CIT vs. The Stock and Bond Trading Company (Bombay High Court)
Penalty/ Fine for violation of procedural law not hit by Explanation to s. 37(1)
The assessee paid penalty/fine to BSE/NSE for infringement of procedural rules
such as failure to maintain margins, trading beyond exposure limits, late
submission of margin certificates, delay in making payment & deliveries etc. The
AO disallowed the claim for deduction on the ground that there was an
infringement of statutory law laid down by SEBI and the Explanation to s. 37(1)
was attracted. This was reversed by the Tribunal on the ground that the penalty
was for violation of procedural regulations and compensatory in nature and there
was no infringement of law. On appeal by the department, HELD dismissing the
appeal:
As the payments made by the assessee to the Stock Exchange for violation of
their regulation was not an account of an offence or which is prohibited by law,
the invocation of the Explanation to s. 37 of the Act was not justified.
See also CIT vs. M/s Khemchand Motilal Jain (MP)
Related Judgements
The Prudential Assurance Company vs. DIT (Bombay High Court) S. 245S stipulates
that an advance ruling is binding on the applicant, the CIT and the authorities
subordinate to him in relation to which it was sought. S. 245S(2) postulates
that the ruling shall cease to be binding if there is a change in law or facts
on the…
CIT vs. Mohair Investment & Trading Co (Delhi High Court) The period of six
months provided for imposition of penalty u/s 275(1)(a) starts running after the
successive appeals from an assessment order have been finally decided by the
CIT(A) or the ITAT. The proviso to s. 275(1)(a) extends the period for imposing
penalty from six months to one year…
CIT vs. Lazor Syntex & CIT vs. Akshay Textiles Trading (Bombay High Court) In
McDowell 154 ITR 148, the Court nowhere said that every action or inaction on
the part of the tax payer which results in reduction of tax liability to which
he may be subjected to in the future, is to be viewed with suspicion and be
treated as a…
Penalty/ Fine for violation of procedural law not hit by Explanation to s. 37(1)
The assessee paid penalty/fine to BSE/NSE for infringement of procedural rules
such as failure to maintain margins, trading beyond exposure limits, late
submission of margin certificates, delay in making payment & deliveries etc. The
AO disallowed the claim for deduction on the ground that there was an
infringement of statutory law laid down by SEBI and the Explanation to s. 37(1)
was attracted. This was reversed by the Tribunal on the ground that the penalty
was for violation of procedural regulations and compensatory in nature and there
was no infringement of law. On appeal by the department, HELD dismissing the
appeal:
As the payments made by the assessee to the Stock Exchange for violation of
their regulation was not an account of an offence or which is prohibited by law,
the invocation of the Explanation to s. 37 of the Act was not justified.
See also CIT vs. M/s Khemchand Motilal Jain (MP)
Related Judgements
The Prudential Assurance Company vs. DIT (Bombay High Court) S. 245S stipulates
that an advance ruling is binding on the applicant, the CIT and the authorities
subordinate to him in relation to which it was sought. S. 245S(2) postulates
that the ruling shall cease to be binding if there is a change in law or facts
on the…
CIT vs. Mohair Investment & Trading Co (Delhi High Court) The period of six
months provided for imposition of penalty u/s 275(1)(a) starts running after the
successive appeals from an assessment order have been finally decided by the
CIT(A) or the ITAT. The proviso to s. 275(1)(a) extends the period for imposing
penalty from six months to one year…
CIT vs. Lazor Syntex & CIT vs. Akshay Textiles Trading (Bombay High Court) In
McDowell 154 ITR 148, the Court nowhere said that every action or inaction on
the part of the tax payer which results in reduction of tax liability to which
he may be subjected to in the future, is to be viewed with suspicion and be
treated as a…
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