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TMI Blog2018 (11) TMI 1324X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of non-furnishing of the details of the vendors, the addition cannot be made especially in the case of purchase of stamps. The consumption of stamps required to be considered on the basis of volume of business and the consumption account. AO did not dispute the fact that there is requirement of affixing the stamps on every contract note, there was no evidence brought on record to show that affixing of stamps in settlement wise as accounted in the ledger account copy is false or overstated. In the earlier years also, the assessee has followed the same practice but the department has not brought on record any evidence to show that department has suspected the payment. Once the department accepts the settlements and mandatory requirement of affixing the stamps there is no reason to suspect the expenses incurred by the assessee towards stamp duty merely on the basis of surmises and conjunctures of the Assessing Officer without bringing any evidence to show that the stamps account is incorrect. The Assessing Officer should have verified the daily transactions on simple basis settlement-wise and given a finding whether assessee is really incurred such expenditure for affixin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75,87,776 04 Less: a) purchase of stamps paidincheques b) Purchase of stamps - Paid in cash 31,83, 168 39,05,000 05 Closing Balance as at 31/03/2012 4,99,608 We purchase broker note stamps to be affixed on the original contract notes to be given to the clients which is a pre-requisite as per the Indian Stamp Act. We purchase brokernote stamps through the liaisoning agents who in turn purchase the same from stamp vendors at Mumbai. We pay to these liaisoning agents for the procurement of stamps. Since these stamp vendors were situated atMumbai and there is no procedure to give bills/invoices by the stamp vendors for purchase of broker note stamps, all these payment were supported by self made vouchers. The amount collected from the clients towards purchase of broker note stamps is parked under the Stamp Duty account and same is grouped under the current liabilities in the balance sheet of the respective Financial Years. Whenever we purchase stamps, we debit the stamp duty account to the tune of stamps purchased. We have never claimed as expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n agents of the company by courier and sometimes in person. However, he could not tell the details of any liaison agent. vii) The Managing Director in his statement dated 11/03/2015 admitted that they have no evidence with them to substantiate the purchase of brokerage stamps in cash. 4. Therefore, the Assessing Officer was of the view that the claim of purchase of brokerage stamps in cash is bogus, as it is not supported by any evidence. Therefore, he made the addition of ₹ 40,23,346/-, relating to the amount paid for purchase of stamps in cash. The assesse has argued before the AO that it has collected the stamp duty charges from it s customers in fiduciary capacity and accounted under the current liabilities and did not claim or debit the expenditure to the P L account, thus question of disallowance does not arise. The Assessing Officer relied on the decision of the Hon'ble Gujarat High Court in the case of CIT Vs. Ideal Sheet Metal Stamping Pressing (P) Ltd. , [(2007) 290 ITR 295] and also the decision of the Bombay High Court in the case of CIT Vs. Bassein Metals (P) Ltd. [(2003) 263 ITR 518] and held that charges for collection towards stamp duties are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note stamp, the contract note is invalid. The assessee is collecting the requisite stamp duty amount from the clients at the time of issue of contract note to the customers. The mode of payment for purchase of broker note stamps is immaterial, as there is a statutory obligation on the part of the broker to affix proper value of broker note stamps on every contract note given to the client. The assessee has purchased the broker note stamps partly by way 8 ITA No. 161/VIZ/2017 (M/s. Steel City Securities) of cash through the liaisoning agents, who in turn, purchase the same from the stamp vendors at Mumbai and pay to the liaisoning agents for the procurement of stamps. There is no procedure to give bills/invoices by the stamp vendors for purchase of broker note stamps and all these payments were made in cash. Therefore, argued that it is incorrect on the part of the Assessing Officer to treat the cash payments for purchase of broker note stamps, as no payment made to the Government account. There is a statutory obligation to affix proper broker note stamps on each and every contract note given to the client and the same is subject to inspection by SEBI. The Ld. Counsel for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount collected as stamp duty from the customers and the same is required to be considered as revenue receipt and stamps affixed required to be treated as expenditure incurred by the assessee, thus the collections made by the assessee towards stamp duty constitutes as income the stamps that are utilised by the assessee partakes the character of expenditure. Therefore, argument of the assessee not to treat the collection of stamp duty as income is not acceptable and the ld. CIT(A) has rightly held that same is revenue receipt. There is no mistake in placing reliance on the decision of the Hon'ble Supreme Court in the case of M/s. Chowringhee Sales Bureau (P) Ltd. , (supra) by the ld. CIT(A), since the collection of amount for stamp duty is also a trading receipt. In respect of liability of expenditure, the ld. Departmental Representative argued that the Assessing Officer has allowed the expenditure which was incurred and paid to the Government of Andhra Pradesh and disallowed the expenditure which was incurred in cash on self-made vouchers. The assessee failed to furnish the details of stamp vendors i. e. 11 ITA No. 161/VIZ/2017 (M/s. Steel City Securities) names and addresses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclosed in page No. 77 to 120 of the paper book. As per the ledger account of the stamp duty, the assessee in accounting the stamps from his stamps account. As and when, the stamps are purchased, the account is debited and as and when stamps are utilised for each settlement, the same is credited to the account. The assessee has accounted the entire utilization of the stamp duty settlement-wise. The Assessing Officer has verified the ledger account copy, but did not find any irregularity. Though two Directors have stated that there was no purchase of stamps, the employees from whom the statements were recorded have confirmed that stamps were purchased. The Managing Director of the company has stated that both the Directors are not looking after purchase of stamps, therefore, they were not aware of the factual background. It is undisputed fact that the assessee has to affix the stamps on every transaction and it is also a fact that the assessee is operating throughout the country and the stamps purchased from the Government of Andhra Pradesh are valid only for the transactions in the state. It is also mentioned in the rules of Indian Stamps Act that whenever stamp duty payable und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t affixing of stamps in settlement wise as accounted in the ledger account copy is false or overstated. In the earlier years also, the assessee has followed the same practice but the department has not brought on record any evidence to show that department has suspected the payment. The department has not disputed the settlements accounted by the assessee in the ledger account. Once the department accepts the settlements and mandatory requirement of affixing the stamps there is no reason to suspect the expenses incurred by the assessee towards stamp duty merely on the basis of surmises and conjunctures of the Assessing Officer without bringing any evidence to show that the stamps account is incorrect. The Assessing Officer should have verified the daily transactions on simple basis settlement-wise and given a finding whether assessee is really incurred such expenditure for affixing of stamps. This exercise was not done by the Assessing Officer. Therefore, we hold that disallowance of expenditure claimed by the assessee on account of stamp duty is unsustainable and the same is deleted. Accordingly, we set aside the order of the ld. CIT(A) and delete the addition and allow the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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