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TMI Blog2014 (3) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... of Calcutta Stock Exchange vide rules and regulation of the exchange - The financial contribution compulsorily collected by Stock Exchange of which assessee is a member and who is also governed by rules and regulations of the Calcutta Stock Exchange is not penalty - assessee never defaulted in Calcutta Stock Exchange at any point of time and this payment made was for the better functioning of Calcutta Stock Exchange, which in no way can be called as penalty in nature – thus, the CIT(A) has rightly allowed the claim of the assessee – Decided against Revenue. Disallowance u/s 14A of the Act r.w. Rule 8D of the Act – Held that:- CIT(A) was of the view that the assessee's books of account are clear and no defect is pointed out by the AO in the interest free fund position explained by the assessee or in the books of account of the assessee which proves that borrowed funds were not used for the purposes of making the investments, the disallowance cannot be made - Assessee contended that no satisfaction whatsoever has been recorded by the AO regarding correctness of accounts of the assessee no diwsallowance can be made u/s. 14A of the Act read with Rule 8D of the Rules - As regards to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exchange. The amount of such difference in purchase was Rs.230897/- and in the case of sale the difference was Rs.198191/-. However, no bills and identity of the buyers or suppliers could be furnished along with identity. Therefore, the same is not accepted. Hence, Rs.429088/- being difference in accounts is added back. Aggrieved, assessee preferred appeal before CIT(A), who deleted the addition after considering the reconciliation statement vide para 3.3 of his appellate order as under: 3.3. I have carefully considered the submission of the AR and also gone through the assessment Order. The AO has not considered the facts and submissions made by the Assessee. The figures of purchases and sales as provided in Form 1ODB are not reconcilable with the f gures of the purchases and sales shown by the assessee in the final accounts for the various reasons enumerated here above. And also after considering the Mode of Computation for STT (as passed by Finance (no:2) Act, 2004) and Notificat on no: S.O.1059(E) on Securities Transaction Tax Rules, 2004, it is imperative that the figures of Sales and purchases shown in FORM 1ODB are based on Volume weihted average pr ce, which are not d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the assessee by observing as under: 4.2.1. It was further seen that the appellant-assessee was never been declared DEFAULTER by the Calcutta Stock Exchange Ltd. at any point of time. I also perused letter addressed to the assessee (Reference No. CSE/ACCT/2010-11/008) of the Exchange wherein, at the last line, it is stated that Further we would like to mention that you never declared defaulter in the Exchange. 4.2.2. Therefore, the AO's perception about the expenses of Settlement Guarantee Fund is unfounded and hypocritical. From no angle the payment is in the nature of penalty. Hence the appeal is allowed on this count. The assessee gets relief of Rs.409380/-. Aggrieved, revenue is in appeal before us. 7. We find that this amount of Rs.4,09,380/- on account of payment of settlement guarantee fund by the calcutta Stock Exchange Ltd. was borne by all the members of Calcutta Stock Exchange vide rules and regulation of the exchange. The financial contribution compulsorily collected by Stock Exchange of which assessee is a member and who is also governed by rules and regulations of the Calcutta Stock Exchange is not penalty. It is also a fact that assessee n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ata to the extent of Rs. 85,402/- under the specious invocation of the provisions of s. 14A of the Income Tax Act, 1961 read with r. 8D of the Income Tax Rules, 1962 is absolutely flawed, wrong and unjustified in law. 3. FOR THAT the Ld. Commissioner of Income Tax (Appeals) IV, Kolkata misconstrued the position in law in upholding the purported disallowance to the extent of Rs. 85,402/- resorted to by the Ld. Deputy Commissioner of Income Tax, Circle 4, Kolkata u/s. 14A of the Income Tax Act, 1961 read with r. 8D of the Income Tax Ru1es, 1962 in the facts and circumstances of the instant case and the purported findings on that behalf are entirely capricious, flawed and erroneous. 9. Briefly stated facts are that in both the years the assessee claimed that the loans were not utilised for investmemt purposes but it was utilised for the purpose of business and as such interest on loan is in expenditure towards earning of taxable income. The AO examined the assessee's contention and noted that it is not maintaining separate books of account for extra and non-extra income and also noted that loans were taken in earlier years which were utilised for trading purposes. The AO ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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