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TMI Blog2014 (7) TMI 989X X X X Extracts X X X X X X X X Extracts X X X X ..... e followed – Decided in favour of assessee. Disallowance of STT as capital expenses – Held that:- The assessee in this case is neither the purchaser nor the seller - He is merely a collecting agent of STT on behalf of the Government - the assessee has both collected the amount and paid the same to the Government - assessee being a broker has neither purchased shares on its own nor sold shares on its own - It was only an intermediary - section 40(a)(ib) of the Act does not get attracted in this case nor section 88E benefit can be extended to the assessee - Following the decision in M/s A.K. Equities Pvt. Ltd. Vs. ITO [2010 (2) TMI 1115 - ITAT MUMBAI] - Only when the purchaser or the seller claims a deduction of STT paid, then only 40(a)(ib) is attracted – Decided in favour of Assessee. Disallowance of bad debts – Held that:- The AO has disallowed the part claim of the assessee on the ground that the claim should be after adjusting all receivables by the assessee against the clients by sale of holdings by the assessee belonging to the clients - assessee has made the claim that the amount written off by the assessee pertaining to the outstanding receivables after considering any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of administrative expenses and the grievance of the assessee is confined only to the expenditure disallowed u/s 14A on account of interest expenditure. The Ld. AR of the assessee has contended that the assessee's own funds are more than sufficient to source the investment which has resulted tax free income. He has referred the balance sheet and pointed out that the assessee's own fund is ₹ 45.41 crores whereas the total investment as on 31st March 2008 is ₹ 15.81 crore which is much less than the assessee's own fund. The Ld. AR has further submitted that an identical issue has been considered and decided by this Tribunal in assessee's own case for A.Y. 2006-07 and, therefore, this issue is covered in favour of the assessee. 2.3 On the other hand the Ld. DR has submitted that the assessee made fresh investment during the year to the tune of ₹ 13 crore and no details have been furnished to show that these investments were made from assessee's own funds. He has relied upon the orders of authorities below. 3. Having considered the rival submissions as well as relevant material on record, we note that an identical issue was considered and dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of law . ii. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in ignoring the fact that the penalty is imposed under SEBI [procedure for holding enquiry and imposing penalty by Adjudicating Officer] Rules 1995 which has a binding character'. iii. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in ignoring the facts that non-adherence to statutory provisions is not an allowable expenditure' iv. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in appreciating that it was not enough that the disbursement was made in the course of trade, but was also for the lawful purpose of trade.' v. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the fact that the penalty was imposed because the business was not conducted within the framework of law. 2 On the facts and in the circumstances of the case and in law, the Ld. CIT(A)erred in deleting the disallowance towards foreign travel expenses amounting to ₹ 1,70,521/ - made by the AO. 3. On the facts and in the circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal for A.Y. 2007-08, therefore, following the earlier orders of this Tribunal, we decide this issue against the revenue and in favour of the assessee. The order of CIT(A) is upheld. 6. Ground No. 2 is regarding disallowance of foreign travelling expenses. 6.1 We have heard the Ld. DR as well as Ld. AR and considered the relevant material on record. The AO has disallowed a sum of ₹ 1,70,521/- towards foreign travel expenses on the ground that no actual benefit has accrued to the assessee. On appeal, the CIT(A) has deleted the addition made by the AO by following the orders for A.Y. 2002-03 and 2007-08. We find that the expenditure in question is related to the foreign travel of the Directors of the assessee to Dubai and an identical issue was considered by this Tribunal for A.Y. 2002-03 and 2007-08. For A.Y. 2007-08 the Tribunal in para 14 held as under:- 14. The Ld. Departmental Representative relied upon the findings of AO. The Ld. Counsel for the assessee pointed out that on similar facts and circumstances in the assessment year 2002-03 wherein the matter travelled up to the Tribunal in assessee's own case and the ITAT had deleted the additions made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax planning or a colourable device, in our considered opinion, is devoid of merit. 7.3 Following the decision of the Tribunal (supra) we decide this issue in favour of the assessee and against the revenue. 8.1 Ground No. 4 is regarding disallowance of bad debts. 8.2 The assessee claimed bad debts of ₹ 4,44,30,690/- comprising of 1,51,71,170/- on account of brokerage and balance 2,92,58,921/- on account of non brokerage dues against the clients. The AO disallowed the claim of bad debt with respect to the non brokerage dues from the debtors. On appeal CIT(A) has allowed the claim of the assessee by following the decisions of Special Bench of this Tribunal in the case of DCIT Vs. Shreyas S. Morakhia (131 TTJ 641). 8.3 Before us, the Ld. DR has submitted that the AO has disallowed the claim of bad debts on the ground that the assessee failed to establish that the amount of bad debts claimed by the assessee has arrived after reducing the recoveries from the clients. He has relied upon the orders of the AO. 8.4 On the other hand the Ld. AR has submitted that CIT(A) has examined the entire record pertaining to bad debts. He has further submitted that the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is more that the interest paid, therefore, no disallowance could be made on account of interest expenditure u/s 14A. In support of his contention he has relied upon the following decisions:- (i) Paresh K. Shah Vs. DCIT Central Circle 17 18 (ITA No. 8214/Mum/2011) (ii) Additional CIT 1 (3) Vs. Weizmann Limited (ITA No. 6008/mum/2012) (iii) Shri Harshad F. Sheth Vs. ITO-16(2)(2) (ITA No. 4208/Mum/2011) 9.3 The disallowance of interest expenditure is not warranted in view of the fact that the assessee's own fund is more than the investment in question and further the interest received by the assessee is more than the interest paid during the year which also suggest that the assessee's own fund which has generated the interest is more than the investment in question. An identical issue has been considered by this Tribunal in no. of cases as relied upon by the assessee and mentioned above. In the case of Paresh K. Shah Vs. DCIT (supra), the Tribunal has decided an identical issue in para 5 to 5.2 as under:- 5 Having considered the rival submissions as well as the relevant material on record, we find that the assessee's own funds c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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