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2015 (5) TMI 122 - BOMBAY HIGH COURT

2015 (5) TMI 122 - BOMBAY HIGH COURT - [2015] 379 ITR 146 (Bom) - Disallowance u/s 40(a)(ib) - deduction of STT claimed by the Assessee - ITAT allowed the claim - Held that:- The requisite details of the clients have been provided by the assessee clearly. If the parties are clients of the assessee and from whom brokerage is collected by raising bills, then, there is no dispute that it is this very tax which is collected by the assessee. In the circumstance, the Tribunal's order on this point doe .....

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matter requires fresh examination and in case loss is found to have occurred on account of error trade conducted by assessee on behalf of clients, then the claim will have to be accepted as business loss if the law laid down by the Tribunal in the case of Parker Securities Ltd. (2006 (5) TMI 110 - ITAT AHMEDABAD-B ) applies. Such direction far from concluding the matter only highlights the aspects of the case and particularly in relation to non consideration of the claim of error trade. If that .....

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).

Disallowance of charges paid to Stock Exchanges - non deduction to tax at sources - ITAT allowed claim - Held that:- The judgment of this Court in case of Commissioner of Income Tax vs. Kotak Securities Ltd. ( 2011 (10) TMI 24 - Bombay High Court) covers the question. The party with which we are concerned is the Stock Exchange and transaction charges paid by the assessee being in the nature of fees for technical services, that this question need not detain us. It stands answered in .....

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The appeal, according to Mr.Malhotra raises four substantial questions of law. They are formulated at Page 7 and 8. They are as under: "6.1 Whether, on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was justified in deleting the disallowance made by the A.O. u/s 40(a)(ib) of the deduction of STT claimed by the Assessee? 6.2 Whether, on the facts and circumstances of the case and in law, the Hon'ble Tribunal was justified in restoring back to the A.O. .....

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in directing the A.O. to disallow the expenses relating to earning of exempt income relying on the decision of Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. as the Revenue has not accepted this decision and has filed SLP against this decision? 6.4 Whether, on the facts and circumstances of the case and in law, the Hon'ble Tribunal relying on the decision on Hon'ble Bombay High Court in the case of CIT vs. Kotak Securities Ltd. 15 Taxmann.com 77 was justified in deleti .....

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ax. Mr.Malhotra submits that the assessee projected as if he is merely collecting tax. However, this was to get out of the clear language of this provision, namely, section 40(a)(ib) as it stood then. That provision clearly states that any sum paid on account of security transaction tax under Chapter VII of the Finance Act, 2004 cannot be the subject matter of deduction in computing income chargeable under head "Profits and gains of business or profession". Mr.Malhotra submits that the .....

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the issue regarding loss said to have been incurred on account of error trade has been sent back to the assessing officer still, the tribunal has termed this loss as error trade. Now, there is no opportunity to probe or investigate this loss though the matter is sent back and restored to the file of the assessing officer, therefore, question No.6.2 is also the substantial question of law. 5. In relation to question 6.3 and 6.4 the decision of this Court relied upon has not been accepted by the r .....

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Thereafter, the rules have been segregated by pointing out the component of tax and only to the extent of tax in this case the deduction is claimed. Section 40(a)(ib) does not apply to such non deletion. 7. We are of the opinion that the assessing officer was aware of the obligation to pay security transaction tax. That is obligation clearly referable to two statutory provisions which have been referred by the assessing officer and rightly relied upon by Mr.Mistri, learned senior counsel for the .....

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aimed on the basis of such payment by clients of the assessee. Beyond being a conjecture and surmise, we do not think that either the nature of the transaction or relationship itself was in dispute. The requisite details of the clients have been provided by the assessee clearly. If the parties are clients of the assessee and from whom brokerage is collected by raising bills, then, there is no dispute that it is this very tax which is collected by the assessee. In the circumstance, the Tribunal&# .....

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