Listing fees paid to the stock exchange could not be said to be capital expenditure : ITAT

Listing fees paid to the stock exchange could not be said to be capital expenditure : ITAT

We have carefully considered the rival contention and perused the orders of the lower authorities. In the present case, the
appellant has shifted its global depository receipt exchange from AIM London stock exchange to the main market London stock exchange without increasing any capital but to provide a bigger platform to global depository receipt holders to trade their holding. The learned assessing officer has not shown that there is any increase in the capital base of the assessee. The learned CIT – A has allowed the claim of the assessee relying upon the decision of the honourable Gujarat High Court in case of CIT vs. Alembic Chemical Works Co Ltd 201 ITR 250 wherein the annual listing fees paid to stock exchange was held to be admissible business deductible expenditure. The Honourable Highcourt held that in view of the CBDT Circular No. F. 10/67-65/IT ( A1) dated 26-8-1965 it is obvious that the listing fees paid to the stock exchange shall have to be allowed as revenue expenditure. The Tribunal had rightly taken the view that listing fees shall have to be paid by the company to the stock exchange every year and that no enduring benefit arises to the company by payment of annual listing fees. Even otherwise, listing of shares in the stock exchange has high relevance so far as the public limited
company is concerned. The status of the company is one in which public is substantially interested and for that purpose
listing of shares in the stock exchange would assume importance so far as the public limited company is concerned. The business of the company also carries better prestige and better status when its shares are listed in the stock exchange. Such listing adds several advantages to the business carried on by the company, particularly in the matter of confidence of customers and loyalty of employees, which generate value. Thus, the expenditure on account of listing fees paid to the stock exchange could not be said to be capital expenditure, and that it shall have to be regarded as expenditure of revenue nature. Therefore, for the reasons we do not find any infirmity in the order of the learned CIT – A in deleting the above disallowance noting that there is no increase in the capital base of the assessee company. In view of this, we dismiss ground number 1 of the appeal of the learned AO.

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