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TMI Blog2014 (3) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Act, 1961 (hereinafter referred to as the "Act") for Assessment Years 2007-08 and 2008-09 vide his orders dated 31.12.2009 and 23.12.2010 respectively. 2. First we take up ITA No.1747/Kol/2011. The first issue in this appeal of revenue is against the order of CIT(A) deleting the difference in the account of excess purchases and excess sales qua figures provided in Form No.10DB of the Act. For this, revenue has raised following ground no.1: "1. That on the facts and circumstances of the case, Ld. CIT(A) has erred in law in deleting the addition of Rs.4,29,088/- on account of difference in accounts of excess purchase and excess sales stating that figures and sales as provided in Form 10DB are not reconcilable with the figures of pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sales shown by the assessee in the final accounts for the various reasons enumerated here above. And also after considering the Mode of Computation for STT (as passed by Finance (no:2) Act, 2004) and Notificatíon no: S.O.1059(E) on Securities Transaction Tax Rules, 2004, it is imperative that the figures of Sales and purchases shown in FORM 1ODB are based on Volume weihted average príce, which are not decisive and misleading, while the assessee shows purchases and sales on the basis of value of each transaction it has entered into to derive true profit or loss on such transaction. Secondly the figures of Purchases and sales in Form 1ODB are without Brokerage while the assessee has to account for all the transactions net of B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and gone through facts and circumstances of the case. We find that AO disallowed guarantee fund deposited by assessee with Calcutta Stock Exchange Association and claimed deduction of Rs.4,09,380/-. The AO held the payment as falling under Explanation to section 37(1) of the Act being penalty for an offence which is prohibited by law. Aggrieved, assessee preferred appeal before CIT(A), who allowed the claim of the assessee by stating that the settlement guarantee fund and payment made on that account is not in the nature of penalty. Hence he allowed the claim of the assessee by observing as under: "4.2.1. It was further seen that the appellant-assessee was never been declared DEFAULTER by the Calcutta Stock Exchange Ltd. at any point of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 1962 (hereinafter referred to as the Rules). For this, revenue has raised following ground no.2 in ITA No.1747/K/2011 and assessee in its CO no. 33/K/2012 has raised the issue of restriction of 1%: "2. That on the facts and circumstances of the case, Ld. CIT(A) has erred in law in directing the A.O. that 1% of the dividend income upto Rs.8130/- be added u/s. 14A instead of addition made by the AO of Rs.18,72,516/- without appreciating the fact that his decision is not supported by any judicial pronouncement cited or governed by Rule- 8D." Similarly, in ITA No.1720/K/2011 revenue has raised the issue of deletion of disallowance by CIT(A) under Rule 8D(2)(ii) vide ground no.1 as under: "2. That on the facts and circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the extent of Rs. 85,402/- resorted to by the Ld. Deputy Commissioner of Income Tax, Circle 4, Kolkata u/s. 14A of the Income Tax Act, 1961 read with r. 8D of the Income Tax Ru1es, 1962 in the facts and circumstances of the instant case and the purported findings on that behalf are entirely capricious, flawed and erroneous." 9. Briefly stated facts are that in both the years the assessee claimed that the loans were not utilised for investmemt purposes but it was utilised for the purpose of business and as such interest on loan is in expenditure towards earning of taxable income. The AO examined the assessee's contention and noted that it is not maintaining separate books of account for extra and non-extra income and also noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of making the investments, the disallowance cannot be made. The Ld. counsel for the assessee bfore us now argued that no satisfaction whatsoever has been recorded by the AO regarding correctness of accounts of the assessee no diwsallowance can be made u/s. 14A of the Act read with Rule 8D of the Rules. However, for the AY 2007-08 CIT(A) has rightly restricted the addition at 1% of exempted income. We confirm the same. As regards to AY 2008-09, the CIT(A) specifically made disallowance of demat charges and 0.50% on average value of investment at Rs.20,775/- and Rs.64,627/- respectively aggregating to Rs.85,402/-. Once the CIT(A) held that there is no defect pointed out by AO and there is no satisfaction that the borrowed funds were used ..... X X X X Extracts X X X X X X X X Extracts X X X X
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