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2016 (8) TMI 66 - ITAT KOLKATA

2016 (8) TMI 66 - ITAT KOLKATA - TMI - Business loss set off against other business income - Held that:- In the present case the assessee suffered share trading loss of ₹ 31,18,920/- on account of delivery and ₹ 6,24,653/- on non delivery totaling to ₹ 37,43,573/- and claimed to set off against the income from other business in the year under consideration, but, however, the AO denied the same on the ground that the income of assessee consists of many other heads of income and .....

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old the same. - Decided against revenue - Disallowance of expenses being penal in nature - Held that:- The assessee paid penalty to National Stock Exchange conducting their business control under SEBI during the course of its business transactions, therefore, we are of the opinion that the National Stock Exchange is not a statutory body and any penalties or fines paid as the case may be under regulations and bye-laws can be considered as regulations for controlling the internal obligations a .....

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(A)-1 2(4)2012-13 dated 03-05-2013 for the assessment year 2010-11 against the order of assessment framed u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. In this appeal, the revenue has raised the following grounds of appeal:- 1. That on the facts and the circumstances of the case and in Law, the CIT(A)-I, Kolkata had erred in deleting the addition made by disallowing to set off speculation loss of ₹ 37,43,573/- against business income. 2. That on the fact .....

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. Brief facts of the case are that the assessee is a company engaged in share broking and filed its return of income declaring at ₹ 3,05,080 on 27-09-2010 for the year under consideration. Under scrutiny notices u/s. 143(2)/142(1) of the Act were issued, in response to which the AR of the assessee appeared along with relevant books of account and corresponding evidences. 4. Ground nos. 1 & 2 are heard together as one issue involving therein, as claimed by the assessee that business los .....

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the Hon ble Jurisdictional Calcutta High Court in the case of CIT Vs. M/s. Sandune Trade Pvt. Ltd, which held the activity on account of other parties and brokerage income earned and equity dealing in shares on own account was to be treated as share trading business and in the case of DCIT Vs. Trade Apartment Ltd of Kolkata Tribunal in ITA No. 2087/kol/2010 dated 13-02-2013), which held the dividend was earned by the assessee on the shares acquired in the course of business of purchase and sale .....

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before us and contended that the CIT(A) held in deleting the addition by disallowing the speculation loss against business income and relied on the order of the AO. 8. In reply, the ld.AR reiterated the same submissions as made before the CIT(A) and relied on the impugned order of the CIT(A) in disallowing the addition made by the AO. 9. Heard the rival submissions and perused the material available on record. As rightly pointed out by the Ld AR of the assessee that the question before us is as .....

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ty of dealing in shares In the own account was to be treated as share trading business. The entire activity has to be treated as one. The statute has not made a distinction between purchase and sale of shares of companies made on own behalf and/or on behalf of others, where entire business activity of the company consists of purchase and sale of shares of other companies, in some on which brokerage was earned and in some others loss or profit is earned. The entire business activity is inter link .....

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with the purchase and sale of shares of other companies is considered or regarded to be the income or loss of speculation business. The ITAT, Kolkata Bench, in the case of Trade Apartments Pvt. Ltd in ITA No. 2087/Kol/2010 for the assessment year 1996-97 has held that dividend which was earned by the assessee on the shares acquired in the course of business of purchase and sale of shares; represented income of the assessee s speculation business and therefore entitled to be set off against spec .....

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present case the assessee suffered share trading loss of ₹ 31,18,920/- on account of delivery and ₹ 6,24,653/- on non delivery totaling to ₹ 37,43,573/- and claimed to set off against the income from other business in the year under consideration, but, however, the AO denied the same on the ground that the income of assessee consists of many other heads of income and there was no gain in trading and allowed carry forward next year. We find that the Hon ble Jurisdictional Calcu .....

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,32,999/- being penal in nature by the AO. Before the CIT-A, the assessee contended that the rules framed by the National Stock Exchange can not be equated with any Statutory rules and regulations, considering the same, the CIT-A deleted said addition. 13. Before us, the Ld.DR relied on the order of AO and Ld.AR reiterated the same submissions as advanced before the CIT-A. 14. Heard both representatives and perused the relevant material on record. The question that now arises is whether this amo .....

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hange for delay in payment of the dues and for various other obligations arising out of carrying on business activities. We, therefore, agree with the learned CIT(A) that the penalty charges cannot be said to be for infringement of any law but has been paid by the assessee to compensate for delay in payment of the dues to the National Stock Exchange and for various other obligations. We, therefore, agree with the learned CIT(A) that the disallowance is, therefore, not justified and he has rightl .....

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d the documents placed on record and found that the assessee paid penalty for NSE during the course of business transactions, therefore, we are of the opinion the aforesaid order applicable to the facts on hand. 16. We also find a similar issue was answered in the case of GOLDCREST CAPITAL MARKETS LTD. vs. INCOME TAX OFFICER by ITAT, MUMBAI 'B BENCH reported in (2010) 130 TTJ 0446 the relevant portion of order is reproduced herein below: 10. We have heard the rival contentions and perused th .....

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isions of Securities Contract (Regulations) Act, 1956 and Securities Exchange Board of India Act, 1992. The powers of the Board of NSE Ltd. to make bye-laws, rules and regulations is subject to the directives under these enactments and also the trading regulations prescribed by RBI from time to time. The appointments to the board of directors of the NSE Ltd has to be done as per the provisions of articles of association of NSE Ltd. The Board is having power for penalizing any disobedience or con .....

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f the members and NSE Ltd. Though every member of NSE Ltd would be obliged to abide by such rules and regulations, a violation thereof cannot be treated as violation of a statutory law or rule. Fines and penalties levied for violation on account of unfair trading practice as specified in regn. 4.6 of the NSE Regulations and unbusiness like conduct as specified in r. IV(4)(e) of the NSE Rules cannot be equated with violation of a statutory rule or law. Though, the learned CIT(A) has referred r. 4 .....

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regulation of NSE Ltd., and neither the AO nor the learned CIT(A) has been able to point out how such violation or breach of regulations could be treated on par with the breach of a rule under the SEBI enactment. Therefore, we are of the considered opinion that there was no violation of law by the assessee and the fine paid were only for non-observation of internal regulations of stock exchange. We derive support in taking this view from the decision of Co-ordinate Bench of this Tribunal in the .....

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