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TMI Blog2018 (2) TMI 1624X X X X Extracts X X X X X X X X Extracts X X X X ..... 52,01,417/-. In the said return, the assessee had voluntarily disallowed a sum of Rs. 87,766/- u/s 14A of the Act. There was a search and seizure operation u/s 132 of the Act followed by survey u/s 133A of the Act carried out on 6.9.2011 and on subsequent dates in the case of Lumino Group. The main business of the assessee group is Manufacturing of Cables, Conductors, Wire etc and Contract work for Rural Electrification Turnkey Infrastructure Project. During the course of search operation, some of the documents seized were belonging to the assessee. As a result, notice u/s 153C of the Act was issued to the assessee company for the earlier years prior to the year of search. For the year of search, notice u/s 143(2) and 142(1) of the Act was issued and served on the assessee within the prescribed time. The ld AO observed that the assessee had earned exempt income of Rs. 1,59,609/- and had disallowed only a sum of Rs. 87,766/- u/s 14A of the Act which is not in accordance with the computation method prescribed under Rule 8D of the Rules. The assessee vide its submissions dated 13.3.2014 offered a sum of Rs. 10,02,187/- under Rule 8D of the Rules. The ld AO however recomputed the disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vance for the revenue in this regard. With regard to disallowance under Rule 8D(2)(iii), the ld CITA had rightly directed the ld AO to include only dividend bearing investments in tune with the decision of this tribunal supra. We do not find any infirmity in the said direction of the ld CITA. Accordingly, the Grounds 1 & 2 raised by the revenue are dismissed. 3. The next issue to be decided in this appeal is as to whether the ld CITA was justified in deleting the loss claimed from commodity trading in the sum of Rs. 41,55,088/- in the facts and circumstances of the case. 3.1. The brief facts of this issue is that the assessee claimed loss on account of commodity trading to the tune of Rs. 41,55,088/- in the return of income. The method of arriving at this loss figure was produced by the assessee before the ld AO together with the supporting documents thereon which was not disputed by the ld AO. But the ld AO alleged that the assessee had taken bogus loss through Shri Saraf, one of the broker of MCX. Shri Saraf registers the name of the assessee company by taking Know Your Customer (KYC) details. Shri Saraf buys currency through M/s Marigold Vanijya Pvt Ltd for the assessee. But, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner placed reliance on the judgment of this Court in case of Uttam Chand Garg vs. Anand Rathi Shares Brokers Limited & Ors. In Arbitration Petition No. 950 of 2011 and in particular paragraph (5) and would submit that even if there was a non-compliance with the requirement of collecting margin by a trading member from the clients it would not invalidate the trades admittedly executed at the instance of the constituents. He submits that merely because the petitioner had shown some leverage to the respondent, the same would not make the transaction illegal. He submits that clause 8.6.6 of the bye-law (8) which provides that clearing member may close out an open position of a constituent member when the call for further margin or any other payment due is not complied with is not mandatory but is directory. He submits that since the responded had already made payment of Rs. 20 lacs, the petitioner did not close out the transaction Kvm ARBP195.15 earlier." Based on the aforesaid observations of the Hon'ble Bombay High Court, the assessee submitted that two inferences could be drawn. Firstly, that merely in the absence of margin money, transactions does not become void / illegal and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulsory or necessarily essential. Therefore, disallowance of the loss on commodity trading by the AO simply because margin money was not charged is not acceptable. Accordingly, assessee's appeal on ground no. 3 is allowed." 3.4. Aggrieved, the revenue is in appeal before us on the following grounds:- 3. Whether on the facts and circumstances of the case, the Ld. CIT(A) erred in allowing the bogus loss of Rs. 41,55,088/- being loss claimed from commodity trading. 4. Whether on the facts and circumstances of the case, the Ld. CIT(A) erred in allowing the said claimed loss of Rs. 41,55,088/- when the assessee had neither produced before the AO nor before the Ld. CIT(A) any evidence in support of the deposit which had been claimed as exempted by the broker. 3.5. We have heard the rival submissions. We find that the entire transactions were routed through regular and proper banking channels duly supported by contract notes , relevant copy of bank statements evidencing payments made to the broker M/s Marigold Vanijya Pvt Ltd and payments received by the assessee. These documents were not disbelieved or disputed by the ld AO. The only point in which the transaction was treated as bog ..... X X X X Extracts X X X X X X X X Extracts X X X X
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