9911796707
TMI Blog2011 (9) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrary material brought on record by department, we are of the considered view that orders of Ld. CIT(A) is justifiable for both assessment years under consideration. Therefore we uphold the same by rejecting the grounds of appeal for assessment year 1999-2000 and grounds No. 1 &2 of appeal for assessment year 2000-01. Disallowance of penalty paid to Stock Exchange - Held that:- In the case of Master Capital Services Ltd. Vs DCIT (2007 (2) TMI 241 - ITAT CHANDIGARH-A) wherein it was held that fine paid for delay in making delivery of shares due to deficiencies in the documents like non-matching of signatures etc. cannot be considered as penal in nature. It was held that fine paid on account of irregularities cannot be considered payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000 and grounds No. 1 2 of appeal of assessment year 2000-01 are that assessee is a share broker. For the assessment year 1999-2000, assessee claimed loss on account of shortage in stock in trade written off ₹ 25,78,082/-. During the course of assessment proceedings, assessee stated that it is the practice of assessee-company to review the position of stock periodically and write off useless/unsaleable stock. The assessee filed its submission before the AO vide letter dt. 12th September, 2005 for both assessment year s under consideration. However, AO did not accept the claim of assessee on the ground that assessee could not substantiate the said loss (es) for both assessment years under consideration by external evidence and the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee of the stocks claimed to be lost before the AO. He further submitted that cases cited by assessee before AO, the details which are mentioned by AO in the respective assessment orders at page-4 for assessment year 1999-2000 and at page-5 of assessment year 2000-01 were not relevant as in the said cases, the concerned assessees were manufacturing business and not in share business hence revaluation of stock made in the said cases viz CIT Vs Tata Iron Steel Co. Ltd. (1977) 106 ITR 363 (Bom), ITO Vs Hindustan Aeronautics Ltd. (1988) 31 TTJ 95 (Bang), Milton Cycle Industries Ltd. Vs DCIT (1996) 54 TTJ 380 (Del) and ITO Vs Mysore Sugar Co. Ltd. (1984) 10 ITD 842 (Del) having no marketability was allowed as a deduction. He submitted that Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- for assessment year 2000-01 claimed it as loss (es). We consider it prudent to reproduce the reasons as stated by assessee in the said letters, which was admittedly filed before AO as well, which reads as under: any times clients or the exchange return the stock to the company due to reasons such as transferor signature differs, forged/fake share certificates etc. in absence of counter party or in case where the exchange do not rectify the stock, the Company needs to rectify bad stock for our client/exchange. To avoid sudden impact on the Company s Profit and Loss Account due to these unforeseen circumstances, the Company makes provision for such unexpected loss against the income on regular basis @ 0.01% of turnover so that such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts by the Company took place over a period of time and it is not practically possible to have external evidence to substantiate such efforts of the Company. 9. We also observe that assessee has also in the Annexure to above letter (es) had given details of shares and the amount written off against each script. On perusal of the same, we are of the considered view that the contention of Ld. DR that assessee could not file the details before the AO as to how the loss was estimated for both assessment years under consideration has no merit. We observe that assessee has made the analysis of the situation and only after arriving to the conclusion that stock had become worthless/amount was not recoverable and thereafter the business decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SEBI. Therefore, the amount paid by the assessee for such conduct could not be regarded as wholly laid out for the purpose of business because the incurrence of such expense has not been necessitated by the business but by the conduct of assessee. Therefore, AO disallowed the said amount of ₹ 10,00,000/- and added to the income of assessee. Being aggrieved, assessee filed appeal before Ld. CIT(A). 12. On behalf of the assessee, letter of NSCCL dt. 28th March, 2000 was produced before Ld. CIT(A). It was stated that the said letter was also produced before the AO. Ld. CIT(A) has reproduced the content of the said letter at para 6.1 of the impugned order wherein it is stated inter alia that the assessee was asked by NSCCL to pay late ..... X X X X Extracts X X X X X X X X Extracts X X X X
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