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TMI Blog2014 (9) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... me. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Rs. 3,39,515/- being institutional STT and service tax not collected. 3. On the facts and in the circumstances of the case, the impugned order of the Ld. CIT(A) is contrary to law to be set aside and that of the Assessing Officer be restored." 3. None appeared on behalf of the assessee, though notice was sent though RPAD. We, therefore, proceed to dispose of the appeal exparte, qua the assessee. We have heard the learned D.R. and perused the record. 4. The facts necessary for the disposal of the appeal are stated in brief. Assessee company is a member of the Bombay Stock Exchange and National Stock Exchange and car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. Assessee earned brokerage income of `7,77,46,335/- and 50% approximately belongs to these high end clients from whom service tax is not collected. It was, therefore contended that service tax was paid by the assessee on the principle of commercial expediency, which is allowable as deduction. 7. The AO observed that the liability to pay service tax was that of the clients and it can never be said to be assessee's liability so as to claim under section 37(1) of the Act. He therefore disallowed the said claim. 8. Aggrieved, assessee preferred an appeal before the CIT(A). With regard to the claim of short term capital gains the learned CIT(A) accepted the plea of the assessee, by observing as under: - "4.9 (i) In the assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end Yield Ratio Dividend /Average Investment = 42,40,311/19,26,78,251 * 100 = 2.20% The aforesaid ratios are on much better footing than what are determined in the ITAT order in appellant's own case for the A.Y. 2005- 06, to ascertain the nature of transaction and thereby to decide whether assessee is investor or trader. 4.10 Considering the cumulative effect of several factors discussed above, including the fact that there was no motive of the appellant to take advantage of concessional tax rate applicable to capital gains and also the various ratios worked out in the above manner, clearly establish that appellant was an investor and not a trader in respect of shares held by it and therefore the assessing officer was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an expense particularly since STT was collected by the broker on behalf of government of India as an intermediary and as required by the provisions of law. Therefore, STT collected from the clients, either directly or embedded in the brokerage, and paid to the Government of India through the exchanges cannot be treated as an expense of the appellant. Also, in the instant case the appellant has not claimed it as an expense in its Profit & Loss Account. In the premise since it is not the appellant's expenditure it could also not have been disallowed under section 40(a)(ib) of the Act. Having regard to the facts and circumstances of the case the addition of Rs. 3,39,515/- is deleted. This ground of appeal is, thus, allowed." Aggrieved, Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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