Concept Securities Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(1), Surat

ITA 2064/AHD/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2373 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 15-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY RAI
• Keywords: Depreciation; Business expenditure
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH D DD D BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI T.K.SHARMA T.K.SHARMA T.K.SHARMA T.K.SHARMA, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER AND AND AND AND SHRI N.S. SAINI, ACCOUNTANT MEMBER SHRI N.S. SAINI, ACCOUNTANT MEMBER SHRI N.S. SAINI, ACCOUNTANT MEMBER SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING:21-1-11 DRAFTED ON:24-1-201 1 IT A NO. 2064 /AHD/ 2010 ASSESSMENT YEAR : 2007-08 CONCEPT SECURITIES PRIVATE LTD., 401,EMPIRE STATE BUILDING,NR. UDHNA DARWAJA RING ROAD, SURAT. VS. INCOME TAX OFFICER, WARD 1(1), AAYAKAR BHAVAN, MAJURA GATE, SURAT. PAN/GIR NO. : AABC 6056F (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI ANKUR SHAH. RESPONDENT BY: SHRI SANJAY RAI, SR. D.R. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I , SURAT , DATED 9-4-2010. 2. GROUND NO.1 OF THE APPEAL IS DIRECTED AGAINST OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) SUSTAINING DIS ALLOWANCE OF DEPRECIATION ON BSE MEMBERSHIP CARD OF `.13,83,588/ -. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE THE ASSESSEE CLAIMED DEPRECIATION OF `.13,83,588/- ON BSE MEMBERSHIP CARD. THE LEARNED ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT IT IS NOT SPECIFIED IN THE INCOME TAX RULES IN THE DEPRECIATION TABLE. THE REGISTRATION CERTIFICATE OF SEBI ISSUED U/S 12(1) O F THE SEBI ACT,1922 TO THE ASSESSEE COMPANY DOES NOT MENTION THAT THE ASSESSEE IS LICENSED TO DO SHARE BUSINESS. THE LEARNED ASSESSING OFFICER FURTH ER OBSERVED THAT THE DECISION OF HONBLE MUMBAI TRIBUNAL IN THE CASE OF TECHNO SHARES AND STOCKS LTD., HAS BEEN REVERSED BY THE HONBLE BOMB AY HIGH COURT VIDE ITS - 2 - DECISION DATED 11-9-2009 IN APPEAL NO.ITA(L) NO.971 OF 2006 AND ITA NO.218 OF 2007 HOLDING THAT DEPRECIATION UNDER SECT ION. 32 IS INTENDED TO AS LIMITED CATEGORY INTANGIBLE ASSET AND NOT TO A W IDER CATEGORY. 4. IN APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONFIRMED THE ACTION OF THE LEARNED ASSESSING OFFIC ER FOR THE SAME VERY REASONS. 5. WE FIND THAT THE HONBLE SUPREME COURT IN THE CA SE OF COMMISSIONER OF INCOME-TAX V. TECHNO SHARES AND STOCKS LTD.(2010) 327 ITR 323(SC) HAS HELD AS UNDER:- THE QUESTION WAS WHETHER THE ASSESSEE-COMPANY COUL D CLAIM DEPRECIATION ON THE BOMBAY STOCK EXCHANGE MEMBERSHI P CARD HELD BY IT ON THE BASIS THAT IT WAS A 'LICENCE' OR 'BUSI NESS OR COMMERCIAL RIGHT OF A SIMILAR NATURE' UNDER SECTION 32(1)(II) OF THE INCOME-TAX ACT, 1961. THE ASSESSING OFFICER AND THE COMMISSIONER (A PPEALS) HELD THAT THE ASSESSEE COULD NOT CLAIM DEPRECIATION ON THE ST OCK EXCHANGE MEMBERSHIP CARD ; BUT THE APPELLATE TRIBUNAL HELD T HAT IT WAS AN INTANGIBLE ASSET AND THE ASSESSEE WAS ENTITLED TO D EPRECIATION THEREON UNDER SECTION 32(1)(II). THE HIGH COURT, ON APPEAL, HELD THAT THE BSE MEMBERSHIP CARD WAS ONLY A PERSONAL PRIVILE GE GRANTED TO A MEMBER TO TRADE IN SHARES ON THE FLOOR OF THE STOCK EXCHANGE AND THAT SUCH A PRIVILEGE WAS NOT A 'LICENCE' OR 'ANY OTHER BUSINESS OR COMMERCIAL RIGHT OF A SIMILAR NATURE' UNDER SECTION 32(1)(II). THE ASSESSEE APPEALED TO THE SUPREME COURT : V REVERSING THE DECISION OF THE HIGH COURT, ON A CO NSIDERATION OF THE BSE RULES, THAT THE RIGHT OF MEMBERSHIP WAS A 'BUSI NESS OR COMMERCIAL RIGHT' AND COULD BE SAID TO BE OWNED BY THE ASSESSEE AND USED FOR BUSINESS PURPOSES IN TERMS OF SECTION 32(1 )(II). THE RIGHT OF MEMBERSHIP, WHICH INCLUDED THE RIGHT OF NOMINATION, WAS A 'LICENCE' OR 'AKIN TO A LICENCE' WHICH WAS ONE OF THE ITEMS W HICH FELL IN SECTION 32(1)(II). THE RIGHT TO PARTICIPATE IN THE MARKET H AD AN ECONOMIC AND MONEY VALUE. IT WAS AN EXPENSE INCURRED BY THE ASSE SSEE WHICH SATISFIED THE TEST OF BEING A 'LICENCE' OR 'ANY OTH ER BUSINESS OR COMMERCIAL RIGHT OF SIMILAR NATURE' IN TERMS OF SEC TION 32(1)(II). [THE SUPREME COURT INDICATED THAT THIS DECISION WAS STRICTLY CONFINED TO THE RIGHT OF MEMBERSHIP CONFERRED BY THE BSE MEM BERSHIP CARD.] VINAY BUBNA V. STOCK EXCHANGE, MUMBAI [1999] 97 COM P CAS 874 (SC) AND STOCK EXCHANGE, AHMEDABAD V. ASST. CIT [20 01] 248 ITR 209 (SC) RELIED ON. DECISION OF THE BOMBAY HIGH COURT IN CIT V. TECHNO SHARES AND STOCKS LTD. [2010] 323 ITR 69 REVERSED. - 3 - 6. BOTH THE PARTIES AGREED BEFORE US THAT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE ABOVE QUOTED DECISION OF THE HONBLE SUPREME COURT. THEREFORE, RESPECTFULLY FOLLOWING TH E SAME WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE DISA LLOWANCE OF DEPRECIATION ON BSE MEMBERSHIP CARD FOR `.13,.83,588/-. THUS THI S GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 7. GROUND NO.2 IN THE APPEAL RELATES TO DISALLOWANC E OF STAMP EXPENSES OF `.92,120/-. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE THE LEARNED ASSESSING OFFICER OBSERVED THAT ASSESSE E HAS DEBITED `.92,120/- INCURRED FOR STAMP DUTY CHARGES FROM THE DETAILS FILED THE LEARNED ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS COLLECTED SUCH CHARGES FROM SEVERAL CLIENTS AND OMITTED TO DO SO I N CASES OF REMAINING CLIENTS THEREFORE, HE DISALLOWED THE DEDUCTION CLAI MED BY THE ASSESSEE. IN APPEAL THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) CONFIRMED THE DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER. 9. WE FIND THAT THE GENUINENESS OF THE EXPENDITURE INCURRED BY THE ASSESSEE IS NOT IN DOUBT OR DEBATE. THE ASSESSEE E XPLAINED THAT THE EXPENDITURE WAS INCURRED AS A BUSINESS PRUDENCE OF THE COMPANY TO EXPAND THE MEMBER CLIENT. THIS EXPLANATION OF THE ASSESSE E WAS NOT FOUND TO BE FALSE. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE EXPENDITURE HAS NOT BEEN INCURRED FOR THE PURPOSE OF THE BUSINESS OF TH E ASSESSEE. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE IN O UR CONSIDERED OPINION THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN DISALLOWING THE GENUINE BUSINESS EXPENDITURE OF THE ASSESSEE. WE THEREFORE, SET ASID E THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE DISALLOWANCE OF `.92,120 /- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. - 4 - ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 25 TH DAY OF JANUARY, 2011. SD/- SD/- ( T.K. SHARMA ) ( T.K. SHARMA ) ( T.K. SHARMA ) ( T.K. SHARMA ) ( N.S. SAINI ) ( N.S. SAINI ) ( N.S. SAINI ) ( N.S. SAINI ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATED: AHMEDABAD,25 TH DAY OF JANUARY, 2011. COMPILED AND COMPARED BY : PATKI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-I, SURAT. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 21-1-2011 --------------- ---- 2. DRAFT PLACED BEFORE AUTHORITY 24-1-2011 ------ ------------- 3. DRAFT PROPOSED & PLACED 24-1-2011 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 24-1-2011 ---------- --------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 25-1-2011 --------- ----------- 6. KEPT FOR PRONOUNCEMENT ON 25-1-2011 --------- ----------- 7. FILE SENT TO THE BENCH CLERK 25-1-2011 ------ -------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- -- -------------------