TaxTMI 
TaxTMI 
2007 (2) TMI 241
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....the learned CIT(A) was not justified to uphold the disallowance of Rs. 68,330 by holding the same in the nature of fees and penalty. The expenditure was incurred for running day-to-day business of the appellant company and could not be termed as any fine or penalty for infraction of any law." 3. The relevant facts of the case under consideration in brief are that the AO during the course of assessment proceedings noticed that the assessee had paid following amounts on account of NSE violations and on account of fine and penalty : NSE violations (stock holding) Rs. 31,200 Fine stock expenses (Rs. 5,000 + Rs. 3,100) Rs. 8,100 Fines and penalty Rs. 29,030 Total Rs. 68,330 The AO asked the assessee to show-cause wh....
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....total the amount of Rs. 30,000 was charges debited by the NSE for violation of that exposure limit six times which was in the normal course of business and not infraction of any law. It was further stated that every member of stock exchange was required to submit a margin certificate (for total deposits taken from the clients against their exposures) on quarterly basis to the NSE. NSE has charged Rs. 9,300 (Rs. 6,200 + Rs. 3,100) due to the late submission of margin certificates. It was stated that NSE charged per day penalty for delay in submission of that margin certificate which is in normal course of business and not due to infraction of any law and that the late submission was due to unavoidable circumstances/computer software problem.....
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.... the assessee. It was further submitted that in the normal course of business exposure limit was crossed due to increase in trading volume but that was not intentional, so, it was also in regular course of business and there was no infraction of any law. 7. In his rival submissions, learned Departmental Representative for the Revenue strongly supported the orders of authorities below and further submitted that the SEBI had fixed certain norms for the working of different stock exchanges which in turn had framed rules and regulations to conduct the business smoothly, those rules and regulations are applicable to the members of respective stock exchange and if any violation is there that violation is in the nature of infraction of law, so,....
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....in nature. Similarly, fine paid for delay in making the deliveries of shares due to deficiencies in the documents like non-matching of signatures, etc. cannot be considered penal in nature; irregularities of this type cannot be ruled out in such type of business and any fine paid for those irregularities cannot be considered as infraction of any law. So, the payments made by the assessee in the regular course of business, cannot be termed as penal in nature, particularly when the assessee did not commit those irregularities intentionally and regularly. The AO disallowed the fine levied for the transactions where the trading volume reached or crossed the fixed exposure limit. Similarly, as regards to the deliveries or bad deliveries of the s....