COMMISSIONER INCOME TAX Vs. BLB LTD.

JUDGEMENT

(1.) The Revenue has preferred the instant appeal, challenging the order dated 29th January, 2010 passed by the Income Tax Appellate Tribunal (ITAT) proposing the following questions of law that under Section 88E of the Act, the Assessee is entitled for payment of income tax of profits and gains of business or provision arising from Taxable Securities Transaction computed in the manner provided in Sub-Section 2 of an amount equal to the Security Transaction Tax paid in respect of the taxable Securities Transaction.

(2.) The facts in brief of this case are that Assessee filed the return declaring income at Rs. 8,92,070/-, which was revised on 30.03.2007 declaring income at Rs. 7,45,34,674/-. During the assessment proceedings, the Assessing Officer noticed that the Assessee had claimed a sum of Rs. 3,94,16,470/- being SEBI registration fee as expense in the Profits & Loss account. The Assessing Officer required the Assessee to justify as to why the same be not disallowed as it was in the nature of prior period expense.

(3.) The Assessee replied that the said payment was made as one time settlement fees to SEBI under Securities & Exchange Board of India (Internal Liability Regularization) Scheme 2004. As per the scheme all the brokers of BSE and NSE were required to pay turnover fees at a prescribed rate for an initial period of 5 years. For non-payments, SEBI had charged interest on the amount payable. The brokers were representing to the Board that the fee was arbitrary and excessive. In this process of confrontation, brokers went to the Court to get relief and matter went to the Apex Court which vide its judgment in the case of B.S.E. Brokers Forum v. SEBI, 2001 3 SCC 482, upheld the regulations of SEBI, holding the fees as reasonable and valid.