By Ajay R. Singh, Advocate
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[Affirmed M/s. J.M. Financial Securities
Pvt. Ltd. vs Asst CIT – 4(3) . [ITA No.
4289/Mum/11 ; Bench : J ; dated 19/04/2013 ; A Y: 2004- 2005,
Mum. ITAT ]
Expenses
– Liability Disputed – Once
the assessee stopped contesting the claim of SEBI, the liability was crystallized
during the year: Sec 37
The
Assessing Officer disallowed assessee’s claim for expenditure aggregating to
Rs.1.86 crores. This expenditure was on account of payment to SEBI of Registration
Fees and interest paid thereon on account of late payment. The explanation of
the assessee was that there was a dispute
between SEBI and assessee with regard to the fees payable for registration in
respect of its taking over the business of M/s. J.M. Financial & Investment
Consultancy Services Ltd. However, in the subject assessment year, the assessee
decided to accept the contention of the SEBI on the question of fees payable
for registration with SEBI along with interest as contended by the SEBI. This
was warranted in view of the communication dated 19th November, 2003 from SEBI
to National Stock Exchange returning its application for trading in Future and
Options.
Being
aggrieved the assessee carried the issue in appeal to the CIT(A). The CIT(A)
dismissed the assessee’s appeal.
On further
appeal, the Tribunal held that the only reason for not accepting the claim of
the assessee as given by the lower
Authorities was that the assessee was not able to produce supporting documents
to evidence that the payment in fact had been made to SEBI. The evidence of
payment provided was a copy of the cheque issued in favour of SEBI drawn on
HDFC Bank.
The Hon’ble
High Court observed that there was no dispute that the assessee had taken over the business of one
M/s. J.M. Financial Investment Consultant Services Pvt. Ltd. and a final
registration had to be applied for with SEBI. The assessee had earlier
contested the claim of SEBI in respect of the fees payable. However, during the
previous year relevant to the subject assessment year, the assessee decided to accept the claim of SEBI
and pay the fees.
Once the assessee
acceptedthe claim of SEBI, the liability had crystallized during the year and
had to be allowed as an expenditure. So far as payment during the year is
concerned, the examination thereof may strictly be not necessary in view of the
above findings as the assessee is following Mercantile System of Accounting.
Nevertheless, the view taken by the Tribunal is a factual finding. The evidence
was in the form of copy of a cheque in favour of SEBI drawn on HDFC Bank.
Accordingly, appeal of the dept was dismissed as the question framed does not give rise to
any substantial question of law.
