TMI Blog2013 (7) TMI 1064X X X X Extracts X X X X X X X X Extracts X X X X ..... ds as under:- 1. (i) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing short term capital gain of ₹ 4,47,37,552/- and long term capital gain of ₹ 6,04,00,296/- without appreciating the fact that the conversion of stock-in-trade into investment was not allowed by the AO during AY: 2005-06. (ii) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in holding that the assessee converted its stock in trade in investment and had already paid tax on conversion which was treated as business income of ₹ 1,33,28,497/- without appreciating the fact that it was suo-moto action of the assessee. 3. We have heard the arguments of both the sides a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot have any colourable device. If the riders are accepted by the assessee, the law accepts the change. In the present set of circumstances, the assessee company who in the past have been maintaining separate sets of portfolios, but in the current year, proposed to change, when the law permits it, and the Board also accepts the factum of assessee s having distinct portfolios, which the assessee in the present case had been maintaining. The change proposed by the Board of Directors to convert the stock in trade to investment was approved vide an appropriate resolution as per Companies Act, 1956. As a consequence of this conversion, the assessee has also paid taxes during the course of assessment proceedings. 9. Taking into the facts into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k exchange to the Department of Telecommunications, the same do not have any element of income and there is no question of deducting any tax from the payment of such charges. Respectfully following the said decision of the Hon ble Bombay High Court in the case of Angel Capital Debit market Ltd. (supra) we uphold the impugned order of the ld. CIT(A) deleting the disallowance made by the A.O. u/s 40(a)(ia) of the Act on account of V-Sat and Leaseline charges. 6. As regards the disallowance u/s 40(a)(ia) of the Act on account of transaction charges to the stock exchange, it is observed that the said disallowance made by the A.O. was deleted by the ld. CIT(A) relying on the decision of Mumbai Bench of ITAT in the case of Kotak Securities Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance made by the A.O. on account of transaction charges u/s 40(a)(ia) of the Act is not sustainable has been finally upheld by the Hon ble Bombay High Court in the case of Kotak Securities Ltd. (supra) on the ground that the assessee had bonafide reason to believe that the tax was not deductible at source from the payment of transaction charges u/s 194-C of the Act. He has urged that the matter may therefore be restored to the file of the A.O. for giving the assessee an opportunity to explain and establish the bonafide belief. Accordingly we restore this issue to the file of the A.O. in so far as it relates to the disallowance of transaction charges with a direction to decide the same afresh after giving the assessee an opportunity to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. At the outset, it is observed that there is a delay of 266 days on the part of the assessee in filing its C.O. In this regard, the assessee has moved an application seeking condonation of the said delay on the ground that the decision of the Hon ble Bombay High Court in the case of Godrej and Boyce Mfg.Co. Ltd. vs. DCIT (2010) 328 ITR 81 (Bom.) as well as that of the Special Bench of ITAT in the case of Dy. CIT vs. Shri Shreyas S. Morakhia [(2010) 5 ITR (Tri.) 1 (Mum.) (SB)] deciding the similar issues as raised in the C.O. came to be rendered subsequently and immediately after becoming aware of the said decisions, the assessee filed the C.O. which resulted in delay. Since the submission made by the assessee in the application for cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal in the case of DCIT Vs. Shreyas S. Morakhia reported in 40 SOT 432 (SB) wherein it was held that the amount receivable by the assessee, who is a share broker, from his clients against the transactions of purchase of shares on their behalf constitutes debt which is a trading debt. It was held that the brokerage/commission income arising from such transactions very much forms part of the said debt and when the amount of such brokerage/commission has been taken into account in computation of income of the assessee of the relevant previous year or any earlier year, it satisfies the condition stipulated in section 36(2)(i) and the assessee is entitled to deduction u/s 36(1)(vii) by way of bad debts after having written of the said d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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