2018 (7) TMI 586

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....n of addition of Rs. 10,97,280/- made by the AO on account of expenditure u/s 37(1) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'. 3. During the course of scrutiny proceedings, the AO noticed that the assessee has claimed an amount of Rs. 10,97,280/- as expenditure on account of consent fee charged by the Security Exchange Board of India [SDEBI]. The AO was of the firm belief that the said payment has been made in violation of the statutory provisions of the SEBI Act and, therefore, cannot be allowed as revenue expenditure u/s 37(1) of the Act. Accordingly, Rs. 10,97,280/- was disallowed. 4. The matter was agitated before the CIT(A) and it was explained that the consent fee paid to SEBI was in settlement of....

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....ance relates to allowance of long term capital loss of Rs. 2,39,92,582/-. 9. While scrutinising the return of income, the AO noticed that the assessee has claimed in its return of income long term capital loss of Rs. 2,63,96,983/-. The assessee was asked to justify its claim of loss. The assessee, vide letter dated 16.05.2012, has stated as under: "The assessee company claimed during the year in its return of income a long-term of Rs. 2,63,96,983/- incurred on investments in shares of its foreign company namely, VLS International SA. The company finally realized rent of this company through another subsidiary company namely, VLS Investment Inc. during the year and in net, a loss of Rs. 2,63,96,983/- was the company on this account. Compl....

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....ne of Rs. 2,39,92,582/-. 11. The assessee agitated the matter before the CIT(A) and reiterated its claim of loss. After considering the facts and submissions, the CIT(A) was convinced that the assessee was entitled to the claim of long term capital loss of Rs. 2,63,46,033/- as against Rs. 23,53,451/- allowed by the AO. Accordingly, the CIT(A) directed the AO to allow the claim of the assessee. Aggrieved by this the Revenue is before us. 12. The ld. DR strongly supported the findings of the AO. It was the say of the ld. DR that since the assessee is following mercantile system of accounting, the loss incurred in A.Y 2006-07 cannot be allowed in the year under consideration. 13. Per contra, the ld. AR reiterated what has been stated ....