THE OMNISCIENT SECURITIES P. LTD, MUMBAI V. ACIT 4(2), MUMBAI

ITA 8589/MUM/2011

• Counselvise Citation: 858919914 RSA 2011
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-12-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 19-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KIRAN S MEHTA
• Keywords: Capital asset; Depreciation; Period of limitation; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 8589/MUM/2011 ASSESSMENT YEAR: 2002-03 THE OMNISCIENT SECURITIES P. LTD. 1003, P.J. TOWER, DALAL STREET FORT, MUMBAI-01 VS. ACIT-4(2) MUMBAI (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :AAACT 7330 D ASSESSEE BY : SHRI KIRAN S. MEHTA REVENUE BY : SHRI SANJEEV JAIN DATE OF HEARING : 10.04.2014 DATE OF PRONOUNCEMENT : 16.04.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A)-8, MUMBAI DATED 09.09.2010, CONFIRMING TH E DISALLOWANCE OF DEPRECIATION OF RS.15,99,609/- CLAIMED BY THE ASSESSEE IN RESPEC T OF BOMBAY STOCK EXCHANGE MEMBERSHIP CARD FOR THE ASSESSMENT YEAR 2002-03. 2. AT THE OUTSET, IT IS OBSERVED THAT THERE IS A DE LAY OF 392 DAYS IN FILING THE APPEAL. IN THIS CONNECTION, THE ASSESSEE HAS FILED A PETITION FOR CONDONATION OF DELAY IN THE SHAPE OF AN AFFIDAVIT EXPLAINING THE REASONS FOR NOT FILING THE APPEAL WITHIN THE TIME PERIOD OF LIMITATION. THE RELEVANT PORTION OF THE AFFIDAVIT IS EXTRACTED HEREUNDER: A. THE LEARNED CIT(A) HAD DECIDED THE MAIN ISSUE IN VOLVED IN APPEAL, BASED ON THE DECISION OF HON. BOMBAY HIGH COURT IN THE CASE OF T ECHNO SHARES AND STOCK BROKERS LTD. (225 CTR 337). APPELLANT WAS ALSO ONE OF THE P ARTIES IN THIS MATTER BEFORE THE HON. HIGH COURT. B. AN APPEAL WAS FILED WITH THE HON'BLE SUPREME COU RT AGAINST THIS ORDER OF THE HON. HIGH COURT AND APPELLANT WAS ALSO ONE OF THE PARTIE S OF THIS APPEAL. C. THE APPELLANT WAS UNDER A BONA FIDE BELIEF THAT ALL THE PENDING MATTERS ON THIS ISSUE WOULD BE DECIDED BASED ON THE DECISION OF HON 'BLE SUPREME COURT. ITA NO. 8589/MUM/2011 THE OMNISCIENT SECURITIES P. LTD. ASSESSMENT YEAR: 2002-03 2 D. THE APPELLANT WAS THUS, UNDER A BELIEF THAT IF T HE DECISION OF HON'BLE SUPREME COURT WERE TO BE IN HIS FAVOUR THEN THE ISSUE ON HA ND WOULD BE DECIDED IN HIS FAVOUR BY CARRYING OUT A SUITABLE RECTIFICATION IN AS MUCH AS THE FINAL DECISION OF HON'BLE SUPREME COURT WOULD BE REGARDED AS THE LAW OF LAND AND ANY DECISION CONTRARY TO THE LAW OF LAND WOULD BE RECTIFIED. E. THE ORDER OF HON'BLE SUPREME COURT DID COME IN F AVOUR OF THE APPELLANT AND THEREUPON THE APPELLANT APPROACHED THE LEARNED AO F OR A SUITABLE RECTIFICATION AND THE RESULTANT REFUND. F. HOWEVER, THE LEARNED AO RECENTLY COMMUNICATED TO THE APPELLANT THAT HE WOULD NOT BE IN A POSITION TO RECTIFY THE ORIGINAL ORDER AS HIS ORDER HAD MERGED INTO THE ORDER OF A HIGHER AUTHORITY AND HENCE UNLESS THERE WAS A DIRECTION FROM THE HIGHER AUTHORITY, HE COULD NOT DISTURB THE ORDER. G. IT IS ON ACCOUNT OF THE VIEW TAKEN BY THE LEARNE D AO THAT THE APPELLANT WAS CONSTRAINED IN FILING THE APPEAL IN REFERENCE. H. THE APPEAL IN REFERENCE WAS FILED WITHIN A FEW D AYS OF THE LEARNED AO REFUSING TO RECTIFY THE ORDER IN APPEAL. IN VIEW OF THE AFOREMENTIONED REASONS, THE LD.AR HA S PRAYED THAT THE DELAY IN FILING THE APPEAL BEFORE THE TRIBUNAL MAY BE CONDONED. ON THE OTHER HAND, LD.DR HAS VEHEMENTLY OPPOSED THE CONDONATION OF DELAY. 2.1 AFTER CONSIDERING THE RELEVANT RECORD, FACTS AN D CIRCUMSTANCES OF THE CASE AS WELL AS THE REASONS EXPLAINED BY THE ASSESSEE, WE F IND THAT THE ASSESSEE HAS EXPLAINED SUFFICIENT REASONS FOR NOT FILING THE APP EAL WITHIN TIME. IT IS A SETTLED LAW THAT WHILE CONDONING THE DELAY THE COURT SHOULD TAK E A LENIENT VIEW. IT IS ALWAYS A QUESTION WHETHER THE EXPLANATION AND REASONS FOR DE LAY IS BONA FIDE OR MERELY A DEVISE TO COVER AN ULTERIOR PURPOSE SUCH AS LACHES ON THE PART OF THE LITIGANT OR AN ATTEMPT TO SAVE LIMITATION IN UNDER HAND WAY. WHEN IT IS FOUND ON RECORD THAT THE PARTY HAS NOT ACTED MALAFIDE BUT THE REASON EXPLAIN ED ARE FACTUALLY CORRECT, THEN THE COURT SHOULD BE LIBERAL IN CONSTRUING THE SUFFICIEN T CAUSE AND LEAN IN FAVOUR OF SUCH PARTY. WHENEVER SUBSTANTIAL JUSTICE AND TECHNICAL C ONSIDERATION ARE OPPOSED TO EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE HAS TO BE PREFE RRED AND JUSTICE ORIENTED APPROACH HAS TO BE TAKEN BY THE COURT WHILE DECIDING THE MAT TER FOR CONDONATION OF DELAY. IN VIEW OF THIS LEGAL AND FACTUAL POSITION, WE CONDONE THE DELAY IN FILING THE APPEAL BEFORE US AND TAKE UP THE MATTER FOR ADJUDICATION O N MERITS. 3. AS REGARDS THE ISSUE OF ALLOWABILITY OF DEPRECIA TION CLAIMED IN RESPECT OF BOMBAY STOCK EXCHANGE MEMBERSHIP CARD, IT IS PERTIN ENT TO MENTION THAT THE SAID ITA NO. 8589/MUM/2011 THE OMNISCIENT SECURITIES P. LTD. ASSESSMENT YEAR: 2002-03 3 CLAIM HAS BEEN REJECTED BY THE AO AND THE SAID REJE CTION HAS BEEN CONFIRMED BY THE LD.CIT(A) BY RELYING ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF TECHNO SHARES AND STOCK BROKERS LTD. [225 CTR 337] WHEREIN IT HAS BEEN HELD THAT BSE CARD IS NOT A CAPITAL ASSET AND THEREFORE DEPRE CIATION CANNOT BE CLAIMED ON THE SAID PROPERTY. HOWEVER, THE HONBLE APEX COURT HAS REVERSED THE SAID DECISION OF THE BOMBAY HIGH COURT AND HAS HELD THAT RIGHT OF ME MBERSHIP CONFERRED UPON A MEMBER UNDER BSE MEMBERSHIP CARD IN TERMS OF RULES AND BYE-LAWS OF BSE, AS THEY STOOD DURING RELEVANT ASSESSMENT YEARS, IS A BUSIN ESS OR COMMERCIAL RIGHT WHICH GIVE A NON-DEFAULTING CONTINUING MEMBER A RIGHT TO ACCESS EXCHANGE AND TO PARTICIPATE THEREIN AND, IN THAT SENSE, IT IS A LIC ENSE OR AKIN TO A LICENSE IN TERMS OF SECTION 32(1)(II) AND THEREFORE, FOR RELEVANT ASSES SMENT YEARS, DEPRECIATION IS ALLOWABLE ON COST OF BSE MEMBERSHIP CARD UNDER SECT ION 32(1)(II) [327 ITR 323] . IN VIEW OF THAT MATTER, WE ARE OF THE CONSIDERED OPINI ON THAT THE ISSUE RAISED BY THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE APEX COURT IN FAVOUR OF THE ASSESSEE. FOLLOWING THE SAID RATIO LAID DOWN BY THE HONBLE APEX COURT, WE DIRECT THE AO TO ALLOW THE DEPRECIATION OF RS.15,99,609/- CLAIMED BY THE ASSESSEE IN RESPECT OF BOMBAY STOCK EXCHANGE MEMBERSHIP CARD. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF MARCH, 2014. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 16.04.2014. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.