Sanidhya Securites Pvt.Ltd., Ahmedabad V. The Dy.CIT.,(OSD)Circle-8, Ahmedabad

ITA 2505/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6652 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-05-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 11-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P TALARI
• Keywords: Depreciation
• Section: 32

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI, JM AND D.C.AGRAWAL, A M SANIDHYA SECURITIES (P) LTD., S.V.KINARIWALA ROAD, LAW GARDEN, AHMEDABAD. VS. DCIT, (OSD), CIRCLE-8, AHMEDABAD. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- NONE (WRITTEN SUBMISSION) RESPONDENT BY:- SHRI S. P. TALARI, SR.DR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUNDS:- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DISMISSING THE ASSESSEES APPEAL. (2) WITHOUT PREJUDICE ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, THE CIT(A) HAS ERRED IN REJECTING THE ASSESSE ES CLAIM FOR DEPRECIATION ALLOWANCE IN RESPECT OF THE AHMEDABAD STOCK EXCHANGE CARD. (3) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND /OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DU RING THE COURSE OF HEARING OF THE APPEAL. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WHETHE R ASSESSEE IS ENTITLED TO DEPRECIATION ON AHMEDABAD STOCK EXCHANG E CARD. ITA NO.2505/AHD/2010 ASST. YEAR 2007-08 ITA NO.2505/AHD/2010 ASST. YEAR 2007-08 2 3. THE AO DENIED THE CLAIM ON THE GROUND THAT - (1) STOCK EXCHANGE CARD CANNOT BE TREATED AS INTANGIBLE ASSET. IT IS NOT ANY OTHER BUSINESS OR COMMERCIAL RIGHT OF SIMIL AR NATURE. THE CARD BY ITSELF IS NOT A COMMERCIAL OF BUSINESS RIGHT. (2) DEPRECIATION U/S 32 IS GIVEN FOR DIMINATION IN THE VALUE OF AN ASSET. THERE IS NO EVIDENCE OF ANY DIMINATION IN TH E VALUE IN THE MEMBERSHIP CARD. (3) CONDITIONS LAID DOWN U/S 32 FOR CLAIM OF DEPRECIATI ON ARE NOT FULFILLED. (4) IF THE ASSETS ARE NOT CAPABLE OF DEPRECIATING DEPRE CIATION CANNOT BE ALLOWED. (5) THERE IS NO WEAR AND TEAR, NO UNUSUAL DAMAGE, THERE IS NO OBSOLESCENCE OR THERE IS NO UNSUITABILITY TO THE AS SET IN THE ECONOMICALLY PRODUCTIVITY. MEMBERSHIP CARD IS ALWAY S SUITABLE AND PRODUCTIVE, THERE IS NO DAMAGE AND THERE IS NO OBSOLESCENCE. 4. THE LD. CIT(A) CONFIRMED THE ORDER OF THE AO FOL LOWING THE DECISION OF THE TRIBUNAL, MUMBAI BENCH IN THE CASE OF CITY GROUP GLOBAL MARKETS INDIA (P) LTD. VS. DCIT (2009) SOT -0326 ET C. IN THIS REGARD HE OBSERVED AS UNDER :- 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND TH E SUBMISSIONS OF THE APPELLANT. I AM NOT INCLINED TO ACCEPT THE CONTENTI ONS OF THE APPELLANT. THE HON. ITAT, MUMBAI IN THE CASE OF CITY GROUP GLO BAL MARKETS INDIA (P) LTD. VS. DCIT (2009) SOT -0326 FOLLOWED ITS EAR LIER DECISION IN THE CASE OF TECHNO SHARES & STOCKS (P) LTD. VS. ITO (20 06) 101 TTJ 349 AND DIRECTED TO ALLOW THE DEPRECIATION ON MEMBERSHIP CA RD OF BSE. BUT RECENTLY, HON. BOMBAY HIGH COURT IN THE CASE OF CIT VS. M/S TECHNO SHARES & STOCK LTD. & OTHERS VIDE ORDER DT.11.09.20 09 HELD AGAINST THE ASSESSEE AND REVERSED THE ORDER OF HON. TRIBUNAL IN THE CASE OF M/S TECHNO SHARES. THIS DETAILED ORDER AFTER ANALYZING ALL ASPECTS RELATED TO STOCK EXCHANGE CARD AND BASIC CONTENTION ABOUT IT B EING INTANGIBLE ASSETS BEING LICENCE TO CARRY ON THE BUSINESS CLEARLY DEMO NSTRATE THE INTENTION OF ITA NO.2505/AHD/2010 ASST. YEAR 2007-08 3 THE LEGISLATURE FOR PROVIDING DEPRECIATION ON INTAN GIBLE ASSETS AND INTERPRETATION OF SUCH PROVISION ON THE PRINCIPLE O F NOSCITUR A SOCIIS LEADING TO SUCH CONCLUSION THAT DEPRECIATION CANNOT BE ALLOWED ON SUCH CARD. THE AO IS, THEREFORE, JUSTIFIED IN DISALLOWIN G SUCH DEPRECIATION. THIS GROUND OF APPEAL IS REJECTED. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE. BUT WRI TTEN SUBMISSIONS HAVE BEEN FILED. WE HAVE HEARD THE LD. DR AND HAVE GONE THROUGH THE WRITTEN SUBMISSIONS OF THE ASSESSEE. IN THE WRITTEN SUBMISSION THE ASSESSEE HAS REFERRED TO THE DECISION OF HON. SUPRE ME COURT IN THE CASE OF TECHNO SHARES AND STOCKS LTD. VS. CIT (2010) 327 IT R 323 (SC) WHEREIN HON. SUPREME COURT HELD THAT MEMBERSHIP CARD OF BOM BAY STOCK EXCHANGE IS INTANGIBLE ASSET AND DEPRECIATION CAN B E ALLOWED THEREON. THE HEAD NOTES FROM THAT DECISION READS AS UNDER:- THE QUESTION WAS WHETHER THE ASSESSEE-COMPANY COUL D CLAIM DEPRECIATION ON THE BOMBAY STOCK EXCHANGE MEMBERSHIP CARD HELD BY IT ON THE BASIS THAT IT WAS A 'LICENCE ' OR 'BUSINESS OR COMMERCIAL RIGHT OF A SI MILAR NATURE' UNDER SECTION 32(1) (II) OF THE INCOME-TAX ACT, 1961. THE ASSESSI NG OFFICER AND THE COMMISSIONER (APPEALS) HELD THAT THE ASSESSEE COULD NOT CLAIM DEPRECIATION THE STOCK EXCHANGE MEMBERSHIP CARD; BUT THE APPELLATE T RIBUNAL HELD THAT IT WAS AN INTANGIBLE ASSET AND THE ASSESSEE WAS ENTITLED TO D EPRECIATION THERE- F: UNDER SECTION 32(L)(II). THE HIGH COURT, ON APPEAL HELD T HAT THE BSE MEM BERSHIP CARD WAS ONLY A PERSONAL PRIVILEGE GRANTED TO A MEMBER T O TRADE SHARES ON THE FLOOR OF THE STOCK EXCHANGE AND THAT SUCH A PRIVILEGE WAS NOT L ICENCE' OR 'ANY OTHER BUSINESS OR COMMERCIAL RIGHT OF A SIMILAR NATURE' \ER SECTION 3 2(L)(II). THE ASSESSEE APPEALED TO THE SUPREME COURT: ITA NO.2505/AHD/2010 ASST. YEAR 2007-08 4 HELD, REVERSING THE DECISION OF THE HIGH COURT, ON A CONS IDERATION OF THE RULES, THAT THE RIGHT OF MEMBERSHIP WAS A 'BUSINESS OR COMMERCI AL RIGHT' COULD BE SAID TO BE OWNED BY THE ASSESSEE AND USED FOR BUSINESS PURPOSE S [TERMS OF SECTION 32(L)(II). THE RIGHT OF MEMBERSHIP, WHICH INCLUDED THE \HT OF NOMI NATION, WAS A 'LICENCE' OR 'AKIN TO A LICENCE' WHICH WAS ONE OF ITEMS WHICH FELL IN SEC TION 32(L)(II). THE RIGHT TO PARTICIPATE IN THE MARKET AN ECONOMIC AND MONEY VAL UE. IT WAS AN EXPENSE INCURRED BY THE ASSESSEE LIE// SATISFIED THE TEST OF BEING A 'LICENCE' OR 'ANY OTH ER BUSINESS OR COMMERCIAL-RIGHT F SIMILAR NATURE' IN TERMS OF SEC TION 32(L)(II). THEREFORE, AS PER ABOVE DECISION THE ASSESSEE CLAIM ED THAT DEPRECIATION ON CARD SHOULD BE ALLOWED. 6. THE LD. DR ON THE OTHER HAND, POINTED OUT THAT R ULES AND REGULATIONS OF AHMEDABAD STOCK EXCHANGE ARE NOT THE SAME AS IN THE CASE OF BOMBAY STOCK EXCHANGE. THERE IS NO STUDY OF COMPARA TIVE NATURE OF THE RULES. IF THE RULES ARE THE SAME THEN THE CLAIM CAN BE ALLOWED. 7. AFTER HEARING THE PARTIES, WE RESTORE THE MATTER BACK TO THE FILE OF AO FOR CARRYING OUT A COMPARISON BETWEEN THE RULES OF BOMBAY STOCK EXCHANGE AND AHMEDABAD STOCK EXCHANGE IN RELATION T O MEMBERSHIP CARD. IF THEY ARE PARI MATERIA IN PRINCIPLEI.E. THE SIMILAR RULES GOVERN THE RIGHTS, DUTIES AND LIABILITIES RELATING TO THE CARD THEN THE CLAIM SHOULD BE ALLOWED. THE AO WILL GIVE REASONABLE OPPORTUNITY TO PUT UP BEFORE HIM THE RELEVANT RULES OF AHMEDABAD STOCK EXCHANGE AND BOMBAY STOCK EXCHANGE. AS A RESULT, THE APPEAL FILED BY THE ASSE SSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.2505/AHD/2010 ASST. YEAR 2007-08 5 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 13/5/11. SD/- SD/- (BHAVNESH SAINI) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD, DATED : 13/5/11. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 9/5/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 11/5/2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..