TaxTMI 
TaxTMI 
2008 (11) TMI 441
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....t. The reply of the assessee in this regard is as under : "1. The company has written of as bad debts of one Company Panther Fincap Management Services Ltd. Rs. 47,73,220. Panther Fincap Management Services Ltd. is a company belonging to Ketan Parikh Group. You are requested to note that Ketan Parikh had become a defaulter in all the exchange BSE & NSE and who is also a big defaulter with Income-tax too. We had tried very hard to recover our funds by following vigorously and sitting in his office and even telephoning him regularly but as he was in deep debts and liability and as nothing was forthcoming inspite of vigorous follow us. We had no other choice but to write off. And there was no idea of filing a civil suit and wasting good money behind bad money and as he was telling that in case his time will change he will try and repay. So in order not to spoil relation and keep door open for future recovery. If we recover our funds in future we will credit the same to profit & loss account and offer the same for taxation. Further enclose herewith Ledger A/c of Panther Fincap Management Services Ltd. and brokerage statement for your record which brokerage income shown in Balance....
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....ayments for the brokerage as well as the principal amount. If the appellant does not own up the liability of the client towards the Stock Exchange, it will hamper the progress of business. In a way, it is almost impossible to run the business smoothly without shouldering the immediate burden of purchase consideration of shares as BSE would not wait till the ultimate client makes the payment. The transaction has to be completed within limited time span. But as the appellant cannot shown the payment to BSE as its own purchase, it takes the same to the balance sheet as liability of the client. If the clients turns his back from this transaction or does not make payment for any reason, the appellant has no option but to write the same off its books of account and claim it either as bad debt or business loss. Since, the written of principal amount does not qualify for deduction 36, the same has to be allowed as business loss as this amount forms an integral part of the appellant's business. Since, the dispute regarding this liability was settled in the year under consideration, the loss in the hands of the appellant has to be taken as relating to the previous year relevant to current as....
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....s Notes rather than the contents of the notification of the notice after one year of the said Press Note. Notwithstanding the claim of the assessee during the year, AR submitted that by allowing the same in the earlier years, there is no tax implication since the assessee is in losses from the assessment year 2001-02 onwards and relied on the paper book pages 1 to 9 in this regard. 6. We have heard both the parties and perused the relevant orders of the lower authorities as well as the copy of the notifications and press releases filed before us in the form of paper book. The condition relied on by the Assessing Officer is given in Para 4 on page 7 of the assessment order. The same reads as under :- "4. Member brokers shall buy securities on behalf of the client only on receipt of margin of minimum 20 per cent on the price of the securities proposed to be purchased, unless the clients already has an equivalent credit with the broker, Members may not, if so desire, collect such a margin from financial institutions, mutual funds and FIIs." The perusal of the copy of the Notification revealed that it does not contain the above Para in the said notification. With the help of L....
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....the assessee. In view of the same, we are of the considered opinion that the order of the CIT(A) does not call for any interference. Accordingly, grounds 1 & 2 of the Revenue are dismissed. 7. Issue 2 relates to the CIT(A)'s decision in deleting the penalty of Rs. 60,000 paid to the stock exchange. Assessee paid the said amount to the stock exchange. Assessing Officer held that the above that the payment was incurred for filing the rules and regulations of such violation is a punishable offence, as it partake the nature of contravention or attempts to contravene or pages to contravention of this Act. Relying on the Apex Court judgment in the case of CIT v. Dhanalakshmi Bank Ltd. [2004] 271 ITR (St.) 2, Assessing Officer disallowed the claim. 8. During the appeal proceedings, the CIT(A) considered the assessee's explanation in this regard and found that amount was levied for "excess utilisation limits" comparable to it for doing the trade of its clients at a particular time. He also considered the assessee's submission that the, said amount was not paid for infringement of law. There is no offence involved for which the penalty payment was made. Accordingly, the CIT(A) agreed ....