with the increase in trading volume which crossed the fixed exposure limit, cannot be considered as infraction of law although irregularities are there, and for those irregularities, the assessee suffered and paid the fine but this payment cannot be termed as penal in nature. Similarly, late submission of margin certificate due to computer software problem, cannot be considered as infraction of law and if any fine is paid for such late submission, due to unavoidable circumstances in the regular course of business that cannot also be termed as penal in nature. We, therefore are of the opinion that in the instant case although some violations of the conditions prescribed by the NSE was there but that violations occurred in the regular course of business and cannot be considered as infraction of any statutory law. So, the expenses incurred by the assessee in regular course of business were allowable. In that view of the matter, we set aside the order of learned CIT(A) and direct the AO the allow the expenses claimed by the assessee. In the result, appeal filed by the assessee is allowed.
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