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2015 (8) TMI 322 - ITAT MUMBAI

2015 (8) TMI 322 - ITAT MUMBAI - TMI - Disallowance u/s. 14A r.w.Rule 8D - CIT(A) deleted addition - Held that:- The disallowance has been made by the AO by applying Rule 8D, however, the assessment year under consideration is 2007-08 in which Rule 8D is not applicable but disallowance is to be made on reasonable basis. After giving detailed finding with regard to availability of own funds and interest free funds, the CIT(A) deleted the disallowance on account of interest. However, with respect .....

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> Disallowance of penalty levied by the Stock Exchange - CIT(A) deleted addition - Held that:- We have considered rival contentions and found that exactly similar issue is covered by the order of the Tribunal in assessee’s own case as mentioned by the CIT(A) in his appellate order wherein held that the expenses are in the nature of payments towards violating the prescribed rules/ regulation, short /partial collection of margins, non-maintenance of complete records, delay in payout of funds and .....

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dition - Held that:- CIT(A) after following the order of ITAT Special Bench in case of Amway India Enterprises [2008 (2) TMI 454 - ITAT DELHI-C ], directed the AO to allow Annual maintenance charges as revenue expenditure and allow deduction of the same and treat the software expenditure as capital in nature. No infirmity in the order of CIT(A).- Decided in favour of assessee.

Disallowance of club membership fees - CIT(A) deleted addition - Held that:- The issue under consideration is .....

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laimed deduction on account of bad debts which arose in the course of its business of brokerage. As the amount could not be recovered from the clients, who defaulted in payments, the assessee has accounted for the said brokerage income in its books, therefore, debt was incurred as a normal incidence of business. There is no reason to disallow the same even as business loss. The finding recorded by the CIT(A) has not been controverted. Accordingly, we do not find any infirmity in the order of CIT .....

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f the IT Act. 2. The revenue in its appeal has raised the following grounds :- 1. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of ₹ 1848392/- made u/s. 14A r.w.Rule 8D of the Income-tax Act by Assessing Officer." 2. "On the facts and in the circumstances of the case and in law, the Lcl.CIT(A) erred in deleting the addition made on account of penalty of ₹ 1837770/- on violation of the bye-laws of the stock e .....

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to statutory provisions is not an allowable expenditure' iv. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in appreciating that it was not enough that the disbursement was made in the course of trade, but was also for the lawful purpose of trade . ' v. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the fact that the penalty was imposed because the business was not conducted within the framew .....

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; 5. "On the facts and in the circumstances of the case and in law, the impugned order of Ld. CIT(A) is contrary to law and consequently merits to be set aside and that of Assessing Officer be restored." 3. The assessee in its cross objection, has raised the following grounds :- "1. On the facts and circumstances of the case and in law, the learned Assessing Officer be directed to allow the expenses of ₹ 365,707 and reduce the income tax demand accordingly." 4. Rival co .....

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diture incurred by it towards earning of tax exempt dividend income as required by section 14A of the Act. The AO therefore relying on Daga Capital Management Pvt Ltd (ITA 8075/M/03) and applying Rule 8D read with section 14A of the Act made the disallowance u/s 14A read with Rule 8D at ₹ 18,48,392. 5. By the impugned order, the CIT(A) restricted the disallowance to ₹ 3,65,707/-, against which both revenue and assessee are in appeal before us. 6. Rival contentions have been heard and .....

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5,707/-. We found that the dividend income received by the assessee during the year was ₹ 4,86,684/-, since the relevant assessment year is 2007-08, wherein Rule 8D is not applicable, keeping in view various judicial pronouncements cited at Bar by the ld. AR, we direct the AO to restrict the disallowance to the extent of 10% of the dividend income. We direct accordingly. 7. The next grievance of the revenue relates to deleting the disallowance of penalty of ₹ 18,37,770/- levied by th .....

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records, delay in payout of funds and securities, incomplete KYC forms, etc which are mere breach of contractual liability and adhere to proper procedure and not for infringement or infraction of any statutory law, therefore not hit by explanation to section 37(1) of the Act. The issue is also covered by decision in the case of DClT v Enam Securities Pvt Ltd [ITA No. 4178/Mum/2009 dated 14-5-2010] and Goldcrest Capital Market Ltd v ITa (2010) 36 DTR177(Mum) In view of these facts, following the .....

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ates to deleting disallowance of software expenses of ₹ 7,99,045/-. The AO has treated the same as capital in nature. By the impugned order, CIT(A) after following the order of ITAT Special Bench in case of Amway India Enterprises, 1 ITD 112, directed the AO to allow Annual maintenance charges as revenue expenditure and allow deduction of the same and treat the software expenditure as capital in nature. In view of decision of Special Bench in case of Amway India Enterprises (supra), we do .....

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wed the deduction of the entrance fees paid to Sports Club by observing that the assessee had no intention to acquire any capital asset or to take advantage for the enduring benefit fo the business by paying entrance fees to the sports Club. The AR also relied in the case of CIT v Samtel Color Ltd (210 Taxation 395) (Delhi) wherein the. Delhi High Court has clearly distinguishing the decision of Kerala High Court in the case of Framestone Connector OEN Ltd v DCIT (157 Taxmen 116) (Ker) relied up .....

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capital account as it only facilitates the smooth and efficient running of a business enterprise and does not add to the profit earning apparatus of a business enterprise. The expenditure has not resulted in to creation of any capital asset or acquisition of any new source of income. In view of these facts respectfully following the aforesaid decisions this ground of appeal is allowed in favour of the appellant." 9.1 We have considered rival contentions and perused the record. The issue und .....

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found that the assessee is engaged in the business of share broking as a member of the Bombay Stock Exchange. The assessee written off bad debts of ₹ 4,11,748 and claimed deduction for the same u/s.36 (1) (vii) of the Act. However. the AO disallowed bad debts aggregating to ₹ 4,11,748/- by observing that since only brokerage. which is only a part of the total debt is taken into account for computing the income of a share broker. only that part of the debt satisfies the condition laid .....

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