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2016 (5) TMI 1310 - AT - Income TaxAllowing the claim of expenses i.e. compensation on account of redemption of units - Held that:- We are of the view that in the present case the unit holders, who made claim with the transfer agent, are entitled for return of their money invested in assessee’s mutual fund. Even the SEBI Regulation states so and if there is violation of the same, SEBI can prosecute the assessee. It means that the liability paid by assessee is in the nature of statutory as well as contractual. The assessee has paid the legitimate claim of the unit holders, who have lodged the claim with the Registrar and Transfer Agent of the issue. We are of the view that this expenditure is incidental to trade itself and Assessing Officer cannot ignore the same. We are of the view that even this comes within the ambit of commercial expediency for the reason that this is indirectly for facilitation of carrying on of the business of the assessee. In view of this reasoning, we allow the claim of the assessee and the orders of the lower authorities on this issue are reversed. This issue of assessee’s appeal is allowed. Disallowance of claim of assessee in respect to redemption of units on forced redemption request in the case of TIFPL - Held that:- We find that the assessee kept the demand alive for the claim of the provision on account of this embezzlement in the AY 2005-06 also. The assessee in the financial year relevant to this assessment year paid to TIFPL an amount of ₹ 4,42,73,539 vide cheque No.112500 dated 28/7/2006 as full and final settlement for the pending dispute. This payment was made against the opening provision of ₹ 3.92 corers provided in the FY 2004-05. The assessee accordingly claimed ₹ 3,92,15,599 on payment basis and also ₹ 50,57,940 which was paid to TIFPL on account of the interest accrued on such liability. The AO has allowed the claim of ₹ 3.92 crores, however, did not allow the claim of ₹ 50,57,940 on the ground that the assessee has filed suit against the various parties and therefore, the claim has not reached its finality. We find that the assessee has been pursuing his claim with the Banking Ombudsman as well as filing of an FIR with the Police but no result was coming out of the same. The fact that the assessee had paid a sum of ₹ 4,42,73,539 has not been denied by the AO. The assessee has reached the settlement after waiting so long and paid the final amount to TIFPL and finally settled the issue with TIFPL. In the present case before us the assessee had pursued the matter and side by side made payment to TIFPL on account of redemption of debentures, which has rightly been paid to the legitimate party and claimed the same as deduction. In the given facts and circumstances, we are of the view that the CIT(A) has rightly allowed the claim of the assessee and we confirm the same.
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