TaxTMI 
TaxTMI 
2018 (11) TMI 1324
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....essee was asked to explain as to why the stamp duty collected, but not paid to the Government account, should not be treated as revenue receipt in the hands of the assessee. In response to the notice, the assessee furnished explanation on 19/03/2015 stating as under:- "During the Financial Year 2011-12, we have collected an amount of Rs. 72,06,514/- towards stamp duty from the clients. Out the above an amount of Rs. 67,06,906/- was paid towards purchase of stamps during the Financial Year 2011-12. These payment includes an amount of Rs. 39,05,000/- paid by way of cash. The following is summary of stamp duty collection account in our books of account for the Financial Year 2011-12. Sl. No Description Amount 01 Opening Balance as on 01/04/2011 3,81,262 02 Add: Collection towards stamp duty form theclients during the F. Y. 2011-12 72,06,514 03 Total 75,87,776 04 Less: a) purchase of stamps - paidincheques b) Purchase of stamps - Paid in cash 31,83, 168 39,05,000 05 Closing Balance as at 31/03/2012 4,99,608 We purchase broker note stamps to be affixed on the original contract notes to be given to the clients which is a pre-requisite as per the Indian Stamp....
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.... the MD, but he was not aware about the purchase of stamps in cash. v) Although, the employees to whom payments were shown in the vouchers have deposed in their statements recorded under section 131 that they were given cash to purchase stamps, they could not tell from whom they purchased the same. They only gave vague reply that they purchased the said stamps from various parties near Railway Station or near Sub-Registrar Office. vi) Sri G. Sreerama Murthy, who is the Managing Director of the company, in his statement recorded under section 131 on 23/02/2015, stated that the said stamps were not available in Visakhapatnam and therefore, those were purchased from stamp vendors in Mumbai, and the stamps were sent by the liaison agents of the company by courier and sometimes in person. However, he could not tell the details of any liaison agent. vii) The Managing Director in his statement dated 11/03/2015 admitted that they have no evidence with them to substantiate the purchase of brokerage stamps in cash. 4. Therefore, the Assessing Officer was of the view that the claim of purchase of brokerage stamps in cash is bogus, as it is not supported by any evidence. Therefore, he m....
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.... affixed by the required amount of stamps the same is invalid. The assesse has to purchase the stamps as per the requirement on day to day basis and the cost of which borne by the customer. As per the requirement, the assessee had purchased the stamps from the Government of A. P. as well as from the local stamp vendors in Mumbai. As per the SEBI guidelines, it is a mandatory to issue contract note at the end of the day, to each and every client for all the transactions of buying / selling of securities in a particular day and this contract note should be given separately for each stock exchange like BSE & NSE. Each contract note is invariably affixed with a broker note stamp of requisite value. Without proper broker note stamp, the contract note is invalid. The assessee is collecting the requisite stamp duty amount from the clients at the time of issue of contract note to the customers. The mode of payment for purchase of broker note stamps is immaterial, as there is a statutory obligation on the part of the broker to affix proper value of broker note stamps on every contract note given to the client. The assessee has purchased the broker note stamps partly by way 8 ITA No. 161/VIZ....
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....larified that stamp duty and security transaction tax are the liability of the buyer/seller of securities and the broker pays the same acting as a Pure Agent, the said amount is not includible in the taxable amount in terms of Rule 5(2) of the Service Tax (Department of Value) Rules, 2006. Therefore, argued that stamp duty collected by the broker in fiduciary capacity cannot be treated as income and the question of disallowance of expenditure does not arise. 7. Per contra, the Ld. Departmental Representative argued that the assessee has collected the stamp duty charges for issue of contract note from the assessees. As and when stamps are affixed and used, the same is reduced from the stamp duty account from the amount collected as stamp duty from the customers and the same is required to be considered as revenue receipt and stamps affixed required to be treated as expenditure incurred by the assessee, thus the collections made by the assessee towards stamp duty constitutes as income the stamps that are utilised by the assessee partakes the character of expenditure. Therefore, argument of the assessee not to treat the collection of stamp duty as income is not acceptable and the ld.....
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....essee is having offices all over India and the stamps purchased from Government of A. P. are valid for the transactions entered into in the State of Andhra Pradesh and for transactions in Mumbai, the stamps required to be purchased from Maharashtra. In the case of other parts of the country, the stamps required to be purchased from the respective states. The assessee further stated that assessee is having branch at Mumbai, for which stamps purchased from Maharashtra Government is required to be affixed. The assessee purchased the stamps in cash from liasioning agents, stamp vendors and accounted the same in the books of account as liability and the account copy of the ledger for the stamp duty was enclosed in page No. 77 to 120 of the paper book. As per the ledger account of the stamp duty, the assessee in accounting the stamps from his stamps account. As and when, the stamps are purchased, the account is debited and as and when stamps are utilised for each settlement, the same is credited to the account. The assessee has accounted the entire utilization of the stamp duty settlement-wise. The Assessing Officer has verified the ledger account copy, but did not find any irregularity....
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....mises of the assessee. Though the details are available settlement wise, no enquiry was conducted to verify whether the assesse has affixed the requisite stamps or not? The Assessing Officer also did not have any evidence to establish that the purchase of stamps was bogus. Merely on the basis of non-furnishing of the details of the vendors, the addition cannot be made especially in the case of purchase of stamps. The consumption of stamps required to be considered on the basis of volume of business and the consumption account. The Assessing Officer did not dispute the fact that there is requirement of affixing the stamps on every contract note, there was no evidence brought on record to show that affixing of stamps in settlement wise as accounted in the ledger account copy is false or overstated. In the earlier years also, the assessee has followed the same practice but the department has not brought on record any evidence to show that department has suspected the payment. The department has not disputed the settlements accounted by the assessee in the ledger account. Once the department accepts the settlements and mandatory requirement of affixing the stamps there is no reason to ....