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TMI Blog2012 (8) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 3. Ground No. 1 raised by the revenue against the deletion of Rs. 3,55,579/- which addition was made by AO on account of penalty for violation of the bye-laws of the Stock exchange. 4. The assessee is a stock broker. For the year under consideration, the return was filed by the assessee declaring total income at Rs. 2,82,57,940/-. The case was selected for scrutiny and notice u/s. 142(1) and 143(2) were issued and served on the assessee. 5. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has debited Rs. 3,55,579/- as stock exchange expenses which are on account of short delivery charges failure to raise requisite margin money, non timely deposit of margin money. The AO sought explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Bombay in ITA No. 4117 of 2010 in the case of CIT Vs The Stock and Bond Trading Co. in that case answering to question No. 2 "Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in deleting the additions made by the AO under proviso to section 37(1) of the I.T. Act, 1961 being penalty imposed by the National Stock Exchange on the assessee. 9. The Hon'ble High Court thus held that "as regards the second question is concerned the finding of fact recorded by the CIT(A) and upheld by the ITAT is that the payments made by the assessee to the Stock Exchange for violation of their regulation are not on account of an offence or which is prohibited by law and the invocation of explanation to Sec. 37 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected the explanation of the assessee on the ground that similar disallowances have been made in earlier years which had been confirmed by Ld. CIT(A). 13. When the matter was travelled before the Ld.CIT(A), the assessee during the appellate proceedings pointed out that in assessee's own case for assessment year 2007-08, the Ld. CIT(A) has allowed entire travelling expenditure for trips to Dubai and 50% of such expenditure for trips to other places. The Ld. CIT(A) followed the decision in assessee's own case for assessment year 2007-08 and allowed the entire expenses on Dubai and 50% expenses on visit to other places. 14. The Ld. Departmental Representative relied upon the findings of AO. The Ld. Counsel for the assessee pointed out that o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termine the quantum of expenditure by applying the following formula and partly allowed the grievance of the assessee. Amount of expenditure allowable to earning of exempt income = Total Expenditure debited to P&L A/c (Direct & Indirect) X Value of transaction in share yielding exempt income / Value of total Transactions in share 18. The Ld. DR supported the order of AO. The Ld. AR argued that the assessee has not incurred any expense for earning exempted income. It was further pointed out by the AR that assessee has substantially own fund to the tune of Rs. 16,33,69,473/- and borrowed funds are only to the extent of Rs. 22,13,822/-. The Ld. Counsel relied upon the decision of the Hon'ble Bombay High Court in the case of CIT Vs Reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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