TMI Blog2008 (11) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... ined the notifications issued by the SEBI or agencies and find these notifications are issued mainly in the context of the Risk Management, rather than as a penal provision for punishing the defaulters or deeming the transactions illegal. Therefore, we are of the considered opinion that with or without the provisions of the margin money the loss cannot be held as illegal loss denying the benefit of set off the same defaulter against the income or allowing the same to carry forward to the later years. There are numerous decisions of the coordinate Benches of the Bombay Tribunal where such losses, which are incidental to the clients purchase orders of the shares are deemed as business loss of the assessee. The same is allowable even if it belonged to earlier years as the said amounts are written off during the year under consideration. Therefore, judgment of High Court in the case of CIT v. Gawalior Rayon Silk Manufacturing (Wvg.) Co. Ltd.[ 1998 (11) TMI 102 - BOMBAY HIGH COURT] applies to the case of the assessee. In view of the same, we are of the considered opinion that the order of the CIT(A) does not call for any interference. Accordingly, grounds 1 2 of the Revenue are di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who is also a big defaulter with Income-tax too. We had tried very hard to recover our funds by following vigorously and sitting in his office and even telephoning him regularly but as he was in deep debts and liability and as nothing was forthcoming inspite of vigorous follow us. We had no other choice but to write off. And there was no idea of filing a civil suit and wasting good money behind bad money and as he was telling that in case his time will change he will try and repay. So in order not to spoil relation and keep door open for future recovery. If we recover our funds in future we will credit the same to profit loss account and offer the same for taxation. Further enclose herewith Ledger A/c of Panther Fincap Management Services Ltd. and brokerage statement for your record which brokerage income shown in Balance Sheet for assessment year 2001-02. However, brokerage amount involved in the amount W/O of Rs. 47,73,220 is not ascertainable. There was no margin taken." 3. Assessing Officer denied the benefit of bad debt as the claim did not fulfil the conditions specified under section 36(2) of the Income-tax Act (Act). Regarding the alternative claim of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultimate client makes the payment. The transaction has to be completed within limited time span. But as the appellant cannot shown the payment to BSE as its own purchase, it takes the same to the balance sheet as liability of the client. If the clients turns his back from this transaction or does not make payment for any reason, the appellant has no option but to write the same off its books of account and claim it either as bad debt or business loss. Since, the written of principal amount does not qualify for deduction 36, the same has to be allowed as business loss as this amount forms an integral part of the appellant s business. Since, the dispute regarding this liability was settled in the year under consideration, the loss in the hands of the appellant has to be taken as relating to the previous year relevant to current assessment year. Thus, this amount qualifies to be allowed as business loss of the appellant. In quite a few cases, my predecessor has treated such claims as allowable duly confirmed by Hon ble Mumbai Bench(es) of ITAT the judgment of Hon ble ITAT D Bench of Mumbai in the case of DCIT v. V. Vrijlal Lallubhai Sons ( supra ) squarely applies to the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per book pages 1 to 9 in this regard. 6. We have heard both the parties and perused the relevant orders of the lower authorities as well as the copy of the notifications and press releases filed before us in the form of paper book. The condition relied on by the Assessing Officer is given in Para 4 on page 7 of the assessment order. The same reads as under : "4. Member brokers shall buy securities on behalf of the client only on receipt of margin of minimum 20 per cent on the price of the securities proposed to be purchased, unless the clients already has an equivalent credit with the broker, Members may not, if so desire, collect such a margin from financial institutions, mutual funds and FIIs." The perusal of the copy of the Notification revealed that it does not contain the above Para in the said notification. With the help of Ld. Counsel for the assessee, we have examined the Press Note dated 18-11-1993 issued by the Central Government, which is placed in the paper book. On perusal of the notification dated 29-11-1994 i.e., one year after the press release we find "accounts maintenance charges for maintaining DP account paid to the bank (receipt) or any DP"(number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exchange. Assessing Officer held that the above that the payment was incurred for filing the rules and regulations of such violation is a punishable offence, as it partake the nature of contravention or attempts to contravene or pages to contravention of this Act. Relying on the Apex Court judgment in the case of CIT v. Dhanalakshmi Bank Ltd. [2004] 271 ITR (St.) 2, Assessing Officer disallowed the claim. 8. During the appeal proceedings, the CIT(A) considered the assessee s explanation in this regard and found that amount was levied for "excess utilisation limits" comparable to it for doing the trade of its clients at a particular time. He also considered the assessee s submission that the, said amount was not paid for infringement of law. There is no offence involved for which the penalty payment was made. Accordingly, the CIT(A) agreed that the assessee s submissions and held that payment to NSE is not for violation of any provision of SEBI Act. Accordingly, deleted the additions made by the Assessing Officer. 9. During the appellate proceedings before the Tribunal, the revenue submitted that the rules and regulations emanate from SEBI Act, 1992 are mandatory and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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