2018 (6) TMI 213

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....39(1) on 30-09-2008 for the AY 2008-09, showing a total loss of Rs. 21309743/-. During the course of the assessment proceedings, the AO has disallowed a sum of Rs. 21660640/- by treating the same as business loss relating to earlier FY 2000-01. The assessee company had claimed business loss of Rs. 21660640/- in computation of income for the AY 2008- 09. In May 2000 outstanding position/outstanding delivery of the assessee company as per delivery receipt statement was closed out by NSE/NSCCL by wrongfully selling the shares even before the pay in date. The Act of NSE/NSCCL was not at all justified so the assessee company disputed the demands raised by NSE/NSCCL and filed a writ petition in Hori'ble Kolkata High Court. Since the company did not accept and acknowledge the demands of NSE/NSCCL and was disputing them by way of filing writ petition in Hon'ble Ko1kata High Court, the same was disclosed as a contingent liability in notes on accounts. Ultimately in Sept, 2007 the matter finally settled with NSE/NSCCL. The writ petition filed by the assessee company was withdrawn on 20-09-2007. The above sequence of events clearly demonstrated that the company never accepted the demands ....

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....ity de future which for the time being is only contingent. The former is deductible but not the latter." After going through the facts of the case and the ratio decided by the Apex Court is Shree Sajjan Mills Pvt. Ltd. case and Indian Molasses Company Pvt. Ltd. (supra). I think it is very clear that the liability of expenditure is to be considered in the year in which it is finally settled for expenditure. Accordingly, assessee's appeal on grounds no. 1 to 7 are allowed." Aggrieved the revenue is in appeal before us. 4. We have heard the rival submissions. On careful consideration of the facts and circumstances of the case, perusal of papers on record and orders of the authorities below, case law cited. We hold as follows. 5. The sequence of facts are as follows: (i) The appellant was incorporated in January 1995 and became a trading member of the National Stock Exchange in 1995. The appellant had given Bank Guarantees of approx Rs. 102.50 Lacs issued by various banks favouring NSEIL/ NSCCL. (ii) A settlement period starts on every Wednesday and ends the following Tuesday. The main purpose of the settlement period is to give an opportunity to the....

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....said close out by NSCCL. NSCCL also asked the appellant company to pay the outstanding dues failing which suitable action might be initiated. (vii) The assessee company disputed the demand raised by NSE/NSCCL and filed a Writ Petition in Calcutta High Court wherein the Hon'ble Calcutta High Court vide order dated 09.05.2000 stayed the collection of dues of NSE / NSCCL in following terms:- "Let there be an interim order in terms of prayer (d) of the Petition till Tuesday Next with Liberty to apply for extension". Prayer (d) of the writ petition reads as follows:- "(d) Injunction restraining the respondents from giving any effect and /or further effect and/or acting pursuant to the impugned le Her dated 05.05.2000 and Trades Done Report Dated 05.05.2000" (viii) The effect of this restraint injunction order was as if the demand letter 5th May, 2000 and "Trades Done Report" for May 03, 2000 never existed and was nullity and as such there was no demand in the eye of law. The stay order was extended on 16.05.2000. Finally the stay order was again extended on 30.06.2000 till further orders. Orders dated 16th may, 2000 and 30th June, 2000 we....

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.... suspended since the year 2000 which had hampered the business of the appellant. The payment made to the NSCCL was entirely loss incurred by the appellant which was debited in its books. (xv) NSE issued demand notice for the first time on 21-09-2007 requiring the appellant company to pay Rs. 1,52,48,599.69 to NSCCL for the purpose of re- enablement. NSE also advised that the exchange would inform the appellant company of further payments / requirement, if any. (xvi) The appellant company paid the sum of Rs. 1,52,48,599.69 by way of demand draft on 24-09-2007 in favour of NSCCL. (xvii) The appellant Company vide its letter dated 15-10-2007 referring to payments made to NSCCL as aforementioned requested NSE to permit re- enablement of company's trading facilities. (xviii) Referring to appellant Company's request letter dt. 15-10-2007 for reenablement, NSE raised further demand of Rs. 64,15,405.56 for the first time vide its letter dated March 5th 2008. The exchange asked the appellant company to pay the same in order to enable Exchange to restore appellant company's trading facility. (xix) In response to NSE's further deman....