ADDL CIT RG 4(2), MUMBAI v. PRAKASH K. SHAH SHARES & SECURITIES P. LTD, MUMBAI

ITA 5430/MUM/2010 | 2007-2008
Pronouncement Date: 29-09-2011 | Result: Dismissed

Appeal Details

RSA Number 543019914 RSA 2010
Assessee PAN AABCP3900A
Bench Mumbai
Appeal Number ITA 5430/MUM/2010
Duration Of Justice 1 year(s) 2 month(s) 27 day(s)
Appellant ADDL CIT RG 4(2), MUMBAI
Respondent PRAKASH K. SHAH SHARES & SECURITIES P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 29-09-2011
Assessment Year 2007-2008
Appeal Filed On 02-07-2010
Judgment Text
1 ITA NO.3339/MUM/2010( ASST YEAR2007-08) ITA NO. 5430/MUM/2010(ASST YEAR 2007-08) IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI C BENCH MUMBAI BENCHES MUMBAI BEFORE SHRI T R SOOD AM & SHRI VIJAY PAL RAO JM ITA NO.3339/MUM/2010 ( ASST YEAR2007-08) PRAKASH K SHAH & SECURITIES P LTD 11/43 RAJA BAHADUR MANSION TAMRIND LANE FORT MUMBAI 23 VS THE ADDL COMMR OF INCOME TAX RANGE 4(2) MUMBAI (APPELLANT) (RESPONDENT) ITA NO. 5430/MUM/2010(ASST YEAR 2007-08) THE ADDL COMMR OF INCOME TAX RANGE 4(2) MUMBAI VS PRAKASH K SHAH & SECURITIES P LTD 11/43 RAJA BAHADUR MANSION TAMRIND LANE FORT MUMBAI 23 (APPELLANT) (RESPONDENT) AN NO. AABCP3900A ASSESSEE BY SHRI DEEPAK H PADACHH REVENUE BY SHRI ALEXENDER DT.OF HEARING 29 TH SEPT 2011 DT OF PRONOUNCEMENT 29 TH SEPT 2011 PER VIJAY PAL RAO JM THESE ARE CROSS APPEALS DIRECTED AGAINST THE ORDER DATED 20TH APRIL 2010 OF THE CIT(A) FOR THE ASSESSMENT YEAR 2007-08. 2 IN APPEAL ITA NO. 3339/MUM/2010 THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS: I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D I LAW THE LD CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 10 91 135/- MADE BY THE ASSESSING OFFICER TO THE INCOME OF THE APPELLANT BY WAY OF DIS ALLOWING CERTAIN EXPENDITURE ALLEGED TO HAVE BEEN INCURRED RELATING TO EXEMPT INCOME INVOKING THE PROVISIONS OF SEC. 14A R.W R 8D. II) THE LD CIT(A) ERRED IN HOLDING THAT LEVY OF INTE REST U/S 234B OF THE I T ACT IS NOT APPEALABLE. THE APPELLANT DENIES ITS LIABILITY FOR SUCH INTEREST. 3 GROUND NO.1 IS REGARDING DISALLOWANCE U/S 14A. 2 ITA NO.3339/MUM/2010( ASST YEAR2007-08) ITA NO. 5430/MUM/2010(ASST YEAR 2007-08) 4 WE HAVE HEARD THE LD AR OF THE ASSESSEE AND THE L D DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD AR HAS POINTED OUT THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS.1 40 535/- ON THE SHARES HELD AS STOCK-IN-TRADE. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE IS A MEMBER OF BSE AND DOING TRADING IN SHARES. HE HAS REFERRED THE BALANCE SHEET AT PAGE 57 OF THE PAPER BOOK AS WELL AS THE SCHEDULE I & J AT PAGE 58 OF THE PAPER BOOK AND SUBMITTED THAT T HE ASSESSEE IS HAVING ONLY INVESTMENT WHICH IS EQUITY SHARE OF BSE LTD. HE HA S FURTHER POINTED OUT THAT THE ASSESSEES INCOME FROM BROKERAGE IS RS. 81 31 503/- AND INCOME FROM TRADING IN SHARES/DERIVATIVES IS RS. 5 38 10 325/- WHEREAS TH E DIVIDEND INCOME IS ONLY RS 1 40 535/- AGAINST WHICH A DISALLOWANCE OF RS 10 91 935/- HAS BEEN MADE BY THE ASSESSING OFFICER U/S 14A. HE HAS FURTHER SUBMITTE D THAT WHEN THE INTEREST EXPENDITURE IS ALLOWABLE U/ 36(1)(III) AND THE DIVI DEND INCOME IS EARNED ONLY ON THE SHARES HELD BY THE ASSESSEE IS STOCK IN TRADE THEN NO DISALLOWANCE CAN BE MADE U/S 14A. HE HAS RELIED UPON THE ORDER OF THE COORDINA TE BENCH OF THE TRIBUNAL IN THE CASE OF YATISH TRADING CO P LTD IN 129 ITD 237 (MU M). HE HAS FURTHER SUBMITTED THAT THE ASSESSEES OWN FUND IS RS. 7 62 00 599/- WHEREA S THE LOAN IS ONLY IN OVERDRAFT ACCOUNT AT RS. 18 886/- AS ON 31.3.2007 AND THE OTH ER LOANS IS ONLY AGAINST HYPOTHECATION OF MOTOR CAR OF RS. 28 60 504/- BUT N O INTEREST BECOME DUE. THUS THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE DISALL OWANCE U/S 14A OF RS. 10 91 135/- IS NOT JUSTIFIED AGAINST DIVIDEND INCOME OF RS. 1 40 5 35/-. 4.1 THE LD DR ON THE OTHER HAND HAS RELIED UPON T HE ORDERS OF THE LOWER AUTHORITIES. 5 AFTER CONSIDERING THE RIVAL CONTENTION AND RELEVA NT MATERIAL ON RECORD WE NOTE THAT THE ASSESSING OFFICER MADE THE ADDITION O F RS. 10 91 135/- U/S 14A BY 3 ITA NO.3339/MUM/2010( ASST YEAR2007-08) ITA NO. 5430/MUM/2010(ASST YEAR 2007-08) APPLYING RULE 8D. THE CIT(A) HAS CONFIRMED THE SAME BY FOLLOWING THE ORDER FOR ASSESSMENT YEAR 2006-07. IT IS PERTINENT TO NOTE T HAT RULE 8D IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION IN VIEW OF THE DECISIO N OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG P LTD VS ACIT REPO RTED IN 328 ITR 81(BOM). FURTHER IT IS WELL SETTLED PROPOSITION OF LAW THAT ONLY THAT P ART OF EXPENDITURE WHICH HAS BEEN INCURRED IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME HAS TO BE DISALLOWED. ADMITTEDLY THE DIVIDEND INCOME EARNED BY THE ASSESSEE IS ONLY ON THE SHARES WHICH ARE HELD AS STOCK-IN-TRADE. T HEREFORE THE BORROWED FUNDS IF ANY USED BY THE ASSESSEE FOR TRADING IN SHARES AND INTEREST ON THE SAME IS ALLOWABLE AS BUSINESS EXPENDITURE U/S 36(1)(III) OF THE ACT. IN THE FACTS OF THE CASE THE TURNOVER OF THE SHARE TRADING CANNOT BE A BASIS FOR DISALLOW ANCE OF INTEREST EXPENDITURE; BECAUSE THE DIVIDEND INCOME EARNED IS ONLY ON THAT PART OF THE SHARES WHICH ARE HELD AS STOCK-IN-TRADE. EVEN OTHERWISE IT IS CLEA R FROM THE RECORD THAT THE ASSESSEES OWN FUND IS MUCH MORE THAN THE AVERAGE STOCK-IN-TRA DE OF THE ASSESSEE; THEN IN OUR OPINION NO DISALLOWANCE OF INTEREST EXPENDITURE CA N BE MADE U/S 14A. 6 SIMILAR VIEW HAS BEEN TAKEN BY THE COORDINATE BEN CH OF THE TRIBUNAL IN THE CASE OF YATISH TRADING CO P LTD (SUPRA) IN PARA 36 & 37 AS UNDER: 36. AS HELD BY THE HON. JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ AND BOYCE MANUFACTURING CO. LTD MUMBAI (SUP RA) SECTION 14A IS IMPLICIT WITHIN IT A NOTION OF APPOR TIONMENT IN THE CASES WHERE THE EXPENDITURE IS INCURRED FOR THE COMPOSITE/INDIVISIBLE BUSINESS WHICH RECEIVES TAXAB LE AND NON- TAXABLE INCOME. HOWEVER THE PRINCIPLE OF APPORTIO NMENT IS APPLICABLE ONLY IN THE CASES WHERE IT IS NOT POSSIB LE TO DETERMINE THE ACTUAL EXPENDITURE INCURRED IN RELATION TO T HE INCOME NOT FORMING THE PART OF THE TOTAL INCOME. BUT WHEN IT IS POSSIBLE TO DETERMINE THE ACTUAL EXPENDITURE IN RELATION TO T HE EXEMPT INCOME OR NO EXPENDITURE HAS BEEN INCURRED IN RELA TION TO THE EXEMPT INCOME THEN THE PRINCIPLE OF APPORTIONMENT EMBEDDED IN SECTION 14A HAS NOT APPLICATION. 4 ITA NO.3339/MUM/2010( ASST YEAR2007-08) ITA NO. 5430/MUM/2010(ASST YEAR 2007-08) 37. EVEN OTHERWISE THE AO HAS DISALLOWED THE INTE REST EXPENDITURE ON THE BORROWED FUNDS TREATING AS PROP ORTIONATELY USED FOR THE INVESTMENT PURPOSES AND NOT FOR THE RE ASON AS USED IN TRADING PURPOSES. AS EVIDENT FROM THE ASSESSME NT ORDER THAT THE VERY BASIS OF DISALLOWANCES IS BORROWED FUNDS U SED FOR INVESTMENT PURPOSES AND ESTIMATED BY THE AO IN PROP ORTION OF BORROWED FUND TO THE TOTAL FUND AVAILABLE. WHEREAS THE DIVIDEND INCOME IS CLAIMED ON THE SHARES PURCHASED FOR TRADI NG PURPOSES AND HELD AS STOCK-IN-TRADE THEN THE VERY BASIS OF DISALLOWANCE BY THE AO IS INCORRECT HIGHLY IMPROPER AND INCONSIST ENT TO THE UNCONTRAVERTED FACTUAL CLAIM. IT IS PERTINENT TO N OTE THAT THE REASON FOR DISALLOWANCE IS DIVIDEND INCOME WHICH IS NOT FORMING THE PART OF THE TOTAL INCOME AND THE BASIS OF APPOR TIONMENT OF THE EXPENDITURE IS INVESTMENT. THUS WHEN THE DIV IDEND INCOME IS NOT ON THE SHARES PURCHASED FOR INVESTMENT AND T HE DIVIDEND WAS DIRECTLY CREDITED IN TO THE D-MAT ACCOUNT OF TH E ASSESSEE AND THE AO HAS NOT DISPUTED THIS FACTUAL CLAIM OF T HE ASSESSEE THEN THE ACTION OF THE AO IN ADOPTING THE BASIS OF APPORTIONMENT IS NOT SUSTAINABLE AND CONTRARY TO THE FACTS AS WEL L AS LAW. MOREOVER THE A.O. HAS NOT DISPUTED THE FACT THAT TH E ASSESSEE WAS HAVING ITS OWN FUNDS OF RS.27 94 34 833 AND TH E INVESTMENT IS RS..27 06 64 720/-. THEREFORE EVEN IF THE OWN FUND S AND INTEREST BEARING FUNDS ARE PUT INTO THE COMMON POOL THE INVE STMENT IS ALWAYS TREATED FROM OWN CAPITAL FUNDS AVAILABLE AND THE LOAN AND OTHER INTEREST BEARING FUNDS ARE USED FOR WORKI NG CAPITAL. THUS WE FIND FORCE IN THE CONTENTION OF THE ASSESSE E WAS THAT THE INVESTMENT HAS BEEN MADE ONLY TO THE EXTENT OF THEI R OWN FUNDS. MORE IMPORTANT TO NOTE THAT THE ASSESSEE DECLARED S HORT TERM AS WELL AS THE LONG TERM CAPITAL GAIN FROM INVESTMENT THEN THE QUESTION OF DISALLOWANCE U/S 14A REGARDING THE INTE REST EXPENDITURE ON BORROWED FUNDS IF ANY UTILIZED FOR I NVESTMENT PURPOSES DOES NOT ARISE SPECIFICALLY WHEN NO DIVIDE ND INCOME IS EARNED ON THE SHARES PURCHASE FOR INVESTMENT. ACCORDINGLY WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 7 GROUND NO.2 REGARDING LEVY OF INTEREST U/S 234B. 5 ITA NO.3339/MUM/2010( ASST YEAR2007-08) ITA NO. 5430/MUM/2010(ASST YEAR 2007-08) 8 SINCE LEVY OF INTEREST U/S 234B IS MANDATORY AND CONSEQUENTIAL IN NATURE; THEREFORE NO SPECIFIC FINDING IS REQUIRED. ITA NO.5430/MUM/ 2010 (BY THE REVENUE) 10 THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN T HIS APPEAL: I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 24 03 648 /- MADE U/S 40(A)(IA) IN RESPECT OF VASAT TRANSACTION AND LEASE-LINE CHARES P AID TO STOCK EXCHANGE WITHOUT APPRECIATING THE FACTS THAT THESE WERE COMPOS ITE CHARGES FOR PROFESSIONAL AND TECHNICAL SERVICES RENDERED BY THE ST OCK EXCHANGE TO ITS MEMBERS AND THE ASSESSEE AHS FAILED TO DEDUCT TDS T HEREON. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD CIT(A) ERRED IN DELETING THE ADDITION U/S 40(A)(IA) OF RS. 1 58 36 356/- MADE ON ACCOUNT OF PAYMENTS TO ARBITRAGERS/JOBBERS FOR NON D EDUCTION OF TDS. III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF P ENALTY OF RS. 7500/- ON VIOLATION OF THE BYE LAWS OF THE STOCK EXCHANGE WH ICH ARE STATUTORY IN CHARACTER AND THUS AMOUNTED TO INFRINGEMENT OF LAW. 11 WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET W E FIND THAT IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 AND 2006-07 WHILE DECIDING THE APPEAL OF THE REVENUE IN ITA NO.214 & 5528/MUM/2009 VIDE ORDER DATED 30 TH NOV 2010 IN PARAS 2 & 3 AS UNDER: 3. WE HAVE HEARD THE PARTIES. THE ASSESSEE-COMPANY IS A MEMBER OF STOCK EXCHANGE MUMBAI AND IS ENGAGED IN THE BUSINE SS OF TRADING IN SHARES AND STOCK BROKERS. THE ASSESSEE DERIVES INCOME BY W AY OF BROKERAGE TRADING IN SECURITIES / DERIVATIVES ETC. THE ASSESSEE HAS CLAIMED THE DEDUCTION IN RESPECT OF THE PAYMENT OF THE LEASE-LINE CHARGES TRA NSACTIONS CHARGES AND VSAT CHARGES PAID TO THE STOCK EXCHANGE. THE A.O. M ADE THE DISALLOWANCE OF THE ENTIRE EXPENDITURE ON THE REASON THAT THE ASS ESSEE HAS NOT DEDUCTED TAX AT SOURCE (TDS) WHILE MAKING PAYMENTS TO THE BSE AS THE SERVICES RENDERED BY THE BSE ARE IN THE NATURE OF THE TECHNICAL SERVICES AND HENCE IN 6 ITA NO.3339/MUM/2010( ASST YEAR2007-08) ITA NO. 5430/MUM/2010(ASST YEAR 2007-08) VIEW OF THE SECTION 40(A)(IA) THE EXPENSES ARE NOT A LLOWABLE. THE LD. CIT(A) DELETED THE ADDITIONS MADE BY THE A.O. AND NOW THE REVENUE IS IN APPEAL BEFORE US NOW THIS ISSUE STANDS SQUARELY COVERED I N FAVOUR OF THE ASSESSEE BY THE FOLLOWING DECISIONS OF THE OTHER CO-ORDINATE BEN CHES:- I) KOTAK SECURITIES VS ADDL. CIT (2008) -25 SOT 44 0 / -124 TTJ 241 (MUM) II) SPECIFIC INTERNET (INDIA) LTD (2009) -27 SOT 5 23 (BOM) 4. WE THEREFORE DO NOT FIND ANY REASON TO INTERFER E WITH THE ORDER OF THE LD. CIT (A) ON THIS ISSUE IN BOTH THE ASSESSMENT YE ARS AND ACCORDINGLY THE SAME ARE CONFIRMED AND THE RELEVANT GROUNDS TAKEN BY THE REVENUE IN BOTH THE ASSESSMENT YEAR I.E. GROUND NO.1 TO 7 IN THE A.Y . 2005-06 AND GROUND NO. 1(I) TO 1(V) IN THE A.Y. 2006-07 ARE DISMISSED. 12 WE THEREFORE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06 & 06-07 DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 13 THE NEXT ISSUE IS THE DISALLOWANCE OF PAYMENT T O THE JOBBERS/ARBITRAGERS. 14 WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET W E FIND THAT IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 AND 2006-07 WHILE DECIDING THE APPEAL OF THE REVENUE IN ITA NO.214 & 5528/MUM/2009 VIDE ORDER DATED 30 TH NOV 2010 IN PARA 9 AS UNDER: 9. IN THE CASE OF M/S. ASSET SECURITIES PVT. LTD. (S UPRA) THE TRIBUNAL HAS EXAMINED THE NATURE OF THE PAYMENTS MADE TO THE JOBB ERS & ARBITRAGERS AND HELD AS UNDER:- THE FACTS SHOW THAT THERE WERE SEPARATE JOINT VENTU RES ENTERED INTO BY THE ASSESSEE WITH SEVERAL JOBBERS / ARBITRAGERS AND PAYMENTS HAVE BEEN MADE TO THEM UNDER SUCH AGREEMENTS AND THE ASSES SEES SHARE IN THE PROFITS HAS BEEN TAKEN TO THE PROFIT AND LOSS ACCOUNT. IN THESE CIRCUMSTANCES THE PROVISIONS OF SECTION 194C ARE NOT ATTRACTED BECAUSE IN ESSENCE AND SUBSTANCE THE AMOUNTS PAID T O THE JOBBERS OR 7 ITA NO.3339/MUM/2010( ASST YEAR2007-08) ITA NO. 5430/MUM/2010(ASST YEAR 2007-08) ARBITRAGERS DID NOT IN REALITY REPRESENT THE EXPENSE O F THE ASSESSEE COMPANY BUT REPRESENTED PAYMENT OF THE SHARE OF THE JOBBERS / ARBITRAGERS UNDER THE AGREEMENT ENTERED INTO WITH THE M. IN SUCH A CASE THE ASSESSEE IS RIGHT IN SAYING THAT THERE WAS NO QUESTION OF DEDUCTING ANY TAX AT SOURCE. THE ABOVE FACTS ALSO E STABLISH THAT THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE JOBBERS / ARBITRAGERS WAS NOT OF PRINCIPAL AND AGENT BUT WAS THAT OF PRINCIPAL TO PRINCIPAL. BOTH HAD AGREED TO EMBARK UPON A JOINT VENTURE TO TRADE I N SHARES AND SECURITIES IN THE STOCK EXCHANGE AND TO SHARE THE PRO FIT / LOSS EQUALLY. WE DO NOT SEE HOW SUCH PAYMENTS CAN BE TERMED AS PA YMENTS TO CONTRACTORS FOR ANY WORK TO BE CARRIED OUT BY THEM. W E THEREFORE UPHOLD THE FINDING OF THE CIT (A) THAT THESE PAYMEN TS DO NOT ATTRACT SECTION 194C AND THE ASSESSEE WAS NOT LIABLE TO DED UCT TAX THERE FROM. ACCORDINGLY SECTION 40(A)(IA) IS ALSO NOT APPLICABL E. THE PAYMENTS IN OUR VIEW WERE RIGHTLY ALLOWED AS DEDUCTION BY THE CIT (A). THE GROUNDS 7 TO 10 ARE DISMISSED. 15 WE THEREFORE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06 & 06-07 DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 16 THE NEXT ISSUE IS THE DISALLOWANCE OF THE PENALT Y PAID TO THE STOCK EXCHANGE. 17 WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET W E FIND THAT IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 AND 2006-07 WHILE DECIDING THE APPEAL OF THE REVENUE IN ITA NO.214 & 5528/MUM/2009 VIDE ORDER DATED 30 TH NOV 2010 IN PARAS 12 & 13 AS UNDER: 12. WE HAVE HEARD THE PARTIES. THE ASSESSEE HAD CLA IMED THE DEDUCTION IN RESPECT OF THE PENALTY LEVIED BY THE S EBI UNDER SEBI (PROCEDURE FOR HOLDING ENQUIRY AND IMPOSING PENALTY B Y ADJUDICATING OFFICER) RULES 1995. THE A.O. MADE THE DISALLOWAN CE BY HOLDING THAT THE PENALTY WAS LEVIED BY FOR INFRACTION OF LAW. T HE ASSESSEE CHALLENGED THE DISALLOWANCE BEFORE THE LD. CIT (A) W HO DELETED THE SAME. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD. COUNSEL 8 ITA NO.3339/MUM/2010( ASST YEAR2007-08) ITA NO. 5430/MUM/2010(ASST YEAR 2007-08) SUBMITTED THAT NOW THIS ISSUE ALSO STANDS COVERED I N FAVOUR OF THE ASSESSEE BY THE FOLLOWING DECISIONS:- I) ITO-4(2)(2) VS. VRM SHARE BROKING (P) LTD. -27 SOT 469 (MUM) II) ITO VS. GDB SHARE & STOCK BROKING SERVICES LTD. -3 SOT 569 (KOL) -88 TTJ 352 (KOL) III) MASTER CAPITAL SERVICES LTD. VS. DCIT -23 SOT 60 (CHD). 13. WE HAVE PERUSED THE FACTS AS WELL AS THE REASONS GIVEN BY BOTH THE PARTIES. AS SUBMITTED BY THE LD. COUNSEL NOW THE ISSUE IN RESPECT OF THE ISSUE IN RESPECT OF THE PENALTY PAID TO THE STOCK EXCHANGE IN RESPECT OF THE ALLOWABILITY OF THE STAND IS COVERED I N FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE OTHER CO-ORDINATE BENCHES (CITED SUPRA). WE THEREFORE FOLLOWING THE PRINCIPLES LAID DOWN IN THE SAID DECISION CONFIRM THE ORDER OF THE LD. CIT (A) ON THIS ISSUE AND RELEVANT GROUNDS TAKEN BY THE REVENUE IN BOTH THE ASSESSMENT YEARS ARE DISMISSED. 18 WE THEREFORE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06 & 06-07 DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 19 IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING I.E. 29.9.2011 SD/- SD/- ( T R SOOD ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 29 TH SEPT 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER 9 ITA NO.3339/MUM/2010( ASST YEAR2007-08) ITA NO. 5430/MUM/2010(ASST YEAR 2007-08) DY /AR ITAT MUMBAI