The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the transaction charges paid to the National Multi Commodity Exchange of India (NMCE) should be treated as ‘business expenditure’ for the purpose of allowing deduction under the Income Tax Act.
The Assessing Officer, in the instant case, rejected the claim of deduction made by the assessee in respect of transaction charges paid to NMCE.
Before the Tribunal, the assessee submitted that the expenses have been incurred in the course of commodity trading on the platform of the exchange and therefore, there was no warrant for expenditure incurred towards transaction charges in the ordinary course of commodity trading.
Allowing the appeal, the Tribunal held that “The claim of the assessee that transaction charges paid to National Multi Commodity Exchange of India (NMCE) require to be allowed as ordinary business expenditure in the course of commodity trading carries a good deal of force. The expense incurred is clearly in the course of commodity business and thus, the assessee is entitled to claim such expenditure as ‘business expenditure’. The action of the Revenue authorities is accordingly set aside and impugned transaction charges amounting to Rs.24,67,435/- is allowed.”
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