2013 (8) TMI 107

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... order dated 12.10.2009. 2. The appeal raises three issues. Opening the arguments for and on behalf of the assessee, it was claimed by the ld. AR, its counsel, that each of the three issues arising in the instant appeal stand covered by the decisions in its favour, adducing a chart listing the same. 2.1 The first disallowance, being agitated per Ground No. 1, is in respect of disallowance u/s.14A read with rule 8D of the Income Tax Rules, 1962 ('the Rules' hereinafter), effected in the sum of Rs.3,61,453/-. Though the same stood deleted by the ld. CIT(A) following the decision by the hon'ble court in the case of Godrej & Boyce Manufacturing Co. Ltd. vs. Dy. CIT [2010] 328 ITR 81 (Bom), he substituted the same with an illogical formula....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....t of short delivery charges; failure to raise adequate margin money; non-timely deposit of margin money, etc, would not constitute a penalty levied for violation or contravention of any law, so as to be hit by Explanation to section 37(1). The same are only in the nature of the technical defaults, being sought to be regularized or regulated through the levy of penalty by the Stock Exchange. The tribunal has taken a consistent view in the matter, and which in fact stands upheld by the hon'ble jurisdictional high court, as in the case of The Stock and Bond Trading Company (in ITA No.4117 of 2010 dated 14.10.2011). 2.2 The ld. DR, on the other hand, would rely on the orders of the authorities below. The ld. CIT(A) has allowed relief to the ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ting the same as attributable to the said income. As such, no infirmity can be said to attend the formula suggested by the ld. CIT(A) on that score. We are, however, inclined to agree with the claim of the ld. AR that the same would not yield a reasonable estimation of the expenditure in relation to the tax exempt income. This is for the reason that in the case of share brokering activity, the dividend income is only incidental, and the shares are not purchased or sold for earning dividend thereon. The formula stipulated by the ld. CIT(A), on the other hand, is based on the premise that the transactions in shares and, therefore, the expenditure incurred thereon, is toward earning the said income. In our view, rule 8D, which is not mandat....