Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2006 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2006 (9) TMI 237 - ITAT MADRAS-BCapital gains - Transfer of membership card - Whether membership card of Madras Stock Exchange could be construed to be a capital asset within the meaning of section 2(74) ex consequenti, consideration of the alleged transfer of membership card is exigible to capital gains tax? - HELD THAT:- Under the rules framed by MSE, as per Article 48(a), once a member is declared defaulter, the right of nomination vests with the Stock Exchange authorities and such right can be exercised only by the Exchange. So far as death of a member is concerned, there is a slight variation in the MSE rules to the effect that legal representatives of a deceased member or his heirs may nominate any person eligible under the rules for admission to the membership of the Exchange. But this slight deviation also does not make any difference. During the subsistence of membership, what a person is holding is a valuable right through which he can exercise the privileges of a cardholder, i.e., mainly trading on the floor of the Stock Exchange. The use of a card by a member is q nothing but an exploitation of this valuable right for the purpose of earning income on regular basis. Therefore, when a continuing member nominates another person in his place, it is nothing but the transfer of this right from one to the other. Accordingly, the card is a valuable property which entitles the members to deal in transactions on the floor of the Stock Exchange and without which one cannot transact such business. This right can be disposed of by a member by nomination, though subject to rules and regulations of Stock Exchange and settlement of debts and liabilities of the members of the Stock Exchange. The argument of the learned counsel was that exercising the right of nomination is not equivalent to transferring an asset. This argument has been met with by the Ahmedabad Bench of the Tribunal in the case of V.G. Gajjar [2004 (9) TMI 290 - ITAT AHMEDABAD-A]. We are in full agreement with the view expressed therein. Accordingly, in the present case, we hold that the transfer of membership card by the assessee to ASERA Securities Pvt. Ltd. is a transfer of capital asset within the meaning of section 2(14) of the Act and consequently the consideration of the said transfer is exigible to capital gains tax. In the result, the appeal of the assessee is dismissed.
|