M/s. Kanodia Stock Broking Pvt. Ltd., Kolkata v. CIT- C-I, Kolkata, Kolkata

ITA 596/KOL/2010 | 2005-2006
Pronouncement Date: 28-05-2010

Appeal Details

RSA Number 59623514 RSA 2010
Assessee PAN AABCK3292N
Bench Kolkata
Appeal Number ITA 596/KOL/2010
Duration Of Justice 2 month(s) 4 day(s)
Appellant M/s. Kanodia Stock Broking Pvt. Ltd., Kolkata
Respondent CIT- C-I, Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 28-05-2010
Appeal Filed By Assessee
Bench Allotted A
Tribunal Order Date 28-05-2010
Date Of Final Hearing 17-05-2010
Next Hearing Date 17-05-2010
Assessment Year 2005-2006
Appeal Filed On 24-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SRI D. K. TYAGI JM & HONBLE SRI C. D. RAO AM] I.T.A. NO.596/KOL/2010 ASSESSMENT YEAR: 2005-06 M/S. KANODIA STOCK BROKING PVT. LTD. . -VS- COMMIS SIONER OF INCOME-TAX (PA NO. AABCK 3292 N) CIRCLE-1 KOLKATA. (APPELLANT) (RESPONDENT) APPELLANT BY : SRI A. K. TULSIYAN RESPONDENT BY : SRI D. R. SINDHAL O R D E R PER D. K. TYAGI JM: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE CIT KOLKATA DATED 16.03.2010 FOR ASSESSMENT YEAR 2005-0 6 U/S. 263 OF THE I. T. ACT. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT IN T HIS CASE WAS COMPLETED U/S. 143(3) OF THE ACT ON 26.12.2007. SUBSEQUENTLY LD. CIT NOTICED THAT THE ASSESSEE COMPANY HAS DEBITED TO THE P & L ACCOUNT A SUM OF RS.18 38 023/- BEING SEBI TURNOVER BASED FEE ALTHOUGH THE SAME RELATES TO THE PERIOD OF FIV E YEARS STARTING FROM 1993-94 WHEN THE COMPANY WAS REGISTERED UNDER SEBI. THIS EXPENS ES WAS ALLOWED IN THE ASSESSMENT COMPLETED EVEN THOUGH IT RELATED TO EARLIER YEARS A ND THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING UNDER WHICH NORM ALLY PRIOR PERIOD EXPENSES ARE NOT ALLOWABLE. HE THEREFORE ISSUED NOTICE U/S. 263 O F THE ACT AND AFTER TAKING INTO CONSIDERATION AND SUBMISSIONS OF THE ASSESSEE THE LD. CIT SET ASIDE THE ORDER OF THE AO BY OBSERVING AS UNDER : IN THE INSTANT CASE AS HAS ALREADY BEEN STATED T HE RELEVANT EXPENSE HAS BEEN DEBITED TO THE ACCOUNTS DURING THE YEAR AND ALSO PAID DURI NG THE YEAR AND HENCE DOES NOT COME WITHIN THE AMBIT OF SEC. 43B AT ALL. THUS AN ERROR OF HAS OCCURRED IN ALLOWING THE DEDUCTION. IT IS CLEAR FROM THE RECORDS THAT THE AO HAS NOT LOOKED INTO THIS ISSUE AT ALL. THIS ALSO HAS LED TO THE PASSING OF AN ORDER WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE THALIBAI F. JAIN ITO (1975) 101 ITR 1 (KARN) AND CIT V- EMERY STONE MANUFACTURING CO. (1995) 213 ITR 843 (RAJASTH AN). IN THE RESULT THE ASSESSMENT OF THIS POINT IS SET ASIDE WITH A DIRECTION TO THE AO TO REDO IT AS PER LAW. IN FAIRNESS TO THE ASSESSEE THE QUESTION AS TO WHETHER THE ABOVE E XPENDITURE HAS CRYSTALLIZED DURING THE YEAR AND HENCE ALLOWABLE U/S. 37 IS NOT BEEN L OOKED INTO. THIS MAY BE DONE BY THE ASSESSING OFFICER AT THE TIME OF REASSESSMENT SIN CE THERE IS AN IMPLICIT CLAIM FOR ITS ALLOWANCE IN THE RETURN OF INCOME FILED. 3. AT THE TIME OF HEARING BEFORE US THE LD. COUNSE L FOR THE ASSESSEE CHALLENGED THE ORDER PASSED BY THE LD. CIT ON THE GROUND THAT THE ORDER PASSED BY THE AO IS NEITHER 2 ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE RE VENUE. FEES PAYABLE TO SEBI IS ALLOWABLE ON PAYMENT BASIS IRRESPECTIVE OF THE YEAR IN WHICH IT IS PAYABLE AS PER THE PROVISIONS OF SECTION 43B OF THE I. T. ACT AND THE REFORE THE LD. CIT WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE I. T. ACT IN THIS CASE. HE FURTHER SUBMITTED THAT THE DIRECTION GIVEN TO THE AO TO CONSIDER THE CLAIM OF THE ASSESSEE ALLOWABLE U/S. 37 OF THE ACT IS ALSO UNCALLED FOR AS THE ISSUE INVOLV ED IN THIS APPEAL IS REGARDING ALLOWABILITY OF THE PAYMENT OF SEBI FEES U/S. 43B O F THE ACT. HE THEREFORE PRAYED THAT THE ORDER OF THE LD. CIT MAY BE QUASHED. 4. ON THE OTHER HAND THE LD. DR RELIED ON THE ORDE R OF THE LD. CIT(A) AND PRAYED BEFORE THE BENCH TO CONFIRM THE SAME. 5. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE ASSESSMENT ORDER WE FIND THAT THERE IS NO MENTION IN THE ASSESSMENT ORDER AB OUT THE ALLOWABILITY OF SUM OF RS.18 38 023/- IN THE ASSESSMENT ORDER PASSED BY TH E AO. THEREFORE THE LD. CIT WAS JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 2 63 OF THE ACT IN THIS CASE. AS FAR AS THE MERITS OF THE CASE IS CONCERNED THE LD. CIT HAS SE T ASIDE THE MATTER TO THE FILE OF THE AO BY DIRECTING THE AO TO REDO IT AS PER LAW. IN VI EW OF THIS DIRECTION THE OTHER OBSERVATIONS MADE BY THE LD. CIT IN OUR OPINION W AS UNCALLED FOR. THE ORDER OF THE LD. CIT IS THEREFORE MODIFIED TO THAT EXTENT. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED WITH PARTIAL MODIFICATION. 7. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28. 5.10 SD/- SD/- (C. D. RAO) (D. K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :28TH MAY 2010 COPY TO : 1. M/S. KANODIA STOCK BROKING PVT. LTD. 1 R. N. MUKHE RJEE ROAD 4 TH FLOOR ROOM NO. 5&6 KOLKATA-1. 2. CIT CIRCLE-1 KOLKATA. 3. ACIT CENTRAL0-1 KOLKATA. 4. D.R. ITAT KOLKATA. TRUE COPY BY ORDER DEPUTY REGISTRAR JD.(SR.P.S.) I.T.AT. KOLKATA