INCOME TAX ACT, 1961

Section 143(3)

Assessment - Addition to income - AO made addition on account of Client Code Modification on the ground that assessee had shifted its profit to other clients or shifted loss to its sister concerns as alleged by Special Auditors -

Assessee company was a member of recognized stock exchanges, i.e., National Commodity and Derivates Exchange Ltd. (NCDEX) and Multi Commodity Exchange of India Ltd.(MCX) and providing trading services in commodity market through NCDEX and MCX. The special auditors appointed under section 142(2A) observed that assessee company has shifted loss amounting to Rs. 2,37,54,77,970 which have occurred all through by itself and/or on behalf of the clients. Accordingly, AO made addition of Rs. 8,74,367 on account of Client Code Modification on the ground that assessee had shifted its profit to other clients or shifted loss to its sister concerns as alleged by the Special Auditors. Held: Volume of Client Code Modification occurred was within the permissible limit allowed by SEBI and Exchange/SEBI had not found any violation of rules and regulations related to CCM and the CCM transactions were falling within the prescribed limit of less than 1%. Accordingly, addition made by AO was not sustainable.

Followed:Jaypee Capital Services Ltd. vide ITA No. 1384/Del/2017, order dt. 17-1-2020 : 2020 TaxPub(DT) 0510 (Del-Trib)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2011-12

INCOME TAX ACT, 1961

Section 14A Rule 8D

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