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TMI Blog2011 (1) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... own definition of turnover and thereafter SEBI formulated the scheme dt. 15th July, 2004 directing the broker to pay the fee.Therefore, the liability is settled in this year only and the same was accordingly claimed in this year hence need to be allowed. Regarding addition u/s 14A - Assessee was asked to explain why the proportionate administrative and management expenses incurred for earning the exempt income should not be disallowed under section 14A - Held that:- As in the case of Godrej & Boyce Mfg. Co. v. Dy. CIT (2010 (8) TMI 77 - BOMBAY HIGH COURT) has held that even when prior to asst. yr. 2008-09, when rule 8D was not applicable, the AO has to enforce the provisions of sub-section (1) of section 14A - AO must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record - Appeal is allowed by way of remand - ITA NOS. 2727 (DELHI) OF 2008 AND 3897 (DELHI) OF 2010 - - - Dated:- 28-1-2011 - SHRI R.P. TOLANI, AND SHRI SHAMIM YAHYA, JJ Represented By: Dr. Shri Rakesh Gupta and Ashwani Taneja for the Appellant. Shri Ashok Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there is no scope of any tax evasion by changing the nature of share by transferring it from one account to another. Further, the ratio of the decision of Hon'ble Tribunal, Mumbai 'J' Bench in the case of JM. Share Stock Brokers Ltd. and other cases, relied upon by the appellant, squarely applies to the facts of the appellant's case. Moreover, the Department in the past has already accepted the system followed by the appellant and there is no change in the system of accounting adopted by the appellant from year to year and no new fact/evidence has been brought on record to support the contention of the AO. The contention of the AO cannot be accepted. The AO is therefore, directed to accept the capital gain declared by the appellant and tax it at the rate applicable to capital gain instead of treating it as business income." 4.1 Furthermore, learned CIT(A) for the asst. yr. 2006-07 has held as under : "I have gone through the facts and circumstances of the case, submissions of the Authorised Representative of the appellant, observations of the AO, CBDT circulars on the issue and various judicial pronouncements as well as the decision of learned CIT(A) in the appellant's ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent types of transactions. After considering the various judicial pronouncements as well as the specific facts relating to the appellant, I am inclined to follow the findings of the learned CIT(A) for asst. yr. 2005-06 vide order dt. 16th May, 2008 wherein this issue has been decided in favour of the appellant. The AO had also accepted the claim of the appellant on similar facts for various earlier assessment years. As a result the AO is directed to delete this addition. This ground is decided in favour of the appellant." 5. Against this order the Revenue is in appeal before us. 6. We have heard the rival contentions in the light of the material produced and decision relied upon. We note that the assessee is a broker as well as investor. It has maintained the investment portfolio separately, income for which was liable to be taxed as capital gains, as the intention in respect of this was to hold the investment as investment only and was shown as such in the books of account and income therefor was shown and treated as capital gains in the successive assessments. Asst. yrs. 2002-03 and 2004-05 were conducted under section 143(3) and 143(1) in which capital gain was assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 2,73,784 as SEBI registration fee by debiting this amount in his P L a/c. AO asked the assessee to provide the details of payment made to SEBI. Assessee was also asked to justify as to why the SEBI regulation charges paid not be disclosed as in the nature of prior period expenditure. Not 'being satisfied with the assessee's reply in this regard AO disallowed the payment of SEBI regularization fee of Rs. 2,73,784 as prior period expenses. 9. Upon assessee's appeal learned CIT(A) elaborately considered the issue and held as under : "I have considered the submissions made by the appellant. From the facts brought on record by the appellant before the AO as well as before me, it is seen that the appellant deserves to succeed on this point. The Hon'ble Supreme Court in the year 2001 only upheld the constitutional validity of the jurisdiction of SEBI to levy the fees on the brokers and also directed that the changes recommended by the Bhatt Committee will be incorporated by the SEBI in the regulations which were amongst other issues were also on the issue of distinction between small/big broker and arbitrary/excessive charge of registration fees by SEBI. The Hon'ble Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions in the light of the material produced and precedent relied upon. Learned counsel of the assessee submitted that the said liability accrued in the previous year relevant to asst. yr. 2005-06 and therefore, it is so claimed in this year. Hon'ble Calcutta High Court vide its order dt. 25th May, 2004 directed the stock brokers to pay the registration fees by adopting their own definition of turnover and thereafter SEBI formulated the scheme dt. 15th July, 2004 directing the broker to pay the fee. Therefore, the liability is settled in this year only and the same was accordingly claimed in this year. From the above it is clear that the liability accrued in the asst. yr. 2005-06. Hence, there is no infirmity in the order of the learned CIT(A) on this issue accordingly, we uphold the same. 12. The last issue raised is that learned CIT(A) erred in deleting the addition of Rs. 1.95 lacs made by the AO by invoking the provision of section 14A 13. During the year assessee company has claimed dividend income of Rs. 11,68,511 and long-term capital gain of Rs. 7,45,100 as exempt income. Assessee was asked to explain why the proportionate administrative and management expenses incurred f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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