Tax Titbits

Abstract

The assessee, a stock broker, had to pay a penalty to the stock exchange for violation of its bye-laws. The Assessing Officer disallowed the payment applying Explanation to section 37(1) of the Act, which disallows illegal payments. The Tribunal in Kisan Ratilal Choksey Shares and Securities P. Ltd. v. Addl. CIT [2015] 41 ITR (Trib) 114 (Mumbai), held, that the said explanation is not a penalty imposed by stock exchange for violation of any law but only for non-compliance with its regulations.