TaxTMI 
TaxTMI 
2015 (11) TMI 111
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....08,193 1.1 The Commissioner of Income-tax (Appeals)-11 ['the CIT (Appeals)], Mumbai on the facts and circumstances of the case and in law erred in upholding the disallowance of fines, penalties etc., levied for non maintenance of KYC forms, short collection of margin money etc., aggregating to Rs. 908,193 under the provisions of the Income-tax Act, 1961 ('the Act') on the premise that such payments are incurred in relation to offence which is prohibited by law. 1.2 The appellant submits that it has neither undertaken any activity which was 'violation' or offence of any law nor has concluded any activity which is 'prohibited' by law. The appellant submits that payment of fine, penalties etc., in question have ....
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....ock broking and is a member of BSE, NSE, is a DP for CDSL & NSDL and Mutual Fund Distribution. During the course of assessment proceedings, it was noted by the AO from the Tax Audit Report in Form No. 3CA, that the assessee has paid penalty/fine, levied by the Stock Exchange amounting to Rs. 9,08,193/-. The AO informed the assessee that in view of Explanation 1 to section 37 of the Act, the aforesaid amount was not allowable as business expenditure. The assessee, in reply, submitted that it has neither undertaken any activities which were in 'violation' or 'offence' of any law, nor has conducted any activities which were prohibited by law. It was submitted by the assessee that fines, penalty etc. have been paid for some procedural non-compl....
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....assessee company is engaged into stock broking activities and also in financial services which involves substantial compliance requirements with various regulatory authorities e.g. BSE, NSE, CDSL, NSDL, & SEBI etc. In the regular course of the business of the assessee company, certain procedural non-compliances are not unusual, for which assessee is required to pay some fines or penalties. In our considered view, these routine fines or penalties are "compensatory" in nature; these are not punitive. These fines are generally levied to ensure procedural compliances by the concerned persons. Their levy depend upon facts and circumstances of the case, and peculiarities or complexities of the situations involved. Sometimes elements of discretion....
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....usiness of share and stock broker as member of Bombay Stock Exchange and National Stock Exchange etc. A sum of Rs. 6,83,507 was claimed by it towards penalty paid to stock exchange. The Assessing Officer came to the conclusion that the disallowance was to be made in the light of Explanation to section 37(1). He, therefore, made the addition, which came to be deleted in the first appeal. 3. After considering the rival submissions and perusing the relevant material on record it is noted that the penalty was paid by the assessee on account of execution of trades without submission of PAN card by the clients, nonsubmission of unique client code details, inspection, execution of option trades, short delivery, margin violation fees. From the ve....
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....he AO asked the assessee to justify its claim. On the basis of reply of the assessee, the AO found that the claim was justified partly and therefore, a sum of Rs. 2,11,109/- was disallowed on the ground that assessee was not able to establish that this amount had become "bad". 4.2. Before the Ld CIT(A), the assessee submitted that, there was no requirement, as per law, to establish that the debt had become bad and mere write off in the books of accounts was enough. Ld CIT(A) was not satisfied on the ground that proper details wer not filed by the assessee. Being aggrieved, the assessee carried the matter before the Tribunal. 4.3. During the course of hearing before us, it was submitted by the assessee that non-filing of details was never ....