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2015 (1) TMI 966 - AT - Income TaxDisallowance of depreciation on BSE Card - Held that:- Keeping in view that now it is a case of demutualization, as result of corporatization of BSE, the issue is covered from both the angles against the assessee as relying on decision of Sino Securities (P) Ltd. vs ITO [2011 (11) TMI 535 - ITAT MUMBAI] - Decided against assessee. Disallowance of the foreign exchange loss on forex - Held that:- Considering the accepted fact that the Hon’ble Supreme Court in the case of CIT vs Woodward Governor India Pvt Ltd [2009 (4) TMI 4 - SUPREME COURT] has decided the issue in favour of the assessee, we, therefore, set aside the order of the CIT(A) on the issue and direct the AO to delete the addition of ₹ 24,149/-. - Decided in favour of assessee. Disallowance of non compete fee and customer rights - Held that:- An expense may be capital in nature or revenue in nature, but, to ascertain the nature, there is no fixed criteria. But the judicial fora has taken one manner to ascertain the distinction. If the expense is for short term benefit, it could be allowed as a revenue expenditure or an expense is made to acquire an asset giving enduring benefit to the assessee, in which case, it would be capital in nature view which has been taken by the Hon’ble Bombay High Court in the case of CIT vs Everest Advertising [2015 (1) TMI 968 - BOMBAY HIGH COURT]. Thus the assessee deserves the allowance. - Decided in favour of assessee. Disallowance of customer rights - Held that:- Once it is seen that the expenditure has been incurred for acquiring the business, we cannot hold that acquisition of customer rights are bogus. We, therefore, hold that the expenditure as such was genuine. Once the expense has been accepted by us to be genuine, it would fall within the inclusions of section 32(1)(ii). - Decided in favour of assessee. Disallowance of Bad debts - CIT(A) deleted the addition - Held that:- Bad-debts of ₹ 78,91,360/- written off pertained to the brokerage income already credited to the profit and loss a/c in the relevant years and accordingly the write off of the bad-debts must be allowed u/s 36(1)(vii) as it satisfies the conditions of section 36(2)(i). - Decided against revenue. Allowance of Vanda loss - AO had treated the loss as speculation loss u/s 73 - Held that:- Explanation to s. 73 is attracted only when part of the business of the assessee company consists of the purchase and sale of shares of other companies and in that situation only such dealings in shares is deemed to be carrying on a speculative business. It must be noticed that any kind of venture will not fall within the definition of "business". The venture or adventure will have to be In the nature of trade, commerce or manufacture. Thus, there is lack of ingredient called "business" in the sale and purchase done by the assessee of shares for which net loss has occurred to assessee. Thus the said loss arisen to assessee does not fall within the ambit of Explanation to s. 73. The loss occurred to assessee was in course of its business activity of brokerage. - Decided against revenue. Disallowance made u/s 14A - Held that:- As relying on Godrej & Boycee Manufacturing Co. Ltd. Vs DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] Rule 8D is not applicable for this assessment year, at the same time, it is held that reasonable disallowance should be made u/s 14A of the Act. - restore the issue to the AO to compute the disallowance as per the provisions of section 14A(2) . - Decided in favour of revenue for statistical purposes. Allowance of membership fees - Held that:- If an item of expenditure is to be considered capital in nature, the expenditure should bring into existence an asset or an advantage for the enduring benefit of a trade. Membership fee paid to a club does not bring into existence an asset or an advantage for the enduring benefit of the business. It is an expenditure incurred for the period of membership and is not long lasting. By subscribing to the membership of a club, no capital asset is created or comes into existence. By such membership, a privilege to use facilities of a club alone, are conferred oil assessee and that too for a limited period. Such expenses are for running the business with a view to produce the benefits to the assessee. Consequently, it cannot be treated as capital asset. - Decided in favour of assessee.
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