9911796707
TMI Blog2011 (9) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... ispose off the same by a common order for the sake of convenience. 2. Before we consider grounds No. 1 & 2 of both appeals of assessment year under consideration, it is relevant to state that in the appeal for assessment year 2000-01, the amount of Rs. 25,78,082/- mentioned is not correct and the correct amount is Rs. 15,84,078/- which has been deleted by Ld. CIT(A) of addition made by AO. 3. The relevant facts giving rise to grounds of appeal of assessment years 1999-2000 and grounds No. 1 & 2 of appeal of assessment year 2000-01 are that assessee is a share broker. For the assessment year 1999-2000, assessee claimed loss on account of shortage in stock in trade written off Rs. 25,78,082/-. During the course of assessment proceedings, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of share lost over the period has held that the same is required to be allowed as business loss u/s. 28 of the I.T. Act of both assessment years under consideration and deleted the disallowance made by AO. Hence department is in further appeal before the Tribunal. 6. During the course of hearing, Ld. Departmental Representative submitted that assessee could not substantiate the lost estimated by it and no details were filed by the assessee of the stocks claimed to be lost before the AO. He further submitted that cases cited by assessee before AO, the details which are mentioned by AO in the respective assessment orders at page-4 for assessment year 1999-2000 and at page-5 of assessment year 2000-01 were not relevant as in the said cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment years under consideration and the orders of Ld. CIT(A) are justified. 8. We have carefully considered the orders of authorities below and the submissions of Ld. Representatives of both parties and contents of letters both dt. 12th September, 2005. We observe that assessee has stated in the said letters the reasons to arrive at the amount of Rs. 25,78,082/- for assessment year 1999-2000 and amount of Rs. 15,84,078/- for assessment year 2000-01 claimed it as loss (es). We consider it prudent to reproduce the reasons as stated by assessee in the said letters, which was admittedly filed before AO as well, which reads as under: "any times clients or the exchange return the stock to the company due to reasons such as transferor signatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment made attempts to rectify the stock through inter alia lodging a complaint with the Exchange. In case the Exchange did not admit the claim (company memo outdated, delivery details statement not traceable, delivering member stamp not affixed etc.) or it was not worthwhile to lodge a claim, the Company itself attempted to rectify the stock by inter alia contacting the shareholder or broker directly. Such efforts by the Company took place over a period of time and it is not practically possible to have external evidence to substantiate such efforts of the Company." 9. We also observe that assessee has also in the Annexure to above letter (es) had given details of shares and the amount written off against each script. On perusal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, it was contended that the said penalty was paid in respect of procedural delay in delivery of shares and not in respect of infraction of law. However, AO did not accept the said contention of the assessee. He observed that penalty can be levied by NSCCL because of the fault of the assessee itself for contravention of certain rules and regulations as framed by it in terms of the guidelines issued by SEBI. Therefore, the amount paid by the assessee for such conduct could not be regarded as wholly laid out for the purpose of business because the incurrence of such expense has not been necessitated by the business but by the conduct of assessee. Therefore, AO disallowed the said amount of Rs. 10,00,000/- and added to the income of assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration of submissions of Ld. Representatives of the parties, order of authorities below and the order of ITAT Chandigarh Bench (supra), we hold that the said payment of Rs. 10,00,000/- paid by assessee is not on account of violation/infraction of statutory law but is only on account of irregularities committed by assessee in the regular course of its business. Hence the same is allowable as revenue expenditure to the assessee.
Therefore, we uphold the order of Ld. CIT(A) and reject ground No. 3 of the appeal taken by department.
15. In the result, both appeals filed by department for assessment years 1999-2000 and 2000-01 are dismissed.
Order pronounced on this 28th day of September, 2011 X X X X Extracts X X X X X X X X Extracts X X X X
|
