2015 (3) TMI 712 - HC - Income Tax

Fee paid to the Securities & Exchange Board of India (SEBI) - ITAT allowed it as revenue expenditure - Held that - There is no merit or substance in this appeal. If the Revenue had been treating the amount deposited by the similarly situated assessees with SEBI as revenue expenditure, then there is no reason why a different treatment should be meted out to the present assessee. See Commissioner of Income- Tax and Another v. Vysya Bank Ltd. 2008 (1) TMI 385 - KARNATAKA HIGH COURT - Decided in favour of assessee.

Summary

Issues:
- Appeal against the common order of the Income Tax Appellate Tribunal
- Disallowance of registration fee paid to SEBI as capital expenditure
- Substantial questions of law formulated by the Court
- Arguments presented by the appellant-revenue and respondent-assessee
- Application of precedents in deciding the appeals
- Conclusion and judgment of the High Court

Analysis:

The High Court of Gujarat heard appeals arising from a common order of the Income Tax Appellate Tribunal, Ahmedabad. The appellant-revenue challenged the Tribunal's order dated 24.03.2006, where the appeals by the assessees were allowed. The facts of the case revolved around the disallowance of the registration fee paid to SEBI as capital expenditure for the Assessment Year 1996-97. The CIT(A) partly allowed the appeal, leading to the assessees filing appeals before the Tribunal, which subsequently ruled in favor of the assessees.

Two substantial questions of law were formulated by the Court regarding the fee paid to SEBI as revenue expenditure in each case. The appellant-revenue argued that the Tribunal erred in allowing the appeals and deleting the disallowance, citing specific court decisions to support their stance. On the other hand, the respondent-assessee supported the Tribunal's order, referring to a decision by the Karnataka High Court in a related case.

After hearing arguments from both parties and examining the precedents cited, the High Court found that the issue in question was already settled in favor of the assessee and against the revenue based on a previous decision. The Court highlighted key observations from the precedent, emphasizing the lack of merit in the appeal and the consistency required in treating similar cases. Consequently, the High Court dismissed the appeals, holding that the Tribunal was correct in treating the fee paid to SEBI as revenue expenditure. The judgment favored the assessee and concluded the matter in their favor.

In summary, the High Court upheld the Tribunal's decision, emphasizing the importance of consistent treatment in similar cases and the precedence set by earlier judgments. The judgment provided clarity on the treatment of the fee paid to SEBI as revenue expenditure, ultimately ruling in favor of the assessee and against the revenue.