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TMI Blog2015 (8) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and found that exactly similar issue is covered by the order of the Tribunal in assessee’s own case as mentioned by the CIT(A) in his appellate order wherein held that the expenses are in the nature of payments towards violating the prescribed rules/ regulation, short /partial collection of margins, non-maintenance of complete records, delay in payout of funds and securities, incomplete KYC forms, etc which are mere breach of contractual liability and adhere to proper procedure and not for infringement or infraction of any statutory law, therefore not hit by explanation to section 37(1) of the Act. Respectfully following the same, we do not find any infirmity in the order of CIT(A) for deleting the disallowance of penalty alleged to be paid to stock exchange. - Decided in favour of assessee. Disallowance of software expenses - CIT(A) deleted addition - Held that:- CIT(A) after following the order of ITAT Special Bench in case of Amway India Enterprises [2008 (2) TMI 454 - ITAT DELHI-C ], directed the AO to allow Annual maintenance charges as revenue expenditure and allow deduction of the same and treat the software expenditure as capital in nature. No infirmity in the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r SEEI [procedure for holding inquiry 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.' 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made on account of Club Membership fees of ₹ 806403/- by treating the same as revenue expenditure 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of sundry balance written off of ₹ 411748/without appreciating the fact that the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e direct accordingly. 7. The next grievance of the revenue relates to deleting the disallowance of penalty of ₹ 18,37,770/- levied by the Stock Exchange. The CIT(A) has deleted the same after observing as under :- 2.3 I have considered the facts and perused the material on record. I find that the penalties /fine paid to BSE are on account non collection of margin charged and procedural failure to follow the bye laws, rules /regulation of stock exchange. Therefore, the expenses are in the nature of payments towards violating the prescribed rules/ regulation, short /partial collection of margins, non-maintenance of complete records, delay in payout of funds and securities, incomplete KYC forms, etc which are mere breach of contractual liability and adhere to proper procedure and not for infringement or infraction of any statutory law, therefore not hit by explanation to section 37(1) of the Act. The issue is also covered by decision in the case of DClT v Enam Securities Pvt Ltd [ITA No. 4178/Mum/2009 dated 14-5-2010] and Goldcrest Capital Market Ltd v ITa (2010) 36 DTR177(Mum) In view of these facts, following the decision of Jurisdictional Tribunal, this ground of appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of business and not towards capital account as it only facilitates the smooth and efficient running of a business enterprise and does not add to the profit earning apparatus of a business enterprise. The expenditure has not resulted in to creation of any capital asset or acquisition of any new source of income. In view of these facts respectfully following the aforesaid decisions this ground of appeal is allowed in favour of the appellant. 9.1 We have considered rival contentions and perused the record. The issue under consideration is covered by the decision of the Hon ble jurisdictional High Court in the case of Otis Lubrizol India Ltd., 37 taxmann.com 294. The finding recorded by the CIT(A) has not been controverted. Respectfully following the decision of the jurisdictional High Court in the case referred above, we do not find any infirmity in the order of CIT(A). 10. The last grievance of the revenue relates to deleting the disallowance of sundry balance written off of ₹ 4,11,748/-. 10.1 We found that the assessee is engaged in the business of share broking as a member of the Bombay Stock Exchange. The assessee written off bad debts of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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