2016 (9) TMI 1146 - AT - Income Tax

Disallowance in respect of fee paid to SEBI - Held that - CIT(A) has rightly respectfully followed the decision in the case of CIT vs. BLB Ltd. reported 2010 (3) TMI 907 - DELHI HIGH COURT by observing that the assessee was required to pay a fee to SEBI. The assessee filed an appeal before the Securities Appellate Tribunal who passed the order dismissing the appeal and thereafter the assessee made the payment. The amount was therefore paid during the year. In view of the discussion above the amount was rightly allowed as a deduction to the assessee and thus addition was deleted and ground of appeal was ruled in favour of the assessee. Re-computing and allowing long term capital loss after considering indexation - Held that - CIT(A) has rightly observed that the AO determined long term capital loss at ₹ 75 lacs but did not allow indexation of cost. However, the assessee has stated that the loss after indexation works out to RS.1,19,10,163/-. Therefore, the Ld. CIT(A) was right in directing the AO to re-compute and allow the loss after considering indexation. In view of the above, CIT(A) has passed a well reasoned order which does not need any interference - Decided against revenue

Summary

Issues:
1. Disallowance of fee paid to SEBI
2. Recomputation of long term capital loss after considering indexation

Issue 1: Disallowance of fee paid to SEBI:
The Revenue appealed against the Order of the Ld. Commissioner of Income Tax (Appeals) regarding the disallowance of a fee paid to SEBI. The Revenue argued that the issue was sub judice before the Supreme Court. The Ld. CIT(A) allowed the deduction of the fee, citing the appellant's obligation to pay SEBI, dismissal of the appeal by the Securities Appellate Tribunal, and subsequent payment during the relevant assessment year. The Ld. CIT(A) relied on the decision of the Delhi High Court in CIT vs. BLB Ltd. The ITAT upheld the Ld. CIT(A)'s decision, emphasizing the similarity of facts, the payment made during the year, and the legal precedents, ruling in favor of the appellant and dismissing the Revenue's appeal.

Issue 2: Recomputation of long term capital loss after considering indexation:
The second issue pertained to the determination of long term capital loss by the AO without allowing indexation of cost. The appellant contended that the loss after indexation amounted to a higher figure. The Ld. CIT(A) directed the AO to recompute the loss after considering indexation, a decision upheld by the ITAT. The ITAT concurred with the Ld. CIT(A)'s reasoning, acknowledging the correctness of the indexation calculation and ruling in favor of the appellant. Consequently, the ITAT dismissed the Revenue's appeal, upholding the Ld. CIT(A)'s order on both issues.