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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: SHRI N.K. BILLAIYA & SHRI MAHAVIR PRASAD
PER N.K. BILLAIYA, ACCOUNTANT MEMBER
This appeal by the Assessee is directed against the order of the Ld. CIT(A)-10, Ahmedabad dated 24.02.2015 pertaining to A.Y. 2010-11.
ITA No1296/Ahd/2015 2 . A.Y. 2010-11 2. The grievance of the assessee is twofold. Firstly, the assessee is aggrieved by the disallowance of depreciation on Exchange Card/Trade Rights of Rs. 3,78,358/- and secondly, the assessee is further aggrieved by the disallowance of Rs. 32,56,263/- made by the A.O. by invoking the provisions of Section 40(a)(ia) of the Act.
The assessee is engaged in the Share Brokering and Depository activities. Return of income was filed on 07.10.2010 declaring total income at Rs. 1,79,49,460/-. The book profit u/s. 115JB of the Act was computed at Rs. 1,82,72,371/-. The return for the year was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee.
During the course of the scrutiny assessment proceedings, the A.O. observed that the assessee has shown Softwares under the head ‘intangible assets’ and has shown Block of asset “Computer” separately. However, while computing the depreciation, the assessee has clubbed the value of “Softwares” alongwith the value of “Computer” and had claimed depreciation @ 60%. The A.O. was of the opinion that the eligible rate of depreciation on “Softwares” is 25%, therefore, the assessee was asked to justify the claim of depreciation @ 60%. The A.O. further noticed that the assessee has claimed depreciation on Exchange Cart/Trading Rights. The A.O. was of the opinion that after demutualization, the SEBI has allotted Membership Card Shares and the Membership Card does not exist, therefore, there is no question of allowing any depreciation on the same. When the assessee was asked to justify its claim, the assessee replied that it has taken original cost of share at Rs. 1 while computing capital gain in a later year and therefore, the same should not be considered for denying the claim of depreciation. The contention of the
ITA No1296/Ahd/2015 3 . A.Y. 2010-11 assessee did not find any favour with the A.O. who disallowed the claim of depreciation of Rs. 3,78,358/- on ‘intangible assets’ being Trading Rights of CSE and BSE.
Assessee carried the matter before the ld. CIT(A) but without any success.
Before us, the ld. counsel for the assessee drew our attention to the order of the Co-ordinate Bench in assessee’s own case in A.Y. 2007-08 & 2008-09 in ITA No. 373/Ahd/2011. It is the say of the ld. counsel that an identical issue was considered by the Tribunal in those assessment years and has allowed the claim of depreciation. The ld. D.R. could not bring any distinguishing decision in favour of the revenue.
We have carefully perused the orders of the authorities below. We have also considered the decision of the Tribunal in assessee’s own case (supra), the relevant findings of the Co-ordinate Bench reads as under:- 13. The assessee’s next ground raised in the instant appeal challenges disallowance of depreciation on Ahmedabad Stock Exchange card of Rs.141/- made in the course of assessment and affirmed in the lower appellate proceedings. Both the lower authorities hold that stock exchange membership card is not an eligible asset u/s 32 of the Act as held by hon’ble Bombay high court in M/s. Technoshares and Stocks Ltd. Vs. CIT 193 Taxman 248. The CIT(A) observes that the hon’ble apex court has reversed the above stated decision as reported in 327 ITR 323 with a rider that the same relates to Bombay Stock Exchange card only. He reproduces relevant portion of this judgment as well. However, the Revenue fails to point out any distinction between the assessee’s Ahmedabad Stock Exchange card and relevant features of Bombay Stock Exchange card. Nor such a distinction is forthcoming from hon’ble apex court
ITA No1296/Ahd/2015 4 . A.Y. 2010-11 decision. We find that a co-ordinate bench of the tribunal in case of assessee’s sister concern’s case M/s. Edelweiss Stock Broking Ltd. Vs. CIT, ITA No. 1168/Ahd/2011 decided on 11.07.2014 for AY 2006-07 grants identical depreciation relief. We also draw support therefrom for allowing the impugned depreciation claimed. This ground is accepted.
Respectfully following the findings of the Co-ordinate Bench (supra), we direct the A.O. to allow the claim of depreciation. Ground no. 1 is allowed.
While scrutinizing the return of income, the A.O. noticed that the assessee has claimed payments on account of CM Pool Charges being VSAT, WAN support charges, Lease line charges being VPN Charges, totaling to Rs. 32,56,263/-. The A.O. found that the assessee has not deducted tax at source. Invoking the provisions of Section 40(a)(ia) of the Act, the A.O. disallowed Rs. 32,56,263/-.
Assessee assailed the assessment before the ld. CIT(A) but without any success. 11. Before us, the ld. counsel for the assessee stated that in the earlier years also, similar disallowance were made which were set aside by the Tribunal to the files of the A.O. It is the say of the ld. counsel that on similar facts, the same view should be taken.
We have carefully considered the orders of the authorities below. We find force in the contention of the ld. counsel. A similar disallowance was considered by the Co-ordinate Bench in ITA No. 373/Ahd/2011 & 1480/Ahd/2011, the relevant findings of the Co-ordinate Bench reads as under:- 14. This leaves us with assessee’s last substantive ground challenging section 40(a)(ia) of Rs.1,02,39,903/- arising from non-deduction of TDS qua payments made of NSE lease line charges, NSE VSAT charges and MTNL expenses. There is no dispute that the assessee has not deducted TDS on these payments. We have
ITA No1296/Ahd/2015 5 . A.Y. 2010-11 given our thoughtful consideration to the rival contentions. The assessee inter alia invites our attention to section 40(a)(ia) second proviso introduced by the Finance Act, 2012 w.e.f. 01.04.2013. It refers to case law of Rajeev Kumar Agarwal vs. ACIT, ITA No.337/Agra/2013 decided on 29.05.2013 (authored by one of us Pramod Kumar, Accountant Member) as considered by a recent decision of hon’ble Delhi high court in CIT vs. Ansal Landmark Townships Pvt Ltd, (377 ITR 635), upholding the same after reproducing the operative part in extempore to the effect that when a deductor-assessee is not an assessee in default u/s 201(1), it is deemed that it has deducted and paid the tax on such sums on the date of filing of return of income by the concerned payee as referred in the above stated proviso. The co-ordinate bench as well as hon’ble Delhi high court have accordingly applied the above stated proviso with retrospective effect by holding it as a curative one. The Revenue is unable to dispute correctness thereof. We accordingly remit this issue back to the Assessing Officer for carrying out necessary verification regarding related payments having been taken into account by the concerned payees in computing their income. The assessee’s other arguments disputing applicability of TDS provision shall be re-adjudicated as per law. This ground is treated as allowed for statistical purposes. This assessee’s appeal ITA No.1718/Ahd/2011 is partly allowed.
On finding parity of facts, we restore this issue to the files of the A.O. with similar directions. This ground is treated as allowed for statistical purpose.
In the result, the appeal filed by the Assessee is partly allowed.
Order pronounced in Open Court on 15 - 01- 2018
Sd/- Sd/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER True Copy ACCOUNTANT MEMBER Ahmedabad: Dated 15 /01/2018 Rajesh Copy of the Order forwarded to:- 1. The Appellant.