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TMI Blog2015 (10) TMI 2581X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Stock Exchange. These expenses are in the nature of payments towards violating the prescribed Rules/ Regulations, short/ partial collection of margins, non-maintenance of complete records, delay in payments of funds and securities, incomplete KYC forms, etc. which are main breach of contractual liability and non-adherence to proper procedure laid down by the Stock Exchanges, and are not for any infringement or infraction of any statutory law, and therefore, are not hit by Explanation to sec.37(1) of the Act. Further, BSE & NSE are not statutory bodies and hence, fines and penalties levied by BSE & NSE cannot be equated with statutory Rule or Law. Since, the facts and circumstances of this year are similar to that of AY 2009-10, I hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Year (AY) 2010-11 on the following grounds of appeal: 1 On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in directing the A.O. to consider only net interest paid, for working disallowance u/s.14A erroneously relying that the same were allowed in the previous year by his predecessor which is factually incorrect. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the penalty on account of payment made to Stock Exchange without taking into account the fact that penalties which are mentioned as technical defaults are not merely compensatory but penalizing . 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge penalty, upheld the addition u/s 94(7), deleted the notional loss in respect of open position in the F O and further deleted the addition of expenses incurred at club made by AO, against which the present appeal is filed by the Revenue before this Tribunal. 3. We have heard the Departmental Representative (DR) and Authorised Representative (AR) of the assessee and perused the material available on record. 4. While restricting the disallowance made u/s 14A r.w. Rule 8D of the Income-tax Act, the CIT(A) observed as under: I have considered the facts of the case. I find that similar issue was there in A.Y. 2009-10 where my predecessor has directed the AO as under: The amount of such expenditure is, therefore, required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue was there in AY 2009-10 where my predecessor vide order No.CIT(A)- 8/Cir.4/172/2010-11 dated 30/12/2011 had allowed the appeal of the appellant holding that the penalties / fine paid to BSE, NSE are on account of non-collection of margin charge, procedure failure to follow bye-laws, rules/ regulations of the Stock Exchange. These expenses are in the nature of payments towards violating the prescribed Rules/ Regulations, short/ partial collection of margins, non-maintenance of complete records, delay in payments of funds and securities, incomplete KYC forms, etc. which are main breach of contractual liability and non-adherence to proper procedure laid down by the Stock Exchanges, and are not for any infringement or infraction of any statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact of the case. I find that the payment has been made to club where the appellant has regular meetings with arbitrage clients, other brokers and the people who forecast markets by scientific method of charts in order to decide course of action next day. I also find that such meeting and discussion are held every day in club after office hours. In view o above and considering the case laws cited upon by the appellant, the addition made by the Ld. AO is unjustified and hence deleted. This ground of appeal is allowed. 8. The learned AR of the assessee relied upon the judgment of co-ordinate bench of ITAT, Mumbai in ITA No. 5072/2005 titled as Morgan Stanley India Securities Pvt. Ltd. Vs. ACIT dated 13.04.2011 wherein it was held as ne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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