ASE Capital Markets Ltd., Ahmedabad V. Jt. Commissioner of Income Tax,Range-3, Ahmedabad

ITA 1296/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6305 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 13-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Depreciation; Retrospective amendment
• Section: 115JB; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 1296/AHD/2015 (ASSESSMENT YEAR: 2010-11) ASE CAPITAL MARKETS LTD. KAMDHENU COMPLEX, OPP:, SAHJANAND COLLEGE, AMBAWADI, AHMEDABAD V/S JT. CIT, RANGE-3, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AADCA4629D APPELLANT BY : MS. IRA KAPOOR, AR RESPONDENT BY : SHRI V.K. SINGH, SR. D.R. ( )/ ORDER DATE OF HEARING : 10 -01-201 8 DATE OF PRONOUNCEMENT : 15 -01-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-10, AHMEDABAD DATED 24.02.2015 PERTAINING TO A.Y. 2010- 11. ITA NO1296/A HD/2015 . A.Y. 2010-1 1 2 2. THE GRIEVANCE OF THE ASSESSEE IS TWOFOLD. FIRSTLY, THE ASSESSEE IS AGGRIEVED BY THE DISALLOWANCE OF DEPRECIATION ON EXCHANGE CARD/TRADE RIGHTS OF RS. 3,78,358/- AND SECONDLY, THE ASSESSEE IS FURTHER AGGRIEVED BY THE DISALLOWANCE OF RS. 32,56,263/- MADE BY THE A.O. BY INVOKING THE PROVIS IONS OF SECTION 40(A)(IA) OF THE ACT. 3. THE ASSESSEE IS ENGAGED IN THE SHARE BROKERING AND DEPOSITORY ACTIVITIES. RETURN OF INCOME WAS FILED ON 07.10.2010 DECLARING TOTAL INCOME AT RS. 1,79,49,460/-. THE BOOK PROFIT U/S. 115JB OF THE AC T WAS COMPUTED AT RS. 1,82,72,371/-. THE RETURN FOR THE YEAR WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY STATUTORY NOTICES WERE ISSUED AND SERVE D UPON THE ASSESSEE. 4. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. OBSERVED THAT THE ASSESSEE HAS SHOWN SOFTWARES UNDER THE HEA D INTANGIBLE ASSETS AND HAS SHOWN BLOCK OF ASSET COMPUTER SEPARATELY. HOW EVER, WHILE COMPUTING THE DEPRECIATION, THE ASSESSEE HAS CLUBBED THE VALU E OF SOFTWARES ALONGWITH THE VALUE OF COMPUTER AND HAD CLAIMED DEPRECIATIO N @ 60%. THE A.O. WAS OF THE OPINION THAT THE ELIGIBLE RATE OF DEPRECIATI ON ON SOFTWARES IS 25%, THEREFORE, THE ASSESSEE WAS ASKED TO JUSTIFY THE CL AIM OF DEPRECIATION @ 60%. THE A.O. FURTHER NOTICED THAT THE ASSESSEE HAS CLAI MED DEPRECIATION ON EXCHANGE CART/TRADING RIGHTS. THE A.O. WAS OF THE O PINION THAT AFTER DEMUTUALIZATION, THE SEBI HAS ALLOTTED MEMBERSHIP C ARD SHARES AND THE MEMBERSHIP CARD DOES NOT EXIST, THEREFORE, THERE IS NO QUESTION OF ALLOWING ANY DEPRECIATION ON THE SAME. WHEN THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM, THE ASSESSEE REPLIED THAT IT HAS TAKEN ORIGINAL COS T OF SHARE AT RS. 1 WHILE COMPUTING CAPITAL GAIN IN A LATER YEAR AND THEREFOR E, THE SAME SHOULD NOT BE CONSIDERED FOR DENYING THE CLAIM OF DEPRECIATION. THE CONTENTION OF THE ITA NO1296/A HD/2015 . A.Y. 2010-1 1 3 ASSESSEE DID NOT FIND ANY FAVOUR WITH THE A.O. WHO DISALLOWED THE CLAIM OF DEPRECIATION OF RS. 3,78,358/- ON INTANGIBLE ASSET S BEING TRADING RIGHTS OF CSE AND BSE. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE DREW OU R ATTENTION TO THE ORDER OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE IN A.Y . 2007-08 & 2008-09 IN ITA NO. 373/AHD/2011. IT IS THE SAY OF THE LD. COUN SEL THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE TRIBUNAL IN THOSE ASSESSMENT YEARS AND HAS ALLOWED THE CLAIM OF DEPRECIATION. THE LD. D.R. COULD NOT BRING ANY DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORI TIES BELOW. WE HAVE ALSO CONSIDERED THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE (SUPRA), THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READS AS UNDER:- 13 . THE ASSESSEES NEXT GROUND RAISED IN THE INSTANT AP PEAL CHALLENGES DISALLOWANCE OF DEPRECIATION ON AHMEDABAD STOCK EXC HANGE CARD OF RS.141/- MADE IN THE COURSE OF ASSESSMENT AND AFFIRMED IN TH E LOWER APPELLATE PROCEEDINGS. BOTH THE LOWER AUTHORITIES HOLD THAT STOCK EXCHANGE MEMBERSHIP CARD IS NOT AN ELIGIBLE ASSET U/S 32 OF THE ACT AS HELD BY HONBLE BOMBAY HIGH COURT IN M/S. TECHNOSHARES AND STOCKS LTD. VS. CIT 193 TAXMAN 248. THE CIT(A) OBSERVES THAT THE HONBLE APEX COURT HAS REVERSED T HE ABOVE STATED DECISION AS REPORTED IN 327 ITR 323 WITH A RIDER THAT THE SAME RELATES TO BOMBAY STOCK EXCHANGE CARD ONLY. HE REPRODUCES RELEVANT PORTION OF THIS JUDGMENT AS WELL. HOWEVER, THE REVENUE FAILS TO POINT OUT ANY DISTINC TION BETWEEN THE ASSESSEES AHMEDABAD STOCK EXCHANGE CARD AND RELEVANT FEATURES OF BOMBAY STOCK EXCHANGE CARD. NOR SUCH A DISTINCTION IS FORTHCOMI NG FROM HONBLE APEX COURT ITA NO1296/A HD/2015 . A.Y. 2010-1 1 4 DECISION. WE FIND THAT A CO-ORDINATE BENCH OF THE TRIBUNAL IN CASE OF ASSESSEES SISTER CONCERNS CASE M/S. EDELWEISS STOCK BROKING LTD. VS. CIT, ITA NO. 1168/AHD/2011 DECIDED ON 11.07.2014 FOR AY 2006-07 GRANTS IDENTICAL DEPRECIATION RELIEF. WE ALSO DRAW SUPPORT THEREFRO M FOR ALLOWING THE IMPUGNED DEPRECIATION CLAIMED. THIS GROUND IS ACCEPTED. 8. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDIN ATE BENCH (SUPRA), WE DIRECT THE A.O. TO ALLOW THE CLAIM OF DEPRECIATION. GROUND NO. 1 IS ALLOWED. 9. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A.O. N OTICED THAT THE ASSESSEE HAS CLAIMED PAYMENTS ON ACCOUNT OF CM POOL CHARGES BEIN G VSAT, WAN SUPPORT CHARGES, LEASE LINE CHARGES BEING VPN CHARGES, TOTA LING TO RS. 32,56,263/-. THE A.O. FOUND THAT THE ASSESSEE HAS NOT DEDUCTED T AX AT SOURCE. INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, THE A.O . DISALLOWED RS. 32,56,263/-. 10. ASSESSEE ASSAILED THE ASSESSMENT BEFORE THE LD. CIT (A) BUT WITHOUT ANY SUCCESS. 11. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT IN THE EARLIER YEARS ALSO, SIMILAR DISALLOWANCE WERE MADE WHICH WERE SET ASIDE BY THE TRIBUNAL TO THE FILES OF THE A.O. IT IS THE SAY OF THE LD. COUNSEL THAT O N SIMILAR FACTS, THE SAME VIEW SHOULD BE TAKEN. 12. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTH ORITIES BELOW. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. A SIMILAR DIS ALLOWANCE WAS CONSIDERED BY THE CO-ORDINATE BENCH IN ITA NO. 373/AHD/2011 & 148 0/AHD/2011, THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READS AS UNDER:- 14. THIS LEAVES US WITH ASSESSEES LAST SUBSTANTI VE GROUND CHALLENGING SECTION 40(A)(IA) OF RS.1,02,39,903/- ARISING FROM NON-DEDU CTION OF TDS QUA PAYMENTS MADE OF NSE LEASE LINE CHARGES, NSE VSAT CHARGES AN D MTNL EXPENSES. THERE IS NO DISPUTE THAT THE ASSESSEE HAS NOT DEDUCTED TDS O N THESE PAYMENTS. WE HAVE ITA NO1296/A HD/2015 . A.Y. 2010-1 1 5 GIVEN OUR THOUGHTFUL CONSIDERATION TO THE RIVAL CON TENTIONS. THE ASSESSEE INTER ALIA INVITES OUR ATTENTION TO SECTION 40(A)(IA) SEC OND PROVISO INTRODUCED BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013. IT REFERS TO CASE LAW OF RAJEEV KUMAR AGARWAL VS. ACIT, ITA NO.337/AGRA/2013 DECIDED ON 2 9.05.2013 (AUTHORED BY ONE OF US PRAMOD KUMAR, ACCOUNTANT MEMBER) AS CONSI DERED BY A RECENT DECISION OF HONBLE DELHI HIGH COURT IN CIT VS. ANS AL LANDMARK TOWNSHIPS PVT LTD, (377 ITR 635), UPHOLDING THE SAME AFTER REPRODUCING THE OPERATIVE PART IN EXTEMPORE TO THE EFFECT THAT WHEN A DEDUCTOR-ASSESS EE IS NOT AN ASSESSEE IN DEFAULT U/S 201(1), IT IS DEEMED THAT IT HAS DEDUCT ED AND PAID THE TAX ON SUCH SUMS ON THE DATE OF FILING OF RETURN OF INCOME BY T HE CONCERNED PAYEE AS REFERRED IN THE ABOVE STATED PROVISO. THE CO-ORDINATE BENCH AS WELL AS HONBLE DELHI HIGH COURT HAVE ACCORDINGLY APPLIED THE ABOVE STATED PRO VISO WITH RETROSPECTIVE EFFECT BY HOLDING IT AS A CURATIVE ONE. THE REVENUE IS UN ABLE TO DISPUTE CORRECTNESS THEREOF. WE ACCORDINGLY REMIT THIS ISSUE BACK TO T HE ASSESSING OFFICER FOR CARRYING OUT NECESSARY VERIFICATION REGARDING RELATED PAYMEN TS HAVING BEEN TAKEN INTO ACCOUNT BY THE CONCERNED PAYEES IN COMPUTING THEIR INCOME. THE ASSESSEES OTHER ARGUMENTS DISPUTING APPLICABILITY OF TDS PROV ISION SHALL BE RE-ADJUDICATED AS PER LAW. THIS GROUND IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THIS ASSESSEES APPEAL ITA NO.1718/AHD/2011 IS PARTLY AL LOWED. 13. ON FINDING PARITY OF FACTS, WE RESTORE THIS ISSUE T O THE FILES OF THE A.O. WITH SIMILAR DIRECTIONS. THIS GROUND IS TREATED AS ALLOW ED FOR STATISTICAL PURPOSE. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 15 - 01- 20 18 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 15 /01/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT.