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Asstt. Commissioner of Income Tax- Cir. 4 (2) , Mumbai Versus S.I. Investments & Broking Pvt. Ltd. and Vice Versa

2013 (7) TMI 1064 - ITAT MUMBAI

I.T.A. No. 6444/Mum/2009, C.O. No. 35/Mum/2011 - Dated:- 19-7-2013 - Dr. S. T. M. Pavalan (Judicial Member) And P. M. Jagtap (Accountant Member) For the Department : S. K. Mahapatra For the Assessee : Subhash Shetty ORDER P. M. Jagtap (Accountant Member) This appeal is preferred by the Revenue against the order of the ld. CIT(A) - 8, Mumbai dtd. 14-09-2009 for A.Y. 2006-07 and the same is being disposed of along with Cross Objection filed by the assessee being C.O. No. 35/Mum/2011. 2. Ground No. .....

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essee 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 and also perused the relevant material available on record. It is observed that the short term capital gain of ₹ 4,47,47,552/- and long term capital gain of ₹ 6,04,00,296/- shown by the assessee was treated by the .....

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, 2012 passed in ITA No. 1547/Mum/2009 has upheld the order of the ld. CIT(A) giving relief to the assessee on similar issue in A.Y. 2005-06. A copy of the said order is placed on record and a perusal of the same shows that a similar issue has been decided by the Tribunal in favour of the assessee for the following reasons given in para No. 8 & 9 of its order:- 8. We have heard the rival submissions made by both the parties. In so far as the issue of conversion of stock in trade to investmen .....

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, 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 .....

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hold the impugned order of the ld. CIT(A) accepting the claim of the assessee for short term and long term capital gain and dismiss ground No. 1 of Revenue s appeal. 4. In ground No. 2, the Revenue has challenged the action of the ld. CIT(A) in deleting the disallowance of ₹ 8,33,481/- made by the A.O. on account of V-SAT, Leaseline and Transaction charges u/s 40(a)(ia) of the Income Tax Act, 1961. 5. We have heard the arguments of both the sides and also perused the relevant material avai .....

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e by the stock 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 disallo .....

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dgment dated 21st October, 2011 passed IT Appeal No. 3111 of 2009 wherein it was held that stock exchange provides risk management and surveillance to the stock brokers to ensure the safety of the market with a view to regulate the trading in securities. It was held that the surveillance function involves price monitoring, exposure of the members, rumour verification on a daily basis and take remedial actions like reduction of filters, imposition of special margin, transferring scrips on a trade .....

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bay High Court in the case of Kotak Securities Ltd. and this position has been accepted even by the ld. counsel for the assessee in so far as this aspect of the matter is concerned. He however has contended that the decision of the Tribunal holding that the disallowance 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 .....

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rtunity to explain and establish the bonafide belief in the light of the decision of Hon ble Bombay High Court in the case of Kotak Securities Ltd. (supra). Ground No. 2 of the Revenue s appeal is accordingly treated as partly allowed. 7. In its C.O., the assessee has raised the following grounds:- 1. The learned Commissioner of Income-Tax (Appeals) committed a gross error of law and fact in confirming the disallowance of ₹ 9,29,636/- made by the assessing officer under section 14A of the .....

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he claim of bad debt only to the extent of brokerage earned with respect to each party and not the whole amount of ₹ 44,16.428/- written off and claimed as bad debt by the appellant. 4. The learned Commissioner of Income-Tax (Appeals) grossly erred in not appreciating that the appellant having fulfilled the conditions laid down under sections 36(1)(vii) and section 36(2). its claim for deduction of bad debts amounting to ₹ 44,16,428!- should have been wholly allowed . 8. At the outse .....

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aised 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 condonation of delay is duly supported by an Affidavit filed by the assessee, we are satisfied that there was sufficient cause for the delay on the part of the assessee in filing its C.O. We, therefore, condone the said delay and proceed to decide the issue raised in the .....

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he disallowance u/s 14A for the years prior to A.Y. 2008-09 has to be made on some reasonable basis. We, therefore, restore this issue to the file of the A.O. with a direction to recompute the disallowance to be made u/s 14-A of the Act by following some reasonable basis. Ground No. 1 & 2 of assessee s C.O. are accordingly treated as partly allowed. 10. As regards the issue involved in ground No. 3 & 4 of the assessee s C.O. relating to the claim of the assessee, who is a share broker, f .....

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