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2014 (10) TMI 781 - AT - Income TaxDisallowance of interest made u/s 14A r.w. rule 8D – Held that:- The AO has to examine the disallowance made by the assessee by having regard to the accounts of the assessee and only thereafter the AO, if he is not satisfied with the correctness of the claim, shall determine the disallowance to be made u/s 14A of the Act in accordance Rule 8D – following the decision in Godrej & Boyce Mfg. Co. Ltd [2010 (8) TMI 77 - BOMBAY HIGH COURT - the workings furnished by the assessee for interest disallowance was not examined at all by the AO, whereas he is required to reject the workings furnished by the assessee after having regard to the accounts of the assessee – thus, CIT(A) was justified in holding that the interest disallowance was required to be made under Rule 8D(2)(i) of the I.T Rules and also in confirming the disallowance of interest – Decided against revenue. Disallowance of consent fee paid to SEBI – Fee paid to SEBI cannot be treated as penalty - Held that:- CIT(A) rightly was of the view that it is very apparent from the Circular of SEBI that in cases of administrative/civil actions which includes, interalia, orders of suspension from trading are different from criminal actions - assessee had been suspended from doing trading activity for a period of four months and had not been awarded any monetary fines - the consent application of the asssessee was without admitting or denying the guilt - SEBI has also accepted the application on this basis - Thus, SEBI has accepted the position that guilt may or may not be established at the end of the appellate proceedings - The fee paid cannot therefore, be equated to a "penalty" which must necessarily be a punishment for infraction of a law or a regulation having statutory force - The fee is claimed to have been paid for the purposes of business, to settle a dispute with the regulator SEBI and to be able to conduct its business without interruption – relying upon Commissioner Of Income-Tax Versus Sales Magnesite Private Limited [1994 (11) TMI 38 - BOMBAY High Court] - if the concerned impost is purely compensatory in nature, it is an allowable expense u/s. 37 of the Act – thus, the fee cannot be equated with a penalty and is a payment to enable the assessee to carry on its business in the normal course – the order of the CIT(A) is upheld – Decided against revenue.
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