DCIT, CHENNAI v. M/s. Navia Markets Ltd., CHENNAI

ITA 1035/CHNY/2011 | 2006-2007
Pronouncement Date: 30-03-2012 | Result: Dismissed

Appeal Details

RSA Number 103521714 RSA 2011
Assessee PAN AAACM4739R
Bench Chennai
Appeal Number ITA 1035/CHNY/2011
Duration Of Justice 9 month(s) 23 day(s)
Appellant DCIT, CHENNAI
Respondent M/s. Navia Markets Ltd., CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 30-03-2012
Date Of Final Hearing 22-03-2012
Next Hearing Date 22-03-2012
Assessment Year 2006-2007
Appeal Filed On 06-06-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH CHENNAI BEFORE SHRI ABRAHAM P.GEORGE ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY JUDICIAL MEMBER ITA NO.632 /MDS/2011 (ASSESSMENT YEAR : 2006-07) M/S. NAVIA MARKETS LIMITED GANGA GIRTHA 4 TH & 5 TH FLOOR NO.9 (OLD 6D) N.H.ROAD NUNGAMBAKKAM CHENNAI-600 034. PAN:AAACM4739R VS. THE ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE-IV(4) CHENNAI-600 034. (APPELLANT) (RESPONDENT) ITA NO.1035/MDS/2011 (ASSESSMENT YEAR : 2006-07) THE ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE-IV(4) CHENNAI-600 034 VS. M/S. NAVIA MARKETS LIMITED GANGA GIRTHA 4 TH & 5 TH FLOOR NO.9 (OLD 6D) N.H.ROAD NUNGAMBAKKAM CHENNAI-600 034. PAN:AAACM4739R (APPELLANT) (RESPONDENT) ITA NO.633/MDS/2011 (ASSESSMENT YEAR : 2007-08) M/S. NAVIA MARKETS LIMITED GANGA GIRTHA 4 TH & 5 TH FLOOR NO.9 (OLD 6D) N.H.ROAD NUNGAMBAKKAM CHENNAI-600 034. PAN:AAACM4739R VS. THE ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE-IV(4) CHENNAI-600 034. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.VENKATNARAYANAN ADVOCATE REVENUE BY : DR. YOGESH KAMATH JCIT DATE OF HEARING : 22 ND MARCH 2012 DATE OF PRONOUNCEMENT : 30 TH MARCH 2012 O R D E R PER ABRAHAM P. GEORGE ACCOUNTANT MEMBER THE FIRST TWO ARE CROSS APPEALS OF THE ASSESSEE AND DEPARTMENT FOR THE ASSESSMENT YEAR 2006-07 WHEREAS THE LAST APPEAL IS OF THE ASSESSEE FOR THE ASSESSMENT Y EAR 2007- ITA NOS.632 1035 & 633/MDS/2011 2 08. SINCE COMMON ISSUES ARE MORE OR LESS INVOLVED THESE APPEALS ARE DISPOSED OF BY THIS CONSOLIDATED ORDER. 2. IN THE APPEALS OF THE ASSESSEE FOR BOTH ASSESSME NT YEARS 2006-07 AND 2007-08 THE SOLE ISSUE RAISED BY THE ASSESSEE IS DISALLOWANCE OF PENALTIES AND FINES PAI D TO NATIONAL STOCK EXCHANGE WHICH DISALLOWANCE WAS CON FIRMED BY LEARNED COMMISSIONER OF INCOME TAX(APPEAL). THE AMOUNT DISALLOWED BY THE ASSESSING OFFICER FOR ASSE SSMENT YEAR 2006-07 WAS ` 3 84 652/- AND FOR ASSESSMENT YEAR 2007-08 WAS ` 7 09 011/-. THE ASSESSING OFFICER WAS OF THE VIEW THAT SUCH FINES AND PENALTIES WHICH INCLUDED N ON SETTLEMENT FEES PAID WERE FOR CONTRAVENTION OR FOR NOT COMPLYING WITH STATUTORY PROVISIONS RELATING TO STO CK EXCHANGE AND ALSO VIOLATION OF DEPOSITORY RELATED RULES. HE WAS OF THE OPINION THAT PENALTY IMPOSED FOR BREACH OF LAW DURI NG THE COURSE OF TRADE COULD NOT BE DESCRIBED AS A COMMERC IAL LOSS AND THEREFORE COULD NOT BE ALLOWED. IN THE APPEALS BEFORE THE CIT(A) ARGUMENT OF THE ASSESSEE WAS THAT SUCH AMO UNTS WERE ON ACCOUNT OF DELAY IN FURNISHING CERTAIN INFO RMATION TO THE NATIONAL STOCK EXCHANGE AND BEING BROKERS OF NA TIONAL ITA NOS.632 1035 & 633/MDS/2011 3 STOCK EXCHANGE IT HAD BUSINESS RELATIONSHIP WITH S TOCK EXCHANGE. AS PER THE ASSESSEE EXPENDITURE WAS SOLE LY FOR THE PURPOSE OF ITS BUSINESS AND NOT ON ACCOUNT OF A NY VIOLATION OF LAW. THE CIT(A) WAS NOT IMPRESSED THU S HE CONFIRMED THE DISALLOWANCE. 3. NOW BEFORE US THE LEARNED A.R. SUBMITTED THAT T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. S TOCK AND BOND TRADING COMPANY IN ITA NO.4117 OF 2010 VIDE O RDER DATED 15.10.2011 HAD HELD THAT THERE WAS NO VIOLAT ION OF LAW WHEN SIMILAR PAYMENTS MADE TO STOCK EXCHANGE. RELEV ANT PARA 3 OF THE ORDER OF THE HONBLE BOMBAY HIGH COUR T IS REPRODUCED HEREUNDER FOR BREVITY:- 3. AS REGARDS THE SECOND QUESTION IS CONCERNED THE FINDING OF FACT RECORDED BY CIT(A) AND UPHELD B Y THE ITAT IS THAT THE PAYMENTS MADE BY THE ASSESSEE TO THE STOCK EXCHANGE FOR VIOLATION OF THEIR REGULATION ARE NOT ON ACCOUNT OF AN OFFENCE O R WHICH IS PROHIBITED BY LAW. HENCE THE INVOCATION OF EXPLANATION TO SECTION 37 OF THE INCOME TAX ACT 1961 IS NOT JUSTIFIED. IN OUR OPINION IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE NO FAULT CAN BE FOUND WITH THE DECISION OF THE ITAT. ACCORDINGLY T HE SECOND QUESTION CANNOT BE ENTERTAINED. ITA NOS.632 1035 & 633/MDS/2011 4 WE ARE OF THE OPINION IN VIEW OF THE DECISION OF T HE HONBLE BOMBAY HIGH COURT MENTIONED SUPRA THE CLAIM OF THE ASSESSEE WAS ALLOWABLE. SUCH DISALLOWANCES FOR BOTH THE YEARS THEREFORE STAND DELETED. 4. NOW TAKING UP THE DEPARTMENT APPEAL FOR THE ASSESSMENT YEAR 2006-07 ITS GRIEVANCE IS THAT THE CIT(A) DELETED THE DISALLOWANCE OF BAD DEBTS MADE BY THE A SSESSING OFFICER. DURING THE COURSE OF THE ASSESSMENT PROCEE DINGS IT WAS NOT NOTED BY THE ASSESSING OFFICER THAT ASSES SEE HAD CLAIMED DEDUCTION OF BAD DEBTS OF ` 23 50 404/-. AS PER THE ASSESSING OFFICER SINCE ONLY THE COMMISSION WAS OFF ERED AS INCOME DEBT REPRESENTING UNPAID AMOUNTS DUE FROM THE CLIENTS OF THE ASSESSEE COULD NOT BE ALLOWED. ACCOR DING TO HIM EXPLANATION TO SECTION 37(1) OF THE ACT WAS A TTRACTED AND SAID EXPLANATION DID NOT ACCORD FOR SUCH ALLOWANCE. 5. MOVING AGAINST SUCH DISALLOWANCE BEFORE THE CIT( A) ARGUMENT OF THE ASSESSEE WAS THAT SIMILAR ISSUE STO OD ALREADY DECIDED IN ITS FAVOUR BY THIS TRIBUNAL IN A SSESSEES OWN CASE FOR ASSESSMENT YEARS 2003-04 & 2004-05 IN ITA NOS.2333 & 2334/MDS/2007 VIDE ORDER DATED 25 TH APRIL 2008. ITA NOS.632 1035 & 633/MDS/2011 5 THE ASSESSEE ALSO RELIED ON THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF TRF LIMITED VS. CIT REPORTED I N 323 ITR 397(SC). LEARNED CIT(A) AGREED WITH THE ABOVE SUBMI SSIONS DELETED THE DISALLOWANCE. 6. NOW BEFORE US THE LEARNED D.R. STRONGLY ASSAILE D THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ASSESSEE HAD CONSIDERED IN ITS ACCOUNTS ONLY THE COMMISSION PAR T RELATABLE TO SUCH DEBT AND DEBT AS SUCH WAS NEVER PART OF ITS TRADING INCOME. THEREFORE ACCORDINGLY THE CLAIM OUGHT NOT T O HAVE BEEN ALLOWED BY THE CIT(A). PER CONTRA THE LEARNE D A.R. SUPPORTED THE ORDER OF THE LEARNED CIT(A). 7. WE HAVE PERUSED THE ORDERS AND CONSIDERED THE RI VAL CONTENTIONS. WE ARE OF THE OPINION THAT THE MATTER STANDS RESOLVED IN FAVOUR OF THE ASSESSEE THROUGH THE DECI SION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. S HREYAS S.MORAKHIA 2011 TIOL 172 AND THAT OF THE DELHI HIG H COURT IN THE CASE OF CIT VS. BONAZA PORTFOLIO LTD. 320 I TR 178(DEL). IN ANY CASE THE LEARNED CIT(A) HAD FOLLO WED THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FO R EARLIER YEARS. NOTHING WAS BROUGHT ON RECORD BY THE LEARNED D.R. TO ITA NOS.632 1035 & 633/MDS/2011 6 TAKE A DIFFERENT VIEW. WE ARE OF THE OPINION THAT T HE CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE. NO INTE RFERENCE IS CALLED FOR. 8. TO SUMMARISE THE RESULT APPEALS OF THE ASSESSEE ARE ALLOWED WHEREAS THAT OF THE DEPARTMENT IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH 2012. SD/- SD/- ( VIKAS AWASTHY ) (ABRAHAM P.GEORGE) JUDICIAL MEMBER ACC OUNTANT MEMBER CHENNAI DATED THE 30 TH MARCH 2012. SOMU COPY TO: (1) APPELLANT ( 4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.