TMI Blog2002 (11) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... a capital expenditure. He ought to have held it as deductible expenditure. (3) The CIT(A) has erred in not deciding on merits the issue as regards the addition of Rs. 75,000 on the ground of alleged interest income." 2. The assessee is involved in the business of financiers and merchant bankers. The assessee paid Rs. 2,50,000 as fees to SEBI for registration as merchant banker. The payment was made on 18th Aug., 1993 whereas the registration was allowed by SEBI on 15th Sept., 1993. The AO observed that the registration expenses prior to commencement of business is a pre-commencement expenses and the assessee has created an asset as the registration allowed the assessee to commence its business. The AO treated the registration with SEB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was already in business of financiers and merchant bankers. The fee was paid to SEBI for registration as merchant banker which amounts to expansion of existing business. So in view of ratio laid down in above decisions, the expenditure in question is of revenue nature and same should be allowed. 6. The next issue is against the entrance fees of Rs. 1,00,000 paid to Association of Merchant Bankers of India. The AO found that in addition to entrance fees, the assessee was required to pay annual subscription of Rs. 1,00,000 per annum. The AO considered the facts that by acquiring membership right of the cartel of AMBI, the assessee has drawn long-term benefits. He, therefore, held that due to enduring advantage derived by the assessee, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Core Health Care Ltd. (2001) 169 CTR (Guj) 416 : (2001) 251 ITR 61 (Guj). 9. After going through the rival submissions and material on record including the decisions relied upon by the parties, we are not inclined to concur with the finding of the CIT(A) because the assessee was already in business of financiers and merchant bankers. The registration with AMBI is nothing but expansion of existing business and so the expenditure of registration with AMBI is an expenditure on revenue account and is allowable. Similar view has been taken in Gujarat State Export Corporation Ltd.; Engineers India Ltd. and Core Health Care Ltd. In view of this discussion, the order of CIT(A) on this issue is set aside and the AO is directed accordingly. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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