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TMI Blog2021 (3) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... . The case was selected for scrutiny and, thereafter, the assessment was completed at an income of Rs. 2,73,16,74,200/- after making additional disallowance of Rs. 1,93,79,583/- u/s 14A of the Income Tax Act, 1961 (hereinafter called 'the Act) and another disallowance of Rs. 35,18,803/- being amount paid towards fines and penalties. 2.1 Aggrieved, the assessee approached the Ld. First Appellate Authority who partly allowed the assessee's appeal by deleting Rs. 1,93,79,589/- being the additional disallowance made by the Assessing Officer (AO) u/s 14A of the Act. The Ld. CIT (A), however, upheld the disallowance pertaining to amount paid towards fines and penalties. 2.2 Now, aggrieved both the assessee as well as the Department is in appeal before the Tribunal and has raised the following grounds of appeal: ITA No.6330/Del/2017 "1. That the Commissioner of Income Tax (Appeals) ["CIT (A)] erred on facts and in law in confirming the disallowance of Rs. 35,18,803/- made by the Assessing Officer, being amount paid to the National Stock Exchange of India Limited ("NSE") holding the same to be capital in nature. 1.1 That the CIT (A) erred on facts and in law in not appreciating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 Without prejudice, on facts and circumstances of the case and in law, disallowance under section 14A of the Act cannot exceed, in any case, exempt dividend income of Rs. 4,14,800/- earned by the appellant during the relevant previous year." 3.1 The Authorized Representative submitted that this ground is also related to the Department's ground which challenges the action of the Ld. CIT (A) in deleting the disallowance of Rs. 1,93,79,583/- made by the Assessing Officer u/s 14A of the Act. It was prayed that since this ground does not raise any new issue but relates to an issue which has already been deliberated upon both by the Assessing Officer as well as the Ld. CIT (A), the same should be admitted. 4.0 Per contra, the Ld. Sr. Departmental Representative (DR) has no objection to the additional ground being admitted. 5.0 Having heard both the parties on the issue of admission of additional ground, we deem it appropriate to admit this additional ground as this issue was already before the lower authorities and no fresh issue is being sought to be raised by this additional ground of appeal. 6.0 The Ld. Authorized Representative submitted that during the under consideration, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-computing the disallowance u/s 14A afresh at this stage, specially, when the assessee had himself disallowed an amount suo moto and, thereafter, the Ld. CIT (A) had already restricted the disallowance to the extent of suo moto disallowance made by the assessee. 8.0 On a query from the Bench, both the parties agreed that following the Orders of the Tribunal for Assessment Years 2008-09 and 2011-12 in assessee's own case, a similar direction may be given in this year also. 9.0 With respect to assessee's Ground Nos.1 to 1.2 challenging the disallowance of non-compliance charges paid to National Stock Exchange (NSE) amounting to Rs. 35,18,803/-, it was submitted that during the year under consideration the assessee had incurred expenditure aggregating to Rs. 46,06,304/- disclosed under the head fines and penalties and the assessee had suo moto disallowed an amount of Rs. 3 ,76,890/- being aggregate of sums paid to Authorities other than NSE, as not admissible for deduction. It was further submitted that the Assessing Officer, however, also disallowed the amount of Rs. 35,18,803/- being charges paid to NSE, u/s 37(1) of the Act. The Ld. Authorized Representative submitted the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal issue had been decided in favour of the assessee in the case of DCIT vs. VLS Finance Ltd. by the Delhi Tribunal and reported in 104 taxmann.com 294 (Delhi Tribunal). The Ld. Authorized Representative submitted that similar adjudications in favour of the assessees had also been done by the Chandigarh Bench of the Tribunal and the Mumbai Bench of the Tribunal. The Ld. Authorized Representative also submitted that the Hon'ble Delhi High Court in the case of CIT vs. Prasad and Co., reported in 341 ITR 480 (Delhi) had held that fines paid for violating NSE rules was an allowable deduction as the amounts were paid during the course of business of the assessee and were not for infringement of any law. 10.0 In response, the Ld. Sr. Departmental Representative (DR) submitted that the impugned amount had been mentioned as disallowable even by the Tax Auditor of the company in the tax audit report but the assessee had not disallowed the same suo moto in the computation of taxable income. It was submitted that in view of the qualification made by the tax auditor, the amount was correctly disallowed by the Assessing Officer. 11.0 We have heard the rival contentions and have also perused t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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