M/S. GEOJIT SECURITIES LTD. vs. THE ASST. COMMISSIONER OF INCOME TAX,

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ITA/423/2010HC KeralaKLHC01027115201022 January 2019Bench: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN,HONOURABLE MR. JUSTICE ASHOK MENON8 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the membership card of the Bombay Stock Exchange (BSE) is an intangible asset and depreciation can be claimed thereon. This finding is based on the binding declaration made by the Honourable Supreme Court in the case of Techno Shares and Stocks Ltd. v. Commissioner of Income Tax (2010) 327 ITR 323 (SC). The Court found that the issue raised in these appeals is identical to the issue decided by the Supreme Court. Therefore, the question of law is answered in favour of the assessee and against the Revenue. The orders of the lower authorities disallowing the claim for depreciation on BSE membership for all the assessment years are set aside. The appeals are allowed, with parties to bear their respective costs.

What were the facts?

The assessee, M/s. Geojit Securities Limited (also referred to as Geojit Financial Services Ltd.), is a company dealing in stocks and securities. The appeals concern three assessment years, though the specific years are not mentioned in the provided text. The assessee claimed deduction for membership fees paid to the Bombay Stock Exchange (BSE) as depreciation under Section 32(1)(ii) of the Income Tax Act, 1961. The lower authorities, including the Income Tax Appellate Tribunal (ITAT), had disallowed this claim. The present appeals are filed against the orders of the ITAT, Cochin Bench, dated March 25, 2009.

What were the issues?

1. Whether the membership card of the Bombay Stock Exchange (BSE) is an intangible asset eligible for depreciation under Section 32(1)(ii) of the Income Tax Act, 1961, as a question of law. Assessee's Contentions: The assessee contended that the membership fees paid for the BSE membership should be allowed as a deduction for depreciation. The assessee relied on the binding declaration made by the Supreme Court in Techno Shares and Stocks Ltd. v. Commissioner of Income Tax (2010) 327 ITR 323 (SC). Revenue's Contentions: The judgment does not record any specific contentions made by the Revenue. However, the lower authorities had consistently disallowed the claim.

Which sections of the Income-tax Act were involved?

Section 32(1)(ii)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY ,THE 22ND DAY OF JANUARY 2019 / 2ND MAGHA, 1940 ITA.No. 421 of 2010 AGAINST THE ORDER/JUDGMENT IN ITA 294/(COCH)2006 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 25-03-2009 APPELLANT/S:/APPELLANT/ASSESSEE: M/S GEOJIT SECURITIES LIMITED, (GEOJIT FINANCIAL SERVICES LTD.), 5TH FLOOR, FINANCE TOWERS,KALOOR,KOCHI-17. BY ADVS. SRI.E.K.NANDAKUMAR (SR.) SMT.PREETHA S.NAIR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.P.GOPINATH (SR.) RESPONDENT/S:/RESPONDENT/REVENUE: THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1(2), ERNAKULAM. BY ADVS. SRI.JOSE JOSEPH, SC, FOR INCOME TAX SRI.P.K.RAVINDRANATHA MENON, SR. COUNSEL, GOI (TAXES) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 22.01.2019, ALONG WITH ITA.423/2010 AND ITA.424/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY ,THE 22ND DAY OF JANUARY 2019 / 2ND MAGHA, 1940 ITA.No. 423 of 2010 AGAINST THE ORDER/JUDGMENT IN ITA 296(COCH)/2006 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 25-03-2009 APPELLANT/S:/APPELLANT/ASSESSEE: M/S. GEOJIT SECURITIES LTD. (GEOJIT FINANCIAL SERVICES LTD.) 5TH FLOOR,, FINANCE TOWERS, KALOOR, KOCHI-17. BY ADVS. SRI.E.K.NANDAKUMAR (SR.) SMT.PREETHA S.NAIR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.P.GOPINATH (SR.) RESPONDENT/S:/RESPONDENT/REVENUE: THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1 (2), ERNAKULAM. BY ADVS. SRI.P.K.RAVINDRANATHA MENON, SR.COUNSEL, GOI (TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 22.01.2019, ALONG WITH ITA.421/2010 AND ITA.424/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY ,THE 22ND DAY OF JANUARY 2019 / 2ND MAGHA, 1940 ITA.No. 424 of 2010 AGAINST THE ORDER/JUDGMENT IN ITA 295(COCH)/2006 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 25.3.2009 APPELLANT/S:/APPELLANT/ASSESSEE: M/S.GEOJIT SECURITIES LIMITED, (GEOJIT FINANCIAL SERVICES LTD) 5TH FLOOR, FINANCE, TOWERS, KALOOR, KOCHI-17. BY ADVS. SRI.E.K.NANDAKUMAR (SR.) SMT.PREETHA S.NAIR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.P.GOPINATH (SR.) RESPONDENT/S:/RESPONDENT/REVENUE: THE ASST.COMMISSIONER OF INCOME TAX, CIRCLE 1(2), ERNAKULAM. BY ADVS. SRI.JOSE JOSEPH, SC, FOR INCOME TAX SRI.P.K.RAVINDRANATHA MENON, SR.COUNSEL, GOI (TAXES) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 22.01.2019, ALONG WITH ITA.421/2010 AND ITA.423/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

K.VINOD CHANDRAN & ASHOK MENON, JJ. ------------------------------------------- ITA Nos.421, 423 and 424 of 2010 ------------------------------------------- Dated this the 22nd day of January, 2019 J U D G M E N T Vinod Chandran, J. The assessee is a Company incorporated, inter alia, with the object of dealing in stocks and securities. The assessee had taken membership in the Bombay Stock Exchange (BSE). The membership fees was sought to be claimed as deduction under Section 32(1) (ii) of the Income Tax Act, 1961 as depreciation. The lower authorities consistently disallowed the claim for all the three assessment years. As of now, the finding of the lower authorities stands vitiated by the reason of the binding declaration made by the Honourable Supreme Court in (2010) 327 ITR 323 (SC) [Techno Shares and Stocks Ltd. v. Commissioner of Income Tax]. The Honourable Supreme Court had held that the membership card of the BSE is an intangible asset and depreciation can be claimed thereon. The issue raised in the above cases is also with respect to the membership taken in the BSE. Hence, the question of

ITAs421,423&424/10 -5- law has to be answered in favour of the assessee and against the Revenue. The orders of the lower authorities for all the assessment years would stand set aside on that aspect. In view of the above, these ITAs would stand allowed leaving the parties to suffer their respective costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENON JUDGE

ITAs421,423&424/10 -6- APPENDIX OF ITA 421/2010 APPELLANT'S/S EXHIBITS: ANNEXURE-A TRUE COPY OF THE ORDER FOR THE YEAR 2001-02 UNDER SECTION 154 DATED 7/9/2005 ISSUED BY THE RESPONDENT TO THE APPELLANT. ANNEXURE-B TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 23/2/2006 ISSUED TO THE APPELLANT. ANNEXURE-C TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 25/3/2009 ISSUED TO THE APPELLANT. ANNEXURE-D TRUE COPY OF THE ORDER IN MISCELLANEOUS PETITION DATED 9/9/2009 [True Copy] jg

ITAs421,423&424/10 -7- APPENDIX OF ITA 423/2010 APPELLANT'S/S EXHIBITS: ANNEXURE-A TRUE COPY OF THE ORDER FOR THE YEAR 2003-04 UNDER SECTION 143(3) DATED 26/8/2005 ISSUED BY THE RESPONDENT TO THE APPELLANT ANNEXURE-B TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 23/2/2006 ISSUED TO THE APPELLANT. ANNEXURE-C TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 25/3/2009 ISSUED TO THE APPELLANT. ANNEXURE-D TRUE COY OF THE ORDER IN MISCELLANEOUS PETITION DATED 9/9/2009 [True Copy] jg

ITAs421,423&424/10 -8- APPENDIX OF ITA 424/2010 APPELLANT'S/S EXHIBITS: ANNEXURE-A TRUE COPY OF THE ORDER FOR THE YEAR 2002-03 UNDER SECTION 154 DATED 20/9/2005 ISSUED BY THE RESPONDENT TO THE APPELLANT. ANNEXURE-B TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 23/2/2006 ISSUED TO THE APPELLANT. ANNEXURE-C TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 25/3/2009 ISSUED TO THE APPELLANT. ANNEXURE-D TRUE COPY OF THE ORDER IN MISCELLANEOUS PETITION DATED 9/9/2009 [True Copy] jg

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