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2017 (10) TMI 1260 - AT - Income TaxDisallowance paid towards client assistance charges - Held that:- We find that the instant issue is covered in favour of the assessee-company by the order of the ITAT ‘I’ Bench in assessee’s own case for the AY 2004-05 and AY 2005-06, thus allowing the claim. Non deduction of tds on reimbursement expenses to ICICI Securities Limited - Held that:- As decided in assess's own case no tax is deductable at source if payments are made merely towards reimbursement of expenses incurred on assessee’s behalf by another entity. Disallowance of bad debts - assessee-company failed to file party-wise details and actual proof of write off in ledger account of a particular debtor - Held that:- In the case of Oman International Bank (2009 (2) TMI 54 - BOMBAY HIGH COURT ) it has been held that after amendment to section 36(1)(vii), it is neither obligatory nor is there any burden on the assessee to proof that debt written off by him is indeed a bad debt as long as it is bona fide and is based on commercial wisdom or expediency.In the case of Star Chemicals (Bombay) Limited (2008 (2) TMI 399 - BOMBAY HIGH COURT ) it has been held that if assessee has written off debt as bad debt, that would satisfy purpose of section 36(1)(vii).We follow the above decisions which are squarely applicable to the present issue and delete the disallowance Addition u/s 14A - applicability of rule 8D - Held that:- Rule 8D was notified by CBDT by the IT (Fifth Amdt.) Rules 2008 w.e.f. 24.03.2008. Thus it is not applicable to the AY 2007-08. In such a case for AY 2005-06, the Hon’ble Bombay High Court in CIT vs. M/s Godrej Agrovet Ltd. (2014 (8) TMI 457 - BOMBAY HIGH COURT) has held the order of the Tribunal in restricting the disallowance only to the extent of 2% of the total exempt income as proper. We follow the above decision and direct the AO to restrict the disallowance only to the extent of 2% of the total exempt income. Thus the 4th ground of appeal is partly allowed. Disallowance @ 50% of client introduction fees paid to ICICI Securities (INC) (ISI) for non-USA based entities u/s 40(A)(2b) - Held that:- The payment made to ISI was genuine and in accordance with the terms of the agreement dated October 01, 2004.As per the main clause of the aforesaid agreement, ISI would introduce to the assessee-company clients in USA and countries other than USA where permitted from time to time. The assessee-company would execute secondary trades of clients introduced by ISI on the National Stock Exchange and Bombay Stock Exchange. Thus the provisions of section 40(A)(2)(b) of the Act do not cover the payments made to ISI, since ISI does not have any interest in the assessee-company. Addition made on account of penalty for violation of the bye laws of the Stock Exchange - Held that:- The amount paid were not on account of any infraction of law and hence allowable as business expenditure .See case of Angel Capital and Debit Market Ltd [2014 (5) TMI 584 - BOMBAY HIGH COURT] Disallowance on account of transaction charges, VSAT and lease line charges made u/s 40(a)(ia) paid to Stock Exchanges - Held that:- Assessee is not required to deduct tax at source u/s 194J in respect of lease line charges and VSAT charges paid to stock exchange. See The ACIT Cir. 4(2), Mumbai Versus M/s. Twenty First Century Shares & Securities Ltd. [2013 (5) TMI 785 - ITAT MUMBAI ] Disallowance of loss on future and option ‘marked to market margin’ - Held that:- ‘Market to market loss on derivatives could not be treated as contingent liability and hence, same was to be allowed as deduction u/s 37(1)’. See Edelweiss Capital Ltd. vs. ITO [2012 (10) TMI 223 - ITAT, MUMBAI]
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