TECHNO SHARES & STOCKS LTD, MUMBAI V. ADDL CIT RG 4(2), MUMBAI

ITA 5938/MUM/2012

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7378 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2008-2009
• Appeal Filed On: 28-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Assessee Lawyers: P J PARDIWALA
• Keywords: Capital asset; Gift; Business income; Depreciation; Charitable institution; Cost of acquisition; Difference of opinion; Capital expenditure; Capital Gains; CHAPTER IV
• Section: 80C; 201; 274; 64; 43; 48; 13; 22; 255(4); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE SHRI G.S. PANNU, VICE PRESIDENT (THIRD MEMBER) ITA NO. 5938/MUM/2012 : A.Y : 2008 - 09 M/S. TECHNO SHARES & STOCKS LTD., 1 GROUND FLOOR, VIKAS BUILDING, 11, BANK STREET, FORT, MUMBAI 400 023. PAN : AAACT4464G (APPELLANT) VS. ACIT - 4(2), MUMBAI. (RESPONDENT) APPELLANT BY : SHRI P.J. PARDIWALA & SHRI MADHUR AGRAWAL RESPONDENT BY : SHRI B. SRINIVAS DATE OF HEARING : 1 9 /0 6 /2019 DATE OF PRONOUNCEMENT : 30 /0 8 /2019 O R D E R THE FOLLOWING POINT OF DIFFERENCE HAS BEEN REFERRED TO ME BY THE HONBLE PRESIDENT UNDER S ECTION 255(4) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT): (A) WHETHER COST OF SHARES ALLOTTED TO MEMBERS OF BOMBAY STOCK EXCHANGE (BSE) PURSUANT TO ITS CORPORATISATION/DE - MUTUALISATION WOULD BE CALCULATED AS PER SECTION 50 OR SECTION 55(2)(AB) IF DEPRECIATION WAS CLAIMED ON BSE MEMBERSHIP? (B) WHETHER INDEXATION BEN EFIT ON SALE OF SUCH SHARE WOULD BE AVAILABLE FROM THE DATE OF CORPORATISATION/DE - MUTUALISATION OF BSE OR FROM THE DATE OF ACQUISITION OF ORIGINAL MEMBERSHIP OF BSE ? 2. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED UNDE R THE COMPANIES ACT , 1956 . THE ASSESSEE BECAME A MEMBER 2 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 OF THE BOMBAY STOCK EXCHANGE (BSE) AND ACQUIRED THE RIGHT TO TRADE IN THE SHARES OF BSE BY PAYING THE TOTAL CONSIDERATION OF RS. 94.50 LAKHS. AT THAT POINT OF TIME, BSE WAS A MUTUAL ASSOCIATION AN D ACCORDINGLY, BY PAYING THE AFORESAID CONSIDERATION, THE ASSESSEE BECAME THE MEMBER OF THE ASSOCIATION AND WAS ENTITLED TO CARRY ON THE TRADING ACTIVITY. THE ASSESSEE TREATED THE RIGHTS ACQUIRE D BY IT ON PAYMENT OF RS. 94.50 LAKHS AS INTANGIBLE RIGHT A ND CLAIM ED DEPRECIATION ON THE SAME , WHICH WAS DISALLOWED BY THE REVENUE. THE ISSUE OF CLAIM OF DEPRECIATION WAS ULTIMATELY SETTLED BY THE HON'BLE SUPREME COURT IN THE ASSESSEE'S CASE REPORTED IN 327 ITR 323 , WHEREIN THE HONBLE SUPREME COURT HELD THAT TH E MEMBERSHIP CARD ACQUIRED BY THE A SSESSEE WAS AN INTANGIBLE ASSET AS PER SECTION 32(1)(II) OF THE ACT . ACCORDINGLY, THE A SSESSEE WAS CLAIMING DEPRECIATION ON SUCH ASSETS AND THE WRITTEN DOWN VALUE (WDV) OF THE MEMBERSHIP CARD AS ON 31 ST MARCH 2005 WAS RS. 12,61,422/ - . 3. IN THE MEANTIME, IT WAS PROPOSED BY THE G OVERNMENT TO DEMUTUALIZE AND CORPORATIZE THE STOCK EXCHANGE. THE SEQUENCE OF EVENT WAS AS UNDER: - A. ON 20 TH MAY 2005, THE BSE (CORPORATIZATION AND DEMUTUALIZATION) SCHEME, 2005 WAS ANNOUNCED BY THE SECURITY EXCHANGE BOARD OF INDIA (SEBI). B. ON 8 TH AUGUST 2005, BOMBAY STOCK EXCHANGE LIMITED (BSE LTD.) WAS INCORPORATED AS A COMPANY. C. ON 12 TH AUGUST 2005, C ERTIFICATE OF C OMMENCEMENT OF BUSINESS WAS PROVIDED TO THE BSE LTD. 4. PURSUANT TO THE SCHEME OF CORPORATIZATION AND DEMUTUALIZATION, THE A SSESSEE AS WELL AS ALL OTHER MEMBERS WERE ALLOTTED TWO DIFFERENT RIGHTS , I.E. ( A ) 3 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 10,000 SHARES OF THE INCORPORATED ENTITY , I.E. BSE LTD.; AND , ( B) RIGHT TO CARRY ON TRADING IN THE STOCK EXCHANGE. 5 . THE FOLLOWING AMENDMENTS WERE MADE IN THE ACT TO PROVIDE FOR TREATMENT OF COST OF SHARES AND PERIOD OF HOLDING OF SHARES ALLOTTED TO THE MEMBERS OF BSE PURSUANT TO SCHEME OF CORPORATIZATION AND DEMUTUALIZATION: - A) CLAUSES (H) AND (HA) WERE INSERTED IN EXPLANATION 1 TO SECTION 2(42A) OF THE ACT BY THE FINANCE ACT 2003, WITH EFFECT FROM 1 - 4 - 2004 , WHICH PROVIDED THAT TO DETERMINE WHETHER THE ASSET IS LONG TERM OR SHORT TERM CAPITAL ASSET, THE PERIOD FOR WHICH THE PERSON WAS A MEMBE R OF AOP SHALL BE CONSIDERED AS PERIOD OF OWNERSHIP FOR AN ASSESSEE. B) SECTION 47(XIIIA) OF THE ACT WAS INSERTED BY THE FINANCE ACT 2003, WITH EFFECT FROM 1 - 4 - 2004 TO PROVIDE THAT THE TRANSFER OF CAPITAL ASSET BEING MEMBERSHIP R IGHT HELD IN THE AOP, IN ACCORDANCE WITH THE SCHEME OF CORPORATIZATION AND DEMUTUALIZATION WILL NOT COME WITHIN THE AMBIT OF SECTION 45 OF THE ACT. C) SECTION 55(2)(AB) OF THE ACT WAS INSERTED BY THE FINANCE ACT 2001, WITH EFFECT FROM 1 - 4 - 2002 TO PROVIDE THAT THE COST OF EQUITY SHARES ALLOTTED TO A SHAREHOLDER OF THE RECOGNIZED STOCK EXCHANGE PURSUANT TO THE SCHEME OF CORPORATIZATION AND DEMUTUALIZATION SHALL BE THE COST OF ACQUISITION OF HIS ORIGINAL MEMBERSHIP OF THE EXCHANGE. D) THE PROVISO TO S ECTION 55(2)(AB) OF THE ACT INSERTED BY THE FINANCE ACT 2003, WITH EFFECT FROM 1 - 4 - 2004 PROVIDED THAT COST OF THE TRADING OR 4 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 CLEARING RIGHT OF THE RECOGNIZED STOCK EXCHANGE SHALL BE DEEMED TO BE NIL. 6. FROM THE ASSESSMENT YEAR 2006 - 07 ONWARDS, THE A SSESSEE HAS NOT CLAIMED AN Y DEPRECIATION ON THE ASSETS ACQUIRED BY THE A SSESSEE , I.E. SHARES AND RIGHT TO CARRY ON TRADING IN THE STOCK EXCHANGE AS A CONSEQUENCE OF DEMUTUALIZATION AND CORPORATIZATION OF THE STOCK EXCHANGE. THE ASSESSEE CONTENDED THAT AS SHARES IN BSE IS NOT A DEPRECIABLE ASSET FOR WHICH THE ORIGINAL COST HAS BEEN PROVIDED AS THE COST TO THE A SSESSEE OF THE MEMBERSHIP RIGHTS, AND AS THE COST OF TRADING RIGHT IS PROVIDED AT N IL, THE QUESTION OF CLAIMING DEPRECIATION ON THE TRADING RIGHT , BEING INTANGIBLE ASSET , DOES NOT ARISE. 7. DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2008 - 09 , THE ASSESSEE HA S TRANSFERRED 4 , 562 SHARES OF BSE LTD. UNDER THE SCHEME OF BUYBACK OF SHARES BY BSE LTD. THE ASSESSEE HAD RECEIVED TOTAL CONSIDERATION OF RS.20,37,22,400/ - AT RS. 5,200/ - PER SHARE. IN THE RETURN OF INCOME, THE ASSESSEE COMPUTED THE COST OF SHARES BY TA KING THE PROPORTIONATE OF 4 , 562 OVER 10,000 SHARES OVER THE ORIGINAL COST OF ACQUIRING THE MEMBERSHIP RIGHT OF RS. 94,50,000/ - . THE ASSESSEE INDEXED THE SAID COST FROM THE DATE OF ACQUISITION OF THE MEMBERSHIP RIGHT , I.E. 1998 AND DETERMINED THE TOTAL COS T AT RS. 67,67,552/ - AND OFFERED LONG TERM CAPITAL GAIN OF RS.1,69,54,848/ - . 8. THE ASSESSING OFFICER, VIDE ORDER DATED 08.12.2010 , ACCEPTED THE ASSET BEING LONG TERM CAPITAL ASSET AND THE GAINS BEING CHARGEABLE TO TAX AS LONG T ERM CAPITAL GAINS ; HOWEVER, HELD THAT COST OF THE ASSET , I.E. THE SHARES , IS TO BE DETERMINED AS PER THE WDV OF THE MEMBERSHIP RIGHT AS THE ASSESSEE HAD CLAIMED DEPRECIATION ON SUCH MEMBERSHIP RIGHT. THE ASSESSING OFFICER ALSO 5 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 HELD THAT ALTHOUGH SECTION 5 5(2)(AB) OF THE ACT PROVIDES THAT COST OF THE MEMBERSHIP CARD SHALL BE THE COST OF SHARES; HOWEVER, NO PROVISION CAN ALLOW DOUBLE DEDUCTION AND, HENCE, THE WDV OF THE MEMBERSHIP CARD IS TAKEN TO BE THE COST OF THE SHARES. THE ASSESSING OFFICER, ACCORDINGL Y, COMPUTED THE LONG TERM CAPITAL GAINS ON THE BASIS OF SUCH WDV. 9. THE CIT(A) , VIDE ORDER DATED 13 T H JANUARY 2012, CONFIRMED THE ASSESSMENT ORDER IN SO FAR AS THE ISSUE OF COMPUTATION OF LONG TERM CAPITAL GAINS IS CONCERNED. 10. WHEN THE MATTER WAS HEARD ORIGINALLY BY THE DIVISION BENCH OF THE TRIBUNAL, THERE WAS A DIFFERENCE OF OPINION BETWEEN THE LEARNED JUDICIAL MEMBER AND THE LEARNED ACCOUNTANT MEMBER AND HENCE, THIS MATTER IS PLACED BEFORE ME AS THIRD MEMBER. 11. IT WAS CONT ENDED IN THE APPEAL PROCEEDINGS BEFORE THE DIVISION BENCH THAT S ECTION 55(2)(AB) OF THE ACT SPECIALLY PROVIDES THE COST OF ACQUISITION OF SHARES OF BSE LTD. AS COST OF ORIGINAL MEMBERSHIP CARD AND , THEREFORE , THE COST OF ACQUISITION OF SHARES SHOULD BE THE COST OF MEMBERSHIP CARD AND NOT ITS WDV AS PER S ECTION 50 OF THE ACT. THE LEARNED J UDICIAL M EMBER CONCURRED WITH THE SUBMISSIONS ADVANCED ON BEHALF OF THE ASSESSEE THAT S ECTION 55(2)(AB) OF THE ACT BEING MORE SPECIFIC SECTION DEALING WITH THE ABOVE SCENARIO, THE SAME IS APPLICABLE IN THE PRESENT CASE AND PROVISIONS OF S ECTION 50 OF THE ACT IS NOT APPLICABLE. IN ALLOWING THE COST OF SHARES AS ORIGINAL COST OF MEMBERSHIP CA RD , THE LEARNED J UDICIAL M EMBER OBSERVED THAT THOUGH ASSESSEE HAS CLAIMED DEPRECIATION ON THE ORIGINAL MEMBERSHIP CARD, THE SAID FACT WILL NOT AFFECT THE COMPUTATION OF CAPITAL GAINS ON THE SALE OF SHARES. S ECTION 55(2)(AB) OF THE ACT 6 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 CLEARLY PROVIDES FOR THE MEANING OF COST OF ACQUISITION OF ASSETS ; WHICH ALONE SHALL BE CONSIDERED WILL COMPUTING THE CAPITAL GAINS IN THE PRESENT CASE. ON THE OTHER HAND, THE L EARNED ACCOUNTANT M EMBER PASSED AN ORDER SUSTAINING THE DISALLOWANCE MADE BY THE ASSESSING OFFIC ER ON THE GROUND THAT SINCE ASSESSEE HAS CLAIMED DEPRECIATION ON THE COST OF MEMBERSHIP CARD , THE COMPUTATION OF CAPITAL GAINS ON SALE OF SHARES WILL FALL UNDER S ECTION 50 OF THE ACT WHICH DEALS WITH THE COMPUTATION OF CAPITAL GAINS IN CASE OF DEPRECIABLE ASSETS. IT WAS ALSO NOTICED BY THE L EARNED ACCOUNTANT M EMBER THAT IF THE ARGUMENT OF THE ASSESSEE IS ACCEPTED, THIS WILL LEAD TO DOUBLE DEDUCTION WHICH IS NOT PERMITTED IN LAW UNLESS THE SAME IS SPECI FIC ALLY PROVIDE D FOR IN THE ACT. I N VIEW OF THIS DIFFERENCE OF OPINION BETWEEN THE LEARNED J UDICIAL M EMBER AND LEARNED ACCOUNTANT M EMBER, THE MATTER HAS BEEN REFERRED BY THE HON'BLE PRESIDENT TO ME FOR MY OPINION. 12. THE QUESTION TO BE ANSWERED BY ME IN THIS ORDER, AS FRAMED BY THE LEAR NED M EMBERS AND REPRODUCED ABOVE, IS WHAT SHOULD BE THE COST OF ACQUISITION OF SHARES OF BSE LTD. SOLD BY THE ASSESSEE IN A SITUATION WHEREIN ASSESSEE HAD CLAIMED DEPRECIATION ON THE COST OF MEMBERSHIP CARD. IS THE COST OF ACQUISITION TO BE COMPUTED AS PE R S ECTION 50 OF THE ACT OR S ECTION 55(2)(AB) OF THE ACT. FURTHER, WHAT SHOULD BE THE PERIOD OF HOLDING OF SHARES OF BSE LTD. ; WILL IT BE COMPUTED FROM DATE OF ACQUISITION OF MEMBERSHIP CARD OR FROM DATE OF ALLOTMENT OF SHARES IN BSE LTD. 13. AT THE OUTSE T , I MAKE IT CLEAR THAT SO FAR AS THE RELEVANT FACTUAL MATRIX IS CONCERNED, WHICH HAS BEEN DISCUSSED IN THE ABOVE PARAS , THERE IS NO DISPUTE AND , THEREFORE , I REFRAIN FROM ADVERTING TO THE SAME IN DETAIL AGAIN. 7 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 14. BEFORE ME , THE LEARNED REPRESENTATIVE FOR THE ASSESSEE HAS ARGUED TO SUPPORT THE ORDER PROPOSED BY THE LEARNED J UDICIAL M EMBER . AT THE OUT SET , IT WAS ARGUED THAT THE CONSEQUENCE OF DEMUTUALIZATION AND CORPORATIZATION OF THE STOCK EXCHANGE IS THAT THE EARLIER EXISTING ME MBERSHIP RIGHT HAS BEEN TRANSFERRED BY WAY OF EXTINGUISHMENT OF THE MEMBERSHIP RIGHT/ BY WAY OF AN EXCHANGE IN CONSIDERATION FOR THE RECEI PT OF TWO INDEPENDENT ASSETS , I.E . (A) SHARES OF BSE LTD. ; AND , (B) TRADING RIGHT IN BSE LTD. THE NEW ASSET IS COMPLE TELY DIFFERENT AND INDEPENDENT OF THE OLD ASSET WHICH , BUT FOR PROVISION OF SECTION 47(XIIA) OF THE ACT , WOULD HAV E BEEN CHARGEABLE TO TAX UNDER SECTION 45 OF THE ACT. THE COST OF THE NEW ASSET ACQUIRED BY THE A SSESSEE IS TO BE DETERMINED AS PER S ECTION 5 5(2)(AB) OF THE ACT. 15. SECTION 55(2)(AB) OF THE ACT PROVIDES FOR THE COST OF ACQUISITION OF THE ASSETS - COST OF ACQUISITION OF SHARES OF BSE LTD. IS SPECIFICALLY PROVIDED IN SECTION 55(2)(AB) OF THE ACT TO BE THE COST OF THE M EMBERSHIP CARD. THEREFORE, IT WAS SUBMITTED THAT THE COST OF MEMBERSHIP CARD IS TO BE ATTRIBUTED TO THE NUMBER OF SHARES ALLOTTED TO THE A SSESSEE. THERE IS NO OTHER PROVISION IN THE ACT FOR DETERMINATION OF THE COST OF SHARES. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO S UBMITTED THAT AS THE PROVISION S OF S ECTION 55(2)(AB) OF THE ACT IS CLEAR AND UNAMBIGUOUS, LITERAL INTERPRETATION OF THE PROVISION HAS TO BE ACCEPTED AND THE TOTAL COST OF ACQUISITION OF MEMBERSHIP CARD IS REQUIRED TO BE ALLOWED TO THE A SSESSEE AS THE COST OF ACQUISITION OF THE SHARES. IN THIS REGARD, R ELIANCE WAS PLACED ON THE DECISIONS IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT, 394 ITR 449 AND CIT VS. YOKOGAWA INDIA LTD., 391 ITR 274 , WHEREIN THE COURT HAS HELD THAT LITERAL INTERPRETAT ION HAS TO BE ADOPTED IN INTERPRETING THE TAXING STATUTE WHEN THERE IS NO QUESTION OF ANY AMBIGUITY ON THE INTERPRETATION OF THE PROVISIONS. IT WAS ARGUED THAT ON FACTS , 8 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 THERE IS NO AMBIGUITY ON INTERPRETATION OF S ECTION 55(2)(AB) OF THE ACT AND HENCE, TH E FULL COST OF MEMBERSHIP CARD IS TO BE ALLOWED TO THE ASSESSEE AS COST OF THE SHARES. 16. SECONDLY , IT WAS ARGUED THAT S ECTION 50 OF THE ACT, WHICH DEALS WITH COMPUTATION OF CAPITAL GAINS IN RESPECT OF ASSETS WHICH FORM PART OF BLOCK OF ASSETS ON WHICH DEPRECIATION HAS BEEN CLAIMED , IS NOT APPLICABLE IN THE PRESENT CASE AS THE SHARES ACQUIRED BY THE A SSESSEE PURSUANT TO DEMUTUALIZATION AND CORPORATIZATION OF STOCK EXCHANGE DID NOT FORM PART OF THE BLOCK OF ASSETS. THE ASSESSEE SUBMIT TED THAT SHARE DOES NOT COME WITHIN THE AMBIT OF TANGIBLE ASSETS AS DEFINED IN SECTION 32(1)(I) OF THE ACT AS TANGIBLE ASSETS ARE DEFINED AS BUILDING, MACHINERY, PLANT OR FURNITURE . ADMITTEDLY, SHARES ARE NOT ONE OF THESE. THERE CAN BE NO DISPUTE THAT SHARES ARE NOT INTANGIBLE ASSETS . THEREFORE, THE QUESTION OF APPLICABILITY OF S ECTION 50 OF THE ACT TO THE SHARES OF BSE LTD. DOES NOT ARISE. SECTION 50 OF THE ACT APPLIES ONLY WHEN THE CAPITAL ASSET IS AN ASSET FORMING PART OF BLOCK OF ASSETS IN RESPECT OF WHICH DEPRE CIATION HAS BEEN ALLOWED. THIS HAS BEEN CATEGORICALLY HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF NECTAR BEVERAGES PVT. LTD. VS. DCIT , 314 ITR 314 (SC) AT PARA 12 WHICH PROVIDES THAT BOTTLES , WHICH DID NOT FORM PART OF BLOCK OF ASSETS , WAS NOT CHARGEABLE TO TAX UNDER SECTION 50 OF THE ACT. 17. THEREFORE, IT WAS SUBMIT TED THAT THE FINDING OF THE LEARNED ACCOUNTANT M EMBER THAT S ECTION 50 OF THE ACT WAS APPLICABLE AS THE A SSESSEE HAD BEEN ALLOWED DEPRECATION ON THE MEMBERSHIP CARD IS NOT SUSTAINABLE IN LAW. THE APPLICABILITY OF S ECTION 50 OF THE ACT IS TO BE SEEN QUA THE ASSETS WHICH HA VE BEEN TRANSFERRED FOR WHICH THE CAPITAL GAIN HAS TO BE COMPUTED. THERE CAN BE NO DISPUTE THAT THE SHARE OF BSE LTD. IS AN ASSET WHICH IS COMPLETELY DIF FERENT 9 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 FROM THE MEMBERSHIP CARD HELD BY THE A SSESSEE PRIOR TO DEMUTUALIZATION AND CORPORATIZATION OF THE STOCK EXCHANGE. ADMITTEDLY, THE MEMBERSHIP CARD WAS TRANSFERRED BY THE A SSESSEE ON ACCOUNT OF CORPORATIZATION OF THE STOCK EXCHANGE AND IN CONSIDERATI ON, OTHER ASSET WAS RECEIVED BY THE A SSESSEE , I.E. THE SHARES AND THE TRADING RIGHTS. 18. THE FACT THAT THERE WAS A TRANSFER ON CORPORATIZATION OF THE STOCK EXCHANGE IS CLEAR FROM THE PROVISION OF SECTION 47(XIIIA) OF THE ACT, WHICH ACCEPTS THAT THERE IS A TRANSFER ON ACCOUNT OF CORPORATIZATION. HOWEVER, THE PROVISION OF S ECTION 45 OF THE ACT WILL NOT APPLY TO SUCH TRANSFER DUE TO OPERATION OF LAW . THEREFORE, IT IS CLEAR THAT THE SHARES IN BSE LTD., WHICH ARE AN ASSET, IS COMPLETELY DIFFERENT FROM THE MEMBERSHIP CARD IN THE AOP. EVEN IF S ECTION 50 OF THE ACT WAS APPLICABLE TO A MEMBERSHIP CAR D, THE SAME CANNOT APPLY TO THE SHARES OF BSE LTD. THE VIEW TAKEN BY THE LEARNED ACCOUNTANT M EMBER WOULD, IN FACT, RENDER THE PROVISION S OF SECTION 47(XIIIA) AS WELL AS SECTION 55(2)(AB) OF THE ACT OTIOSE . THEREFORE, IT WAS SUBMITTED THAT THE VIEW TAKEN BY THE LEARNED ACCOUNTANT M EMBER WA S CLEARLY UNSUSTAINABLE IN LAW. 19. THE A SSESSEE FURTHER SUBMITS THAT THE VIEW OF THE LEARNED ACCOUNTANT M EMBER IS ITSELF CONTRADICTORY AND AN INCONSISTENT VIEW. THE LEARNED ACCOUNTANT M EMBER , HAVING ACCEPTED THAT ASSET WHICH IS TRANSFERRED BY THE A SSESSEE IS A LONG TERM CAPITAL ASSET ON WHICH THE LONG TERM CAPITAL GAIN IS CHARGEABLE TO TAX , COULD NOT HAVE CONCLUDED THAT THE PROVISION OF S ECTION 50 OF THE ACT IS APPLICABLE AS THE SAID PROVISION PRESCRIBES FOR TAXATION OF CAPITAL GAIN AS SHORT TERM CAPITAL GAIN . THEREFORE, THE VIEW OF THE LEARNED ACCOUNTANT M EMBER IS CONTRARY TO THE PROVISIONS OF THE ACT AND HENCE, NOT SUSTAINABLE IN LAW. 10 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 20. AS REGARDS APPLICABILITY OF THE DECISION OF THE HONBL E SUPREME COURT IN THE CASE OF ESCORTS LTD. VS. UNION OF INDIA, 199 ITR 43 (SC) , IT WAS SUBMITTED THAT THE HONBLE SUPREME COURT IN ESCORTS LTD. ( S UPRA) HAS HELD THAT THERE IS A FUNDAMENTAL UNWRITTEN AXIOM THAT NO LEGISLATURE COULD HAVE AT ALL INTENDED A D OUBLE D EDUCTION IN REGARDS TO THE SAME BUSINESS OUTGOING; AND IF IT IS INTENDED, IT SHOULD BE CLEARLY EXPRESSED. THE A SSESSEE SUBMIT TED THAT ON THE FACTS OF THE PRESENT CASE, IT IS CLEAR THAT THE DOUBLE BENEFIT, IF ANY, PROVIDED TO THE A SSESSEE, IS CLEARLY EXPRESSED IN THE PROVISIONS OF S ECTION 47(XIIIA) AND S ECTION 55(2)(AB) OF THE ACT. THE A SSESSEE SUBMIT TED THAT THE EXPRESSION OF THE LEGISLATURE IS CLEAR FROM THE WORDING OF THE SECTION WHICH PROVIDES THAT COST OF ACQUISITION OF T HE SH ARES OF BSE LTD. WILL BE THE COST OF THE MEMBERSHIP RIGHTS AND NOT THE WDV OF THE MEMBERSHIP RIGHTS. FURTHER, THE DOUBLE TAXATION , IF ANY, IS ON ACCOUNT OF NON - TAXABILITY OF THE TRANS F ER OF MEMBERSHIP RIGHTS, WHICH HAS BEEN SPECIFICALLY PROVIDED BY THE LEGISLATURE IN S ECTION 47(XIIIA) OF THE ACT. THEREFORE, IT WAS ARGUED THAT THERE IS A CLEAR PROVISION FOR NON - TAXABILITY OF TRANSFER OF MEMBERSHIP CARD AND THE COST OF ACQUISITION OF SHARES TO BE THE ORIGINAL COST AND NOT THE WDV OF THE MEMBERSHIP RIGHTS . 2 1 . IN VIEW OF THE AFORESAID, IT HAS BEEN VEHEMENTLY CANVASSED THAT EVEN ON AN APPLICATION OF THE DICTUM OF THE DECISION OF ESCORTS LTD. (SUPRA) , IT IS CLEAR THAT COST OF ACQUISITION OF INSTANT SHARES WOULD BE THE ORIGINAL COST AND NOT THE WDV . THE LEAR NED REPRESENTATIVE RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION, 402 ITR 441 (SC) WHEREIN THE SUPREME COURT HAS HELD THAT IT IS PERMISSIBLE FOR AN ASSESSEE , BEING A CHARITABLE INSTI TUTE , TO CLAIM APPLICATION OF INCOME FOR ACQUISITION OF ASSETS AS WELL AS THE DEPRECIATION OF THE SAID ASSETS IN 11 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 SUBSEQUENT YEARS. FURTHER, RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ALA CHEMICALS PVT. LTD., 203 ITR 891 (BOM.) WHEREIN THE HON'BLE HIGH COURT HAS EXPLAINED THE DECISION IN THE CASE OF ESCORTS LTD. (SUPRA) AND ALLOWED THE DEPRECIATION TO THE ASSESSEE AS WELL AS CLAIM OF DEDUCTION UNDER SECTION 80J OF THE ACT ON THE BASIS OF THE ORIGINAL COST OF THE ASSET. IN VIEW OF THE AFORESAID, IT WAS SUBMITTED THAT THE A SSESSEE SHOULD BE ALLOWED THE COST OF THE MEMBERSHIP R IGHT AS THE COST OF THE BSE LTD SHARES, AS INTENDED BY LAW. 2 2 . THE LEARNED REPRESENTATIVE MAD E AN ALTERNATE PLEA TO THE EFFECT TH AT IF ONE WAS TO TAKE THE VIEW THAT THE PROVISION OF S ECTION 55(2)(AB) OF THE ACT IS NOT APPLICABLE AND ALSO THE VIEW THAT PROVISION OF S ECTION 50 IS NOT APPLICABLE, THEN IT WOULD LEAD TO A SITUATION WHERE COST OF THE ASSET IS NOT DETERMINABLE AND, HENCE, THE CAPITAL GAINS CANNOT AT ALL BE ASSESSED TO TAX AS THE MACHINERY PROVISION ITSELF WOULD FAIL. 2 3 . ON THE OTHER HAND , THE LEARNED DR REITERATED THAT THERE IS NO AMBIGUITY ON THE ISSUE OF FACTS , AND THAT THE ARGUMENTS O F B OTH THE SIDES HAVE BEEN SUMMARISED AND ANALYSED IN THE RESPECTIVE DIFFERING ORDERS OF THE HO N 'BLE MEMBERS. ACCORDING TO HIM, THE SAY OF T HE DEPARTMENT WAS TO HIGHLIGHT THE UNDERLYING PRINCIPLES INVOLVED IN THE MATTER, WHICH MAY HELP THE HON'BLE THIRD MEMB ER TO TAKE A DECISION IN THE FACTS AND CIRCUMSTANC ES OF THE CASE. HE HAS REFERRED TO T HE DECISION OF THE CO - ORDINATE BENCH ON AN IDENTICAL ISSUE IN THE CASE OF TWIN EARTH SECURITIES (P) LTD. VS. AC IT - 4(2), MUMBAI, 66 TAXMANN 258 PERTAIN ING TO ASSESSMENT Y EAR 2008 - 09. IN THIS CASE ALSO, THE ISSUE INVOLVED WAS INTERPRETATION OF PROVISIONS OF S ECTION S 50 AND 55(2)(AB) OF THE ACT. THE ISSUE WAS WHETHER THE ASSESSEE COMPANY WAS ENTITLED TO CLAIM COST OF SHARES AS PER 12 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 S ECTION 50 OF THE ACT OR WHETHER IT WAS ENTITLED TO CLAIM COST OF SHARES AS PER S ECTION 55(2)(AB) OF THE ACT ; T HAT IS TO SAY, THE ISSUE WAS WHETHER THE ASSESSEE WAS ENTITLED TO CLAIM ORIGINAL COST OR ONLY THE WDV . THE HON'BLE BENCH HELD THAT THE ASSESSEE COMPANY WAS NOT ENTITL ED TO CLAIM ORIGINAL COST AND THAT IT WAS ENTITLED TO CLAIM ONLY THE WDV AS THE COST. THUS, THE HON'BLE BENCH UPHELD THE PROVISIONS OF S ECTION 50 OVER THE PROVISIONS OF S ECTION 55(2)(AB) OF THE ACT IN A CASE WHERE THE CAPITAL ASSET WAS BEING CLAIMED AS A DEPRECIABLE ASSET. SIMILARLY, THE HON'BLE BENCH HELD THAT THE INDEXATION BENEFIT ON SALE OF SUCH SHARE WOULD BE AVAILABLE FROM DATE OF CORPORATISATION OF BSE AND NOT FROM THE DATE OF ACQUISITION OF ORIGINAL MEMBERSHIP OF BSE . IT WAS POINTED OUT THAT THOU GH T HE LEARNED J UDICIAL M EMBER HAS EXTENSIVELY REFERRED TO THE DECISION IN THE CASE OF TWIN EARTH SECURIT IES (P) LTD. (SUPRA) , BUT WITHOUT GIVING ANY COGENT REASONS, HE HAS CHOSEN TO DISAGREE WITH THE DECISION OF THE CO - ORDINATE BENCH. IT HAS BEEN ASSERTED THAT THE LEARNED J UDICIAL M EMBER HAS ALSO NOT CITED ANY DECISION IN FAVOUR OF ASSESSEE WHICH WAS DELIVERED BY ANY TRIBUNAL OR HIGH COURT AFTER THE DATE ON WHICH THE ORDER IN THE CASE OF TWIN EARTH SECURITIES (P) LTD . (SUPRA) HAS BEEN PASSED . THE LEARNED DR FURTHER POINTED OUT THAT THE INSTANT ASSESSEE HAD WAGED A LONG BATTLE ON THE ISSUE OF WHETHER THE BSE MEMBERSHIP WAS ENTITLED TO DEPRECIATION OR NOT , AND, WHICH HAS BEEN FINALLY SETTLED BY THE HON'BLE SUPREME COURT , WHICH HELD THAT THE SAID ASSET WAS IN DEED ENTITLED FOR DEPRECIATION. THUS, THE ASSESSEE HAS BEEN ALLOWED DEPRECIATION ON THE BSE MEMBERSHIP CARD BY THE ASSESSING OFFICER . NOW, ALL OF A SUDDEN, WHEN THE EVENT OF CORPORATISATION OF BSE TOOK PLACE AND THE ASSESSEE WAS ALLOTTED SHARES IN LIEU O F THE SAID CARD , WHOSE COST HAD ALREADY BEEN AMORTISED TO A LARGE EXTENT BY THE ASSESSEE THROUGH THE ALLOWANCE OF DEPRECIATION, THE ASSESSEE COMPANY WANTS TO CLAIM THE ORIGINAL COST AGAIN FOR COMPUTING CAPITAL GAINS ON SALE OF SHARES. ACCORDING TO THE LEA RNED DR, THIS 13 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 TANTAMOUNT S TO MILITATING AGAINST THE DECISION OF THE HON'BLE SUPREME COURT , WHICH IS NOT PERMISSIBLE. IN FACT, THE ENTIRE CASE OF THE LEARNED DR IS THAT THE INSTANT IS A CASE OF DOUBLE TAXATION, WHICH IS NOT PERMISSIBLE. 24 . I HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDERED THE MATERIAL ON RECORD. OSTENSIBLY, THE FACTS HAVE BEEN SUCCINCTLY NOTED IN THE EARLIER PARAS, AND THERE IS NO DISPUTE ON FACTS. THE CONTROVERSY BEFORE ME IS WHETHER THE COST OF SHARES ALLOTTED TO MEMBERS OF BSE PURSUANT TO ITS CORPORATISATION/ DE - MUTUALISATION SHOULD BE COMPUTED AS PER S ECTION 50 OR 55(2)(AB) OF THE ACT IN A SITUATION WHE RE THE ASSESSEE HAD ALREADY CLAIMED DEPRECIATION ON THE BSE MEMBERSHIP CARD AND WHETHER THE INDEXATION BENEFIT WILL BE AVAILABLE TO THE ASSESSEE FROM THE DATE OF ACQUISITION OF BSE MEMBERSHIP CARD OR FROM THE DATE OF ALLOTMENT OF SHARES IN BSE LTD. TO RECAPITULATE, AND AS DISCUSSED IN EARLIER PART OF THE ORDER , THE ASSESSEE ACQUIRED BSE MEMBERSHIP CARD FOR RS. 94.50 LAKHS ON WHICH IT CLAIMED DEPRECIATION. SUBSEQUENTLY, PURSUANT TO ITS CORPORATISATION/ DE - MUTUALISATION , ASSESSEE WAS ALLOTTED SHARES IN BSE LTD AND TRADING RIGHTS IN BSE LTD . FROM THE DATE OF ALLOTMENT OF SHARES IN BSE LTD. , ASSESSEE STOPPED CL A I MI NG ANY DEPRECIATION ON THE SHARES ALLOTTED TO IT. SECTION 55(2)(AB) OF THE ACT WAS INSERTED BY THE FINANCE ACT 2001 WITH EFFECT FROM 1 - 4 - 2002 TO PROVIDE THAT THE COST OF EQUITY SHARES ALLOTTED TO A SHAREHOLDER OF THE RECOGNIZED ST OCK EXCHANGE PURSUANT TO THE SCHEME OF CORPORATIZATION AND DEMUTUALIZATION SHALL BE THE COST OF ACQUISITION OF HIS ORIGINAL MEMBERSHIP OF THE EXCHANGE. THE PROVISO TO S ECTION 55(2)(AB) OF THE ACT INSERTED BY THE FINANCE ACT 2003 WITH EFFECT FROM 1 - 4 - 2004 PROVIDE S THAT THE COST OF TRADING OR CLEARING RIGHT OF THE RECOGNIZED STOCK EXCHANGE SHALL BE DEEMED TO BE NIL . THE RELEVANT EXTRACT OF S ECTION 55(2)(AB) OF THE ACT IS REPRODUCED HEREUNDER: 14 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 55(2) FOR THE PURPOSES OF SECTIONS 48 AND 49, 'COST OF ACQUI SITION' - . [( AB) IN RELATION TO A CAPITAL ASSET, BEING EQUITY SHARE OR SHARES ALLOTTED TO A SHAREHOLDER OF A RECOGNISED STOCK EX CHANGE IN INDIA UNDER A SCHEME FOR [DEMUTUALISATION OR] CORPORATISATION APPROVED BY THE SECURITIES AN D EXCHANGE BOARD OF INDIA ESTABLISHED UNDER SECTION 3 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 (15 OF 1992), SHALL BE THE COST OF ACQUISITION OF HIS ORIGINAL MEMBER SHIP OF THE EXCHANGE ;] ( UNDERLINED FOR E MPHASIS BY ME ) FROM ABOVE, IT I S AMPLY C LEAR THAT IN TERMS OF S ECTION 55 (2)(AB) OF THE ACT, THE COST OF SHARES ALLOTTED TO THE ASSESSEE PURSUANT TO THE DEMUTUALISATION AND CORPORATISATION HAS TO BE AS PER THE ORIGINAL COST OF ACQUISITION OF HIS ORIGINAL MEMBERSHIP CARD OF BSE . THE SECTION DOES NOT PRESCRIBE FOR ANY PRE - CONDITION TO CLAIM THE COST OF ACQUISITION AS THE COST OF SHARES ALLOTTED TO THE ASSESSEE. THUS , I FIND THAT LANGUAGE OF S ECTION 55(2)(AB) OF THE ACT IS UNAMBIGUOUS AND CLEAR . 25 . NOW , THE GRIEVANCE OF THE ASSESSING OFFICER IS THAT SINCE THE ASSESSEE HAS CLAIMED DEPRECIATION ON THE COST OF MEMBERSHIP CARD, THE COMPUTATION OF CAPITAL GAINS ON SALE OF SHARES OF BSE LTD . WILL BE GOVERNED BY S ECTION 50 OF THE ACT , WHICH PROVIDES FOR CALCULATION OF CAPITAL GAINS ON ASSETS FORMING PART OF THE BLOCK OF ASSETS AND ON WHICH DEPRECIATION HAS BEEN ALLOWED UNDER THIS ACT. THE RELEVANT EXTRACT OF S ECTION 50 OF THE ACT READS AS UNDER: *SPECIAL PROVISION FOR COMPUTATION OF CAPITAL GAINS IN CASE OF DEPRECIABLE ASSETS. 50. NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (42A) OF SECTION 2, WHERE THE CAPITAL ASSET IS AN ASSET FORMING PART OF A BLOCK OF ASSETS IN RESPECT OF 15 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 WHICH DEPRECIATION HAS BEEN ALLOWED UNDER THIS ACT OR UNDER THE INDIAN INCOME - TAX ACT, 1922 (11 OF 1922), THE PROVISIONS OF SECTIONS 48 AND 49 SHALL BE SUBJECT T O THE FOLLOWING MODIFICATIONS : ( UNDERLINED FOR E MPHASIS BY ME ) AS IS EVIDENT FROM A PERUSAL OF SECTION 50 OF THE ACT , IN ORDER TO GET GOVERNED BY THE PROVISIONS OF S ECTION 50 OF THE ACT , TWIN C ONDITIONS NEED TO BE SATISFIED; NAMELY , THE CAPITAL ASSET MUST BE AN ASSET FORMING PART OF BLOCK OF ASSETS; AND , DEPRECIATION MUST HAVE BEEN ALLOWED ON THE SAID ASSETS UNDER THE ACT. 26 . I SHALL NOW TEST WHETHER THE ABOVE TWIN CONDITIONS ARE FULFILLED IN THE PRESENT CASE OR NOT. FIRSTLY, I SHALL MAKE IT CLEAR THAT THE ASSET WHICH IS BEING TRANSFERRED AND ON WHICH CAPITAL GAINS IS BEING COMPUTED IS THE S HARE OF BSE LTD. NEITHER THE ASSESSI NG OFFICER NOR THE LEARNED ACCOUNTANT M EMBER HAS GIVEN A FINDING THAT THE SHARES OF BSE LTD. WAS EVER FORMING PART OF BLOCK OF ASSET S OF THE ASSESSEE COMPANY. THUS, IT I S UNDISPUTED FACT THAT THE ASSET IN QUESTION, I.E. S HARE OF BSE LTD. NEVER ENTERED THE BLOCK OF ASSET S OF THE ASSESSEE COMPANY. ONCE THAT IS SO , THE QUESTION OF DEPRECIATION HAVING BEEN ALLOWED ON THE SAID SHARES, IN THE CONTEXT OF SECTION 50 OF THE ACT, DOES NOT ARISE. NEVERTHELESS, EVEN S ECTION 32 OF THE ACT , WHICH PROVIDES FOR CLAIM OF DEPRECIATION , DOES NOT HAVE ANY CATEGORY TO ALLOW DEPRECIATION ON THE S HARES. AS SUCH , EVEN OTHERWISE , THE S HARES WHICH ARE TRANSFERRED BY THE ASSESSEE IS NOT AT ALL A DEPRECIABLE ASSET AND THUS , THE QUESTION OF CLAIMING DEPRECIATION ON THE SAME DOES NOT ARISE. 27 . IN THE PERCEPTION OF THE ASSESSING OFFICER AS WELL AS THE LEARNED ACCOUNTANT MEMBER, THE ABOVE INTERPRETATION OF THE STATU TE WILL LEAD TO ALLOWANCE OF DOUBLE DEDUCTION TO THE ASSESSEE , WHICH IS NOT PERMITTED UNDER 16 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 LAW. IN THIS REGARD, I FIND THAT WHEN THE LANGUAGE EMPLOYED BY THE LEGISLATURE IS SO CLEAR AND UNAMBIGUOUS, THE SAME SHOULD BE ADHERED TO , EVEN WHEN THE SAME RESULTS IN DOUBLE DEDUCTION IN THE HANDS OF THE ASSESSEE. IN THIS REGARD, IT WOULD BE PERTINENT TO REFER TO THE REMARK MADE B Y THE HONBLE SUPREME COURT IN THE CASE OF YOKOGAWA INDIA LTD. ( S UPRA) , WHICH IS REPRODUCED HEREUNDER: - THE CARDINAL PRINCIPLES OF INTERPRETATION OF TAXING STATUES CENTERS AROUND THE OPINION OF ROWALATT, J. IN CAPE BRANDY SYNDICATE V. INLAND REVENUE COMMISSIONER [1921] 1 KB 64 WHICH HAS VIRTUALLY BECOME THE LOCUS CLASSICUS. THE ABOVE WOULD DISPENSE WITH THE NECESSITY OF ANY FURTHER ELABORATION OF THE SUBJECT NOTWITHSTANDING THE NUMEROUS PRECEDENTS AVAILABLE INASMUCH AS THE EVOLUTION OF ALL SUCH PRINCI PLES ARE WITHIN THE FOUR CORNERS OF THE FOLLOWING OPINION OF ROWLATT, J. .. IN A TAXING ACT ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQUITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO A TAX. NOTHING IS TO BE READ IN, NOTHING IS TO BE IMPLIED. ONE CAN ONLY LOOK FAIRLY AT THE LANGUAGE USED . ( UNDERLINED FOR E MPHASIS BY ME ) THE ABOVE ANALYSIS CLEARLY REVEAL S THAT WHILE INTERPRETING THE TAX ING STATU T E , NOTHING IS TO BE ASSUMED, NOTHING IS TO BE IMPLIED. ONE HAS TO ONLY LOOK AT THE LANGUAGE USED IN THE STATU TE . THE INTERPRETATION WHICH PREVAILED WITH THE LEARNED ACCOUNTANT M EMBER WILL REQUIRE ASSUMPTION TO THE FACT THAT THE LEGISLATURE NEVER INTENDED T HE DOUBLE DEDUCTION. HOWEVER, ON A PLAIN READING OF THE SECTION , THERE IS NO AMBIGUITY, A FAC E T , WHICH EVEN THE L EARNE D ACCOUNTANT M EMBER AGREES TO. THE INTERPRETATION ACCEPTED BY THE LEARNED ACCOUNTANT M EMBER WILL REQUIRE ONE TO GO BEYOND THE LANGUAGE E MPLOYED IN THE SECTION , EVEN WHEN THERE IS NO AMBIGUITY IN THE TEXT OF S ECTION 55 OF THE ACT. THE ABOVE ASPECT ALSO GETS SUPPORT WHEN ONE IS TO CONSIDER THE PROVISIONS OF SECTION 50 AND 55(2)(AB) OF THE ACT, AS THE FOLLOWING DISCUSSION WOULD SHOW. 17 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 I FURTHER FIND THAT PROVISION S OF S ECTION 50 OF THE ACT ARE GENERAL IN NATURE AND DOES NOT PROVIDE FOR ANY CASE SPECIFIC SITUATION . THE PROVISIONS OF S ECTION 55(2)(AB) OF THE ACT WERE SUBSEQUENTLY BROUGHT INTO STATU TE BOOK AND SPECIFICALLY PROVIDES FOR COST OF ACQUISITION OF THE SHARES ALLOTTED TO THE MEMBERS OF THE BSE PURSUANT TO THE CORPORATIZATION AND DEMUTUALIZATION. THUS, S ECTION 55(2)(AB) OF THE ACT IS A SPECIFIC PROVISIONS DEALING WITH THE PRESENT SITUATION. IT IS WELL - SETTLED LAW THAT A SPECIFIC PR OVISION SHALL PREVAIL OVER THE GENERAL PROVISION. THEREFORE, I FIND THAT PROVISIONS OF S ECTION 55(2)(AB) OF THE ACT , BEING SPECIFIC IN NATURE , SHALL PREVAIL OVER S ECTION 50 OF THE ACT , WHICH IS GENERAL IN NATURE. IT IS ALSO PERTINENT TO NOTE THAT PROVISI ONS OF S ECTION 50 OF THE ACT ARE IN THE STATU T E BOOK FROM THE DATE OF ENACTMENT OF THE ACT , WHEREAS PROVISIONS OF S ECTION 55(2)(AB) OF THE ACT WERE SUBSEQUENTLY BROUGHT INTO THE STATU TE BOOK. WHEN THE AMENDMENTS ARE MADE IN THE STATU T E OR NEW LAW IS BROUGHT IN, IT IS TO BE UNDERSTOOD THAT THE LEGISLATURE WAS WELL VERSED WITH THE PREVAILING LAW AND SECTIONS AND THE AMENDMENTS BROUGHT IN BY THE LEGISLATURE ARE AFTER CONSIDERING THE EFFECT OF THE PREVAILING SECTION OR LAW. IN OTHER WORDS , WHILE INSERTING THE PROVISIONS OF S ECTION 55(2)(AB) OF THE ACT , S ECTION 50 OF THE ACT WAS ALREADY IN EXISTENCE AND THE LEGISLATURE MUST HAVE CONSIDERED THE IMPACT OF S ECTION 50 OF THE ACT AND EVEN AFTER CONSIDERING THE IMPACT OF S ECTION 50 OF THE ACT , TH EY DEEMED IT APPROPRIATE TO BRING IN PROVISIONS OF S ECTION 55(2)(AB) OF THE ACT . A DOUBT MAY ARISE THAT THE ASSESSEE WAS ALLOWED DEPRECIATION ON THE MEMBERSHIP CARD BY THE HONBLE SUPREME COURT AFTER A LONG DRAW N LITIGATION AND AS SUCH , THE LEGISLATURE AT THE TIME OF INSERTION OF S ECTION 55(2)(AB) OF THE ACT MIGHT NOT HAVE ENVISAGED THE SITUATION THAT THE DEPRECIATION COULD BE CLAIMED BY THE ASSESSEE ON COST OF MEMBERSHIP CARD. THIS DOUBT ALSO GETS REPELLED, ONCE IT IS APPRECIATED THAT THE COURTS DO NOT W RITE THE LAW , BUT ONLY INTERPRET THE LAW IN THE CORRECT PERSPECTIVE. THUS, 18 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 THE LAW REMAINS THE SAME AND THERE IS NO CHANGE IN THE LAW CONSEQUENT TO A COURT JUDGMENT . SO , THE ARGUMENT OF THE LEARNED DR THAT FIRST THE ASSESSEE CLAIMED THE DEPRECIATION ON THE COST OF MEMBERSHIP CARD AFTER LONG DRAWN LITIGATION TILL HON'BLE SUPREME COURT AND THEREAFTER , CLAIMING COST OF THE SAME AT THE TIME OF SALE OF SHARES , HAS NO SUBSTANCE. THUS, IT WILL BE WRONG TO SAY THAT THE LEGISLATURE MUST NOT HAVE ENVISAGED THE PRESENT SITUATION WHILE AMENDING S ECTION 55 OF THE ACT. 28 . IF FOR A MOMENT, THE ARGUMENT OF THE LEARNED DR IS ACCEPTED THAT PROVISIONS OF S ECTION 50 OF THE ACT AND NOT SECTION 55(2)(AB) OF THE ACT ARE APPLICABLE , THEN THE MOOT QUESTION WHICH ARISES IS AS TO WHAT WAS THE PURPOSE OF INSERTION OF S ECTION 55(2)(AB) OF THE ACT. IT IS A WELL SETTLED PRINCIPLE OF INTERPRETATION THAT ALL THE SECTION S DEALING WITH THE SAME SUBJECT SHOULD BE GIVEN EFFECT TO IN SUCH A WAY THAT NONE OF THE SECTION S ARE RENDERED INFRUCTUOUS . IF I INTERPRET THE PROVISIONS OF S ECTION 50 AND S ECTION 55(2)(AB) OF THE ACT THE WAY THE LEARNED DR HAS CANVASSED , IT WILL SURELY MA KE THE PROVISIONS OF S ECTION 55(2)(AB) OF THE ACT REDUNDANT AND INFRUCTUOUS , AN APPROACH WHICH OUGHT TO BE AVOIDED, ESPECIALLY WHEN THE LANGUAGE OF SECTION 55(2)(AB) OF THE ACT IS UNAMBIGUOUS AND CLEAR. 29 . AT THIS STAGE, IT WOULD ALSO BE IMPORTANT TO REF ER THE CASES , WHICH AROSE IN A SITUATION WHEREIN THE COST OF PURCHASE OF FIXED ASSETS BY THE CHARITABLE TRUSTS WAS ALLOWED AS APPLICATION OF INCOME IN THE YEAR OF PURCHASE AND ON THE SAME COST OF PURCHASE , THE TRUSTS WERE ALLOWED DEPRECIATION IN SUBSEQUENT YEAR, LEADING TO MAKING OF A CHARGE OF DOUBLE DEDUCTION BY THE ASSESSING OFFICER . THE MATTER TRAVELLED UPTO THE HONBLE SUPREME COURT IN THE CASE OF RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION (SUPRA) AND THE TRUST S CLAIM OF B OTH APPLICATION OF INCOME AND DEPRECIATION WAS UPHELD BY THE HONBLE SUPREME COURT , THOUGH IT HAD IMPRINTS OF A DOUBLE DEDUCTION . IT ALSO PERTINENT TO REFER TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF A.L.A. 19 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 CHEMICALS (P.) LTD. ( S UPRA) WHEREIN THE FACTS WERE THAT THE ASSESSEE - COMPANY CLAIMED DEDUCTION UNDER SECTION 35 OF THE ACT IN RESPECT OF CAPITAL EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH AND DEVELOPMENT IN THE PRECEDING TWO ASSESSMENT YEARS, WHICH WAS ALLOWED. THE ASSESSING OFFIC ER EXCLUDED THE AMOUNT OF AFORESAID EXPENDITURE FROM THE CAPITAL COMPUTATION FOR THE PURPOSES OF DEDUCTION UNDER SECTION 80J OF THE ACT . ON APPEAL, THE AAC, HOWEVER, ALLOWED THIS AMOUNT TO BE INCLUDED IN THE CAPITAL COMPUTATION FOR THE PURPOSE OF S ECTION 80J OF THE ACT . THE TRIBUNAL CONFIRMED THIS DECISION. ON REVENUES APPEAL TO HONBLE HIGH COURT , THE HIGH COURT DISCUSSED THE APPLICABILITY OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ESCORT S LTD. (SUPRA) . THE RELEVANT PART OF THE SAID D ISCUSSION IS REPRODUCED HEREUNDER: - 11. IN OUR VIEW, HOWEVER, THE OBSERVATIONS OF THE SUPREME COURT IN THE CASE OF ESCORTS LTD. (SUPRA) WILL NOT HAVE ANY APPLICATION TO THE BENEFIT GRANTED TO AN ASSESSEE UNDER SECTION 80J. THE SUPREME COURT IN THE CASE O F ESCORTS LTD. (SUPRA ) WAS CONCERNED WITH INTERPRETING THE PROVISIONS OF SECTION 32 AND SECTION 35. BOTH THESE PROVISIONS FORM A PART OF CHAPTER IV, WHICH DEALS WITH THE COMPUTATION OF BUSINESS INCOME. WHILE ARRIVING AT THE TOTAL INCOME OF AN ASSESSEE, CE RTAIN DEDUCTIONS ARE ALLOWED AS SET OUT IN THE SAID CHAPTER ITSELF. SECTION 29 OF THE ACT WHICH FORMS PART OF CHAPTER IV STATES THAT: 'INCOME FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION, HOW COMPUTED. THE INCOME REFERRED TO IN SECTION 28 SHALL BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTIONS 30 TO 43C.' THESE SECTIONS INCLUDE, INTER ALIA, DEDUCTION OF DEPRECIATION UNDER SECTION 32 AND DEDUCTION REGARDING EXPENDITURE ON SCIENTIFIC RESEARCH IN THE MANNER SET OUT IN SECTION 34. THE REFORE, THE DEDUCTIONS WHICH THE SUPREME COURT WAS CONCERNED WITH, WERE THE DEDUCTIONS WHICH WERE WITHIN THE SCHEME OF CHAPTER IV, TO BE TAKEN INTO ACCOUNT WHILE COMPUTING THE INCOME UNDER SECTION 28 OF THE ACT. SECTION 80J. ON THE OTHER HAND, FORMS PART O F CHAPTER VIA WHICH PROVIDES FOR CERTAIN ADDITIONAL DEDUCTIONS WHICH ARE TO BE MADE FROM THE GROSS TOTAL INCOME OF THE ASSESSEE AS COMPUTED UNDER CHAPTER IV. THUS, FOR EXAMPLE, SECTION 80A PROVIDES : 'IN COMPUTING TOTAL INCOME OF AN ASSESSEE, THERE SHALL BE ALLOWED FROM HIS GROSS TOTAL INCOME, THE DEDUCTIONS SPECIFIED IN SECTIONS 80C TO 80U.' 20 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 THESE ARE ADDITIONAL DEDUCTIONS. THEY ARE QUITE DIFFERENT IN KIND FROM DEDUCTIONS WHICH FALL UNDER CHAPTER IV. UNDER SECTION 80J WHAT IS PROVIDED IS AN ADDITIONAL DE DUCTION WHICH IS CALCULATED AS A PERCENTAGE OF THE CAPITAL EMPLOYED BY THE ASSESSEE IN CERTAIN UNDERTAKINGS AS SET OUT IN SECTION 80J. SECTION 80J(1A)(II) PRESCRIBES THE MANNER OF ASCERTAINING THE VALUE OF SUCH CAPITAL ASSETS. THE ASSETS WHICH ARE TO BE TA KEN INTO ACCOUNT FOR COMPUTATION OF CAPITAL ARE ALSO SPECIFIED IN THAT SECTION. THESE INCLUDE UNDER SUB - CLAUSE (I) OF SECTION 80J(1A)(II) ASSETS ENTITLED TO DEPRECIATION. IN THAT CASE THEIR WRITTEN DOWN VALUE HAS TO BE TAKEN INTO ACCOUNT. IT ALSO INCLUDES ASSETS WHICH ARE ACQUIRED BY PURCHASE AND WHICH ARE NOT ENTITLED TO DEPRECIATION, SUCH AS, ASSETS IN THE PRESENT CASE. IN THE CASE OF SUCH ASSETS, WE HAVE TO TAKE INTO ACCOUNT THE ACTUAL COST OF SUCH ASSETS TO THE ASSESSEE. SINCE THE ASSETS ARE ACQUIRED BY THE ASSESSEE BY PURCHASE, THE ACTUAL COST WOULD CERTAINLY INCLUDE AT LEAST THE PRICE OF THOSE ASSETS TO THE ASSESSEE, THOUGH IT MAY ALSO INCLUDE SOMETHING MORE AS WE HAVE POINTED OUT EARLIER. THIS SECTION ALSO INCLUDES IN ADDITION ASSETS WHICH MAY BE ACQU IRED BY AN ASSESSEE OTHERWISE THAN BY PURCHASE WHICH ARE NOT ENTITLED TO DEPRECIATION. THESE MAY BE ASSETS WHICH MAY BE GIFTED TO THE ASSESSEE. THEIR ACTUAL COST TO THE ASSESSEE IS NIL. YET, THEIR VALUE IS ALSO REQUIRED TO BE TAKEN INTO ACCOUNT UNDER CLAUS E (III) OF SECTION 80J(1A)(II). IN THEIR CASE, THE VALUE OF THE ASSETS WHEN THEY BECOME ASSETS OF THE BUSINESS, HAS TO BE TAKEN INTO ACCOUNT. THEREFORE, THE QUESTION WHETHER THE ASSESSEE HAS EXPENDED ANY AMOUNT FOR THE ACQUISITION OF THOSE ASSETS OR WHETHE R HE HAS BEEN REIMBURSED IN RESPECT OF SUCH EXPENDITURE INDIRECTLY BY REASON OF ANY TAX BENEFIT WHICH HE MAY HAVE GOT OR WHETHER THE ASSETS ARE GIFTED TO THE ASSESSEE, IS NOT STRICTLY RELEVANT FOR THE PURPOSE OF SECTION 80J EXCEPT TO THE EXTENT SO SPECIFIE D. WHAT WE HAVE TO ASCERTAIN IS WHETHER ASSETS ARE SUCH AS ARE INCLUDIBLE IN THE COMPUTATION OF CAPITAL. IF SO, THEIR VALUE IS TO BE ASCERTAINED AS SET OUT IN SECTION 80J(1A)(II). 12. IN SUCH A SITUATION THERE IS NO QUESTION OF ANY DOUBLE DEDUCTION OF THE NATURE CONTEMPLATED BY THE SUPREME COURT IN ESCORTS LTD. 'S CASE (SUPRA). IN FACT, THE SUPREME COURT HAS MADE THIS CLEAR (PAGE 874) WHEN IT SAYS THAT THE TWO DEDUCTIONS, I.E., DEDUCTIONS UNDER SECTIONS 32 AND 35 ARE, 'BASICALLY OF THE SAME NATURE INTENDED TO ENABLE THE ASSESSEE TO WRITE OFF CERTAIN ITEMS OF CAPITAL EXPENDITURE AGAINST HIS BUSINESS PROFITS'. A DEDUCTION UNDER 21 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 SECTION 80J IS NOT OF THE SAME NATURE AS A DEDUCTION UNDER SECTION 35. THEREFORE, IN OUR VIEW, THE RATIO OF THE SUPREME COURT JUDGMENT IN ESCORTS LTD. 'S CASE ( SUPRA)WILL NOT APPLY TO THE COMPUTATION OF CAPITAL UNDER SECTION 80J FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SECTION 80J . ( UNDERLINED FOR E MPHASIS BY ME ) THE ABOVE ANALYSIS OF THE HON'BLE HIGH COURT CLEARLY ANSWERS THE QUESTION THAT EVEN IF FOR THE TIME BEING IT IS ASSUMED THAT THERE IS A DOUBLE DEDUCTION , THE NATURE OF DEDUCTION CLAIMED , I.E. AS COST OF SHARES UNDER THE HEAD CAPITAL GAINS AND NATURE OF DEDUCTION CLAIMED EARLIER , I.E. DEP RECIATION ON COST OF MEMBERSHIP CARD UNDER THE HEAD I NCOME FROM BUSINESS A ND PROFESSION IS QUITE DIFFERENT AND CANNOT BE SAID TO BE OF THE SAME NATURE AND THUS , THE RATIO OF THE HONBLE SUPREME COURT IN THE CASE OF ESCORT S LTD. (SUPRA) CANNOT BE SAID TO BE MILITATING AGAINST THE POSITION CANVASSED BY THE ASSESSEE. 3 0 . I MAY ALSO REFER TO THE REASONING TAKEN BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF KALI AERATED WATER WORKS VS. CIT , 242 ITR 79 (MAD) , IN THE CONTEXT OF SECTION 50 OF THE ACT, WHICH WAS TO THE EFFECT THAT S ECTION 50 WILL APPLY ONLY TO CASES WHERE THE DEPRECIATION HAD BEEN OBTAINED BY THE ASSESSEE . THE ASSESSEE BEFORE THE HON'BLE MADRAS HIGH COURT WAS THE NEW PARTNERSHIP FIRM FORMED AFTER DISS OLUTION OF THE OLD FIRM. THE CASE OF THE REVENUE WAS THAT THE WDV AS ON THE DATE OF DISSOLUTION OF THE FIRM WAS TO BE ADOPTED FOR THE PURPOSES OF CALCULATION OF CAPITAL GAIN, WHICH WAS RESISTED BY THE ASSESSEE THEREIN. THE CLAIM OF THE REVENUE, BASED ON SECTION 50 OF THE ACT, WAS NEGATIVE D BY THE HON'BLE HIGH COURT ON THE GROUND THAT THE ASSESSEE - FIRM HAD NOT OBTAINED DEPRECIATION AFTER THE ASSET BECAME PROPERTY OF THE NEWLY CONSTITUTED FIRM, WHICH WAS THE ASSESSEE THEREIN. APPLYING THE SAME 22 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 ANALOGY, IT IS QUITE PERTINENT TO FIND HEREIN THAT THE ASSET , WHICH IS THE SUBJECT - MATTER OF CONSIDERATION , HAS NOT SUFFERED DEPRECIATION AND THEREFOR E S ECTION 50 OF THE ACT CANNOT BE APPLIED. THE CLAIM OF DEPRECIATION ON THE OLD ASSET IS OF NO RELEVANCE TO ADDRESS T HE PRESENT CONTROVERSY . IN FACT, AT THIS STAGE, I MAY REFER TO THE OBSERVATION OF THE LEARNED ACCOUNTANT MEMBER AT PARA 7.6 OF HIS ORDER. AS PER THE LEARNED ACCOUNTANT MEMBER, ADOPTION OF SECTION 55(2)(AB) OF THE ACT IN THE PRESENT CASE WOULD LEAD TO AL LOWING CLAIM OF DOUBLE DEDUCTION ON THE SAME ASSET . IN MY CONSIDERED OPINION, THE MISCONCEPTION ABOUT THE SAME ASSET LEADS TO AN ANOMALOUS INTERPRETATION. AS MY DISCUSSION IN THE EARLIER PART OF THIS ORDER SHOW, THE SUBJECT MATTER OF CONSIDERATION, I. E. SHARE OF BSE LTD., HAS NOT BEEN SUBJECT TO ALLOWANCE OF ANY DEPRECIATION. THUS, IN MY VIEW, THE VIEW CANVASSED BY THE LEARNED JUDICIAL MEMBER IS APT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 31 . AS REGARDS THE RELIANCE OF THE LEARNED DR ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF J. K. SYNTHETIC LTD. (SUPRA) , I FIND THAT THE DECISION RENDERED RELIED ON BY THE LEARNED REPRESENTATIVE FOR THE ASSESSEE IN THE CASE OF RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION (SUPRA) WAS RENDERED SUBSEQUENT TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF J. K. SYNTHETIC LTD. UPHOLDING THE DOUBLE DEDUCTION TO THE CHARITABLE TRUSTS . FURTHER, WE FIND THAT THE HONBLE SUPREME COURT IN THE CASE OF J. K. SYNTHETIC LTD. HAS NOT LAID DOWN A LAW THAT DOUBLE DEDUCTION IS NOT PERMISSIBLE. IT ONLY STATED THAT THE SAME SHOULD BE EXPRESSLY PROVIDED FOR UNDER THE ACT. IN THE PRESENT CASE, ADMITTEDLY S ECTION 32 OF THE ACT PROVIDE S FOR ALLOWANCE OF DEPRECIATION OF COST OF MEMBERSHIP CARD. F URTHER, S ECTION 55(2)(AB) OF THE ACT PROVIDES THAT COST OF SHARES OF BSE LTD . SHALL BE THE COST OF ACQUISITION OF MEMBERSHIP CARD. SECTION 55(2)(AB) OF THE ACT DOES NOT PRESCRIBE ANY RESERVATION OR EXCEPTION FOR 23 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 CASES WHEREIN ASSESSEE HAS ALREADY CLAIMED D EPRECIATION ON THE COST OF MEMBERSHIP CARD. THIS IMPLIES THAT THE LEGISLATURE IN ITS WISDOM HAS CONSIDERED THE SCENARIO OF DOUBLE DEDUCTION W HILE BRIN G ING IN SUCH AMENDMENT. IN SUCH CASES , IT CANNOT BE INFERRED THAT THE BENEFIT GRANTED TO THE ASSESSEE WAS UNINTENTIONAL AND SHALL NOT BE ALLOWED TO THE ASSESSEE. WHEN THE LANGUAGE OF THE SECTION IS SO CLEAR AND NO CONDITIONS ARE ATTACHED WITH THE ALLOWANCE AVAILABLE TO THE ASSESSEE, WHILE INT ERPRETING THE SECTION THIS BENCH CANNOT SUO - MOTO PUT CERTAIN CONDITIONS TO TAKE AWAY THE BENEFIT GRANTED BY TH E STATUTE EVEN WHEN THE SAME MAY LEAD TO DOUBLE DEDUCTION. SUCH AN ACT ON OUR PART WILL BE WITHOUT JURISDICTION , AND WITHOUT AUTHORITY OF LAW. 3 2 . AS REGARDS THE REFERENCE MADE BY THE LEARNED ACCOUNTANT MEMBER AND L EARNE D DR ON THE DECISION OF OUR CO - ORDINATE IN CASE OF TWIN EARTH SECURITIES (P.) LTD. VS. ACIT 66 TAXMANN.COM 258 , I FIND THAT IN THAT CASE NONE APPEARED ON BEHALF OF THE ASSESSEE THE REIN AND AS SUCH , ARGUMENTS OF THE LOSING PARTY WE RE NOT ARTICULATED BEFORE THE BENCH . IN THIS REGARD, IT IS PERTINENT TO REFER TO THE RELIANCE PLACED BY THE LEARNED REPRESENTATIVE FOR THE ASSESSEE ON THE BOOK OF P. J. FITZGERALD, M.A. NAMED SALMOND ON J URISPRUDENCE TO ARGUE THAT WHEN THE MATTER IS NOT ARGUED OR IS NOT FULLY ARGUED , THE SAME CANNOT BE TAKEN AS VALID PRECEDENT AS IN THAT CASE , THE COURT DID NOT HA VE THE OCCASION TO CONSIDER THE ARGUMENTS OF THE LOSING PARTY. THE RELEVANT EXTRACT FROM THE SAID BOOK IS REPRODUCED HEREUNDER: WE NOW TURN TO THE WIDER QUESTION WHETHER A PRECEDENT IS DEPRIVED OF ITS AUTHORITATIVE FORCE BY THE FACT THAT IT WAS NOT ARGUED OR NOT FULLY ARGUED, BY THE LOSING PARTY. IF ONE LOOKS AT THIS QUESTION MERELY WITH THE EYE OF COMMON SENSE, THE ANSWER TO IT I S CLEAR. ONE OF THE CHIEF REASONS FOR THE DOCTRINE OF PRECEDENT S THAT A MATTER HAS ONCE BEEN FULLY ARGUED AND 24 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 DECIDED SHOULD NOT BE ALLOWED TO BE REOPENED . WHERE A JUDGMENT IS GIVEN WITHOUT THE LOSING PARTY HAVING BEEN REPRESENTED THERE IS NO ASSURANCE THA T ALL THE RELEVANT CONSIDERATION HAVE BEEN BROUGHT TO THE NOTICE OF THE COURT, AND CONSEQUENTLY THE DECISION OUGHT NOT TO BE REGARDED AS POSSESSING ABSOLUTE AUTHORITY, EVEN IF IT DOES NOT FALL WITHIN THE SUB SILENTIO RULE. ( UNDERLINED FOR E MP HASIS BY ME ) DUE TO THE ABOVE REASON, I AM NOT INCLINED TO FOLLOW THE RATIO LAID DOWN IN THE SAID DECISION. FURTHER, I FIND THAT IN THE CONCLUDING PARA OF THE SAID DECISION , THE B ENCH HAS PARTIALLY APPLIE D S ECTION 55(2)(AB) OF THE ACT AND HELD THAT COST OF TRADING RIGHTS WILL BE NIL AS PER S ECTION 55(2)(AB) OF THE ACT , WHEREAS FOR COST OF SHARES , IT APPLIED S ECTION 50 OF THE ACT. I FIND THAT SUCH A PARTIAL APPLICATION OF S ECTION 55(2)(AB) OF THE ACT IS NOT C ORRECT APPLICATION OF S ECTION 55(2)(AB) OF THE ACT AND , AS SUCH , THE SAME IS NOT A GOOD PRECEDENT . 33 . AS REGARDS THE RELIANCE PLACED BY THE L EARNED DR ON THE DECISION OF M/S PAVAK SECURITIES PVT. LTD. VS. ITO IN ITA NO. 1803/MUM/2012 , THE SAME IS DISTING UISHABLE ON FACTS AS IN THAT CASE , ASSESSEE HAD NOT ARGUED AND CLAIMED THAT IT WAS ELIGIBLE TO CLAIM ENTIRE COST OF ACQUISITION OF MEMBERSHIP CARD WHILE COMPUTING LONG TERM CAPITAL GAINS. RATHER , ASSESSEE ITSELF CHOSE TO CLAIM ONLY THE WDV AS THE COST OF ACQUISITION OF MEMBERSHIP CARD. SUCH AN ACTION ON THE PART OF THE ASSESSEE IN THAT CASE CANNOT BE SAID TO BE A VALID BINDING PRECEDENT AND THUS , THE SAME CANNOT HELP THE CAUSE OF REVENUE IN THE PRESENT CASE . 34 . IN LIGHT OF THE ABOVE DISCUSS ION, I HEREBY HOLD THAT THE COST OF ACQUISITION OF SHARES OF BSE LTD . SHALL BE THE ORIGINAL COST OF ACQUISITION OF MEMBERSHIP 25 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 CARD IN TERMS OF S ECTION 55(2)(AB) OF THE ACT EVEN THOUGH ASSESSEE HAS CLAIMED DEPRECIATION ON THE COST OF MEMBERSHIP CARD IN THE EARLIER YEARS. 35 . AS REGARDS THE PERIOD OF HOLDING OF SHARES OF BSE LTD. , I FIND THAT AS PER C LAUSE (HA) INSERTED IN EXPLANATION 1 TO SECTION 2(42A) OF THE ACT BY THE FINANCE ACT, 2003 , PERIOD FOR WHICH THE PERSON WAS A MEMBER OF THE RECOGNISED STOCK EX CHANGE IN INDIA IMMEDIATELY PRIOR TO SUCH DEMUTUALISATION OR CORPORATISATION SHALL ALSO BE INCLUDED IN PERIOD OF HOLDING OF SHARES. IN TERMS OF THE CLEAR AND UNAMBIGUOUS LANGUAGE OF THE SECTION, I HOLD THAT THE PERIOD OF HOLDING OF SHARES OF BSE LTD. SHAL L BE RECKONED FROM THE DATE OF ORIGINAL MEMBERSHIP OF BSE AND NOT FROM DATE OF ALLOTMENT OF SHARES IN BSE LTD. 36 . I THUS AGREE WITH THE VIEW TAKEN BY THE LEARNED J UDICIAL M EMBER THAT THE COST OF SHARES WILL BE ORIGINAL COST OF THE MEMBERSHIP CARD IN TERMS OF S ECTION 55(2)(AB) OF THE ACT . 37 . IN VIEW OF THE FOREGOING DISCUSSION, THE QUESTION S PUT FORTH BEFORE ME ARE ANSWERED IN THE POSITIVE AND IN FAVOUR OF THE ASSESSEE. THE DECISION ARRIVED AT BY LEARNED J UDICIAL M EMBER IS THE APP ROPRIATE VIEW , AND I CONCUR WITH THE VIEW ADOPTED BY THE LEARNED J UDICIAL M EMBER ON THIS ISSUE. 38 . THE REGISTRY OF THE TRIBUNAL IS DIRECTED TO LIST TH I S APPEAL BEFORE THE DIVISION BENCH FOR PASSING AN ORDER IN ACCORDANCE WITH THE MAJORITY VIEW. SD/ - (G.S. PANNU) VICE PRESIDENT MUMBAI, DATE D 30 TH AUGUST, 201 9 H IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , . . BEFORE SRI MAHAVIR SINGH, JM AND SRI NK PRADHAN, AM ITA NO. 5938/MUM/2012 : A.Y : 2008 - 09 M/S. TECHNO SHARES & STOCKS LTD., 1 GROUND FLOOR, VIKAS BUILDING, 11, BANK STREET, FORT, MUMBAI 400 023. PAN : AAACT4464G (APPELLANT) VS. A DDL. CIT - 4(2), MUMBAI. (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : V. VINOD KUMAR, DR DATE OF HEARING : 18 / 10 /2019 DATE OF PRONOUNCEMENT: 18/10 /2019 O R D E R THIS MATTER WAS PLACED BEFORE THE BENCH TO PASS A CONFIRMING ORDER BY THE DIVISION BENCH. THE LEARNED THIRD MEMBER HAS NOW CONCURRED WITH A VIEW TAKEN BY THE JUDICIAL MEMBER VIDE PARA 34, 35, 36 AS UNDER: - 34. IN LIGHT OF THE ABOVE DISCUSSION, I HEREBY H OLD THAT THE COST OF ACQUISITION OF SHARES OF BSE LTD. SHALL BE THE ORIGINAL COST OF ACQUISITION OF MEMBERSHIP CARD IN TERMS OF SECTION 55(2)(AB) OF THE ACT EVEN THOUGH ASSESSEE HAS CLAIMED DEPRECIATION ON THE COST OF MEMBERSHIP CARD IN THE EARLIER YEARS. 2 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 35. AS REGARDS THE PERIOD OF HOLDING OF SHARES OF BSE LTD., I FIND THAT AS PER CLAUSE (HA) INSERTED IN EXPLANATION 1 TO SECTION 2(42A) OF THE ACT BY THE FINANCE ACT, 2003, PERIOD FOR WHICH THE PERSON WAS A MEMBER OF THE RECOGNISED STOCK EXCHANGE IN INDIA IMMEDIATELY PRIOR TO SUCH DEMUTUALISATION OR CORPORATISATION SHALL ALSO BE INCLUDED IN PERIOD OF HOLDING OF SHARES. IN TERMS OF THE CLEAR AND UNAMBIGUOUS LANGUAGE OF THE SECTION, I HOLD THAT THE PERIOD OF HOLDING OF SHARES OF BSE LTD. SHALL BE RECKONED F ROM THE DATE OF ORIGINAL MEMBERSHIP OF BSE AND NOT FROM DATE OF ALLOTMENT OF SHARES IN BSE LTD. 36. I THUS AGREE WITH THE VIEW TAKEN BY THE LEARNED JUDICIAL MEMBER THAT THE COST OF SHARES WILL BE ORIGINAL COST OF THE MEMBERSHIP CARD IN TERMS OF SECTION 55( 2)(AB) OF THE ACT. SINCE, MAJORITY VIEW NOW IS THAT THE COST OF ACQUISITION OF SHARES OF BSE LTD. SHALL BE THE ORIGINAL COST OF ACQUISITION OF MEMBERSHIP CALLED IN TERM OF SECTION 5 5(2)(AB) OF THE ACT AND PERIOD OF HOLDING OF SHARES OF BSE LTD WILL BE PER IOD FOR WHICH THE PERSON WAS A MEMBER OF THE RECOGNISED STOCK EXCHANGE IN INDIA IMMEDIATELY PRIOR TO SUCH DE - MUTUALISATION OR CORPORATISATION SHALL ALSO BE INCLUDED IN THE PERIOD OF HOLDING OF SHARES I.E. PERIOD OF SHARES OF BSE LTD SHALL BE RECKONED FROM THE DATE OF ORIGINAL MEMBERS OF THE BSE AND NOT 3 TECHNO SHARE S & STOCKS LTD. ITA NO. 5938/MUM/2012 FROM THE DATE OF ALLOTMENT OF SHARES IN BSE LTD. THIS CONFORMITY ORDER IS ACCORDINGLY PASSED. 2. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 18. 10.2019. SD/ - SD/ - ( . . / NK PRADHAN ) ( /MAHAVIR SINGH) ( / ACCOUNTANT MEMBER) ( / JUDICIAL MEMBER) , / MUMBAI, DATED: 18 . 10 .2019 . , . / SUDIP SARKAR, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ( ASSTT.REGISTRAR) , / ITAT, MUMBAI