2002 (9) TMI 850 - AT - Income Tax

Summary

Issues Involved:
1. Taxation of capital gains arising from the sale of a Bombay Stock Exchange membership card.
2. Levy of interest u/s 234A, 234B, and 234C of the Income-tax Act, 1961.

Summary:

1. Taxation of Capital Gains:
The appellant, a member of the Bombay Stock Exchange since 1974, sold his membership card to M/s. Saurashtra Capital Services Pvt. Ltd. for Rs. 2.40 crores. The Assessing Officer taxed the gains as long-term capital gains after deducting the indexed cost of acquisition, relying on ITAT Mumbai's decision in V.N. Cantol v. W.T.O. The assessee contended that the membership card was a personal privilege and not a capital asset u/s 2(14) of the Income-tax Act, citing the Supreme Court's decision in Vinay Bubna v. Stock Exchange, Mumbai. However, the CIT(A) concluded that the membership card was a valuable property for a non-defaulting member and upheld the taxation of gains as long-term capital gains. The CIT(A) allowed some relief by revising the market value of the card as of 1-4-1981 to Rs. 90,000 and directed consequential revisions in interest u/s 234B and 234C.

2. Levy of Interest u/s 234A, 234B, and 234C:
The interest levied u/s 234A, 234B, and 234C was deemed consequential and did not require a specific order.

Conclusion:
The ITAT upheld the CIT(A)'s decision, rejecting the assessee's appeal. The membership card, when sold, was considered a valuable asset, and the gains from its sale were taxable as long-term capital gains. The appeal was dismissed.