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2016 (11) TMI 881 - ITAT MUMBAI

2016 (11) TMI 881 - ITAT MUMBAI - TMI - Depreciation on stock exchange membership cards - Held that:- As relying on M/s Techno Shares & Stocks Ltd. Versus The Commissioner of Income Tax IV [2010 (9) TMI 6 - SUPREME COURT OF INDIA] stock exchange membership cards are eligible for depreciation under section 32 of the Act being in the nature of intangible asset. Respectfully following the decision from the Coordinate Bench that too in the case of assessee itself for Assessment year 2007-08, we allo .....

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issue is also covered by the decision of the Hon'ble A.Y.08-09 M/s.. Angel Commodities Broking P. Ltd. [2013 (7) TMI 1043 - ITAT MUMBAI ] - Decided in favour of the assessee. - ITA No. 335/Mum/2013, ITA No. 650/Mum/2014 - Dated:- 2-11-2016 - Shri Joginder Singh, Judicial Member And Shri Ramit Kochar, Accountant Member Revenue by : Shri Neil Philiph - DR Assessee by : Shri Vijay Mehta - CA ORDER Per Joginder Singh (Judicial Member) Both these appeals are by the assessee for the A.Y. 2009-10 and 2 .....

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r of the Tribunal dated 07/05/2014 in the case of assessee itself (ITA No. 7375 & 8217/MUM/2010). This factual assertion of the ld. AR was not controverted by Shri Neil Philiph, ld. DR. 2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the order of the Tribunal dated 07/05/2014 (Assessment year 2007-08) for ready reference and analysis:- 4. In so far as the appeal of the ass .....

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nsideration was filed by it on 28-10-2007 declaring total income at nil . In the said return, depreciation of ₹ 1,42,500/- was claimed by the assessee @ 25% on the amount of ₹ 7,60,000/- paid for acquiring rights of Multi Commodities Exchange claiming that it was intangible asset in the form of commercial right as per provisions of section 32(1)(ii) of the income Tax Act, 1961 as amended w.e.f. 1-4-1998. This claim of the assessee, however, was not found acceptable by the A.O. for th .....

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cards was held to be not allowable, the A.O. disallowed the claim of the assessee for depreciation on the membership right of Multi Commodities Exchange. On appeal, the ld. CIT(A) confirmed the said disallowance made by the A.O. holding that the issue was already settled against the assessee by the Hon ble Bombay High Court in the case of CIT vs. Techno Shares & Stocks Ltd. (supra). Aggrieved by the order of the ld. CIT(A), the assessee has preferred this appeal before the Tribunal. 7. We ha .....

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intangible asset. Although the ld. D.R. has relied in support of the Revenue s case on this issue on the decision of co-ordinate bench of this Tribunal in the case of Sino Securities (P.) Ltd. Vs. ITO [2012] 134 ITD 321 (Mum) and in the case of Sunidhi Consultancy Services vs. DCIT reported in [2012] 50 SOT 223 (Mum), it is observed that the claim of depreciation made by the assessee in these cases was in respect of shares issued by the Bombay Stock Exchange in lieu of membership cards under the .....

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r acquiring trading rights in Multi Commodity Exchange Ltd. The ld. Counsel for the assessee in this regard has relied on the decision of co-ordinate Bench of this Tribunal in the case of Pyramid Commodities vs. ITO rendered vide its order dated 28-8-2013 passed in ITA No 558/Mum/2011 for A.Y. 2007-08. In the said case, the assessee had paid a sum of ₹ 6,99,000/- to MCX and the amount so paid was claimed to be a revenue expenditure by the assessee. The ld. CIT(A), however, treated the same .....

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ee by the decision of the Tribunal in the case of Pyramid Commodities (supra) as well as the decision of Hon ble Supreme Court in the case of Techno Shares and Stocks Ltd. (supra) and respectfully following these judicial pronouncements, we direct the A.O. to delete the disallowance made by the A.O. and confirmed by the ld. CIT(A) on account of assessee s claim for depreciation on membership right of Multi Commodity Exchange. 2.2 In the aforesaid order the Tribunal has duly considered the decisi .....

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before us, thus, this ground is decided in favour of the assessee. 2.3 Our above decision will be applicable to the ground No.1 in the appeal No. 650/MUM/2014 for Assessment year 2010-11, therefore, this ground is allowed for Assessment year 2010-11 also. 3. The next ground raised pertains to disallowance of lease line charges amounting to ₹ 2,45,179/- under section 40(a)(ia) of the Act. The learned counsel for the assessee claimed that this issue is also decided by the Hon'ble Jurisd .....

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ot;2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the addition of Rs..10,08,586/- by holding that VSAT and lease line charges cannot be considered as rendering of technical services and hence provisions of section 40(a)(ia) were not attracted." 3.1 The issue is with reference to deletion of the addition of ₹ 18,08,586/- by holding that V-SAT and lease line charges cannot be considered as rendering of technical services, hence, provisi .....

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t in assessee's own case for the assessment year 2006-07 wherein the Hon'ble High Court upheld the orders of ITAT following its own decision in the case of CIT vs. Angel Capital and Debit Market Ltd. in Income Tax Appeal(L) No.475 of 2011 dated 28th July,2011. Since CIT's order is in line with the principle laid down by the Hon'ble High Court in this matter, the same is upheld. The Revenue ground is dismissed. It is noted that the Hon'ble Jurisdictional High Court vide order .....

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as under:- 3. By the impugned order dated 21st October, 2011 passed in the aforesaid appeal, the High Court of Bombay has held that the transaction charges paid by a member of the Bombay Stock Exchange to transact business of sale and purchase of shares amounts to payment of a fee for 'technical services' rendered by the Bombay Stock Exchange. Therefore, under the provisions of Section 194J of the Income Tax Act, 1961 (for short the Act ), on such payments TDS was deductible at source. .....

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understanding of both the assessee and the Revenue with regard to the liability to deduct TDS on transaction charges paid to the Bombay Stock Exchange right from the year 1995 i.e. coming into effect of Section 194J till the Assessment Year in question, benefit, in the facts of the case, should be granted to the appellant - assessee and the disallowance made by the Assessing Officer under Section 40(a)(ia) of the Act must be held to be not correct. 4. Aggrieved by the finding that transaction ch .....

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pplicable to the assessments in case of other assessees, such of the assessees who are aggrieved thereby have filed the other appeals before us. 5. The relevant provisions of the Act which have a material bearing to the issues arising for determination in the present appeals may now be noticed. Section 194J; Section 40(a)(ia) of the Act introduced by Finance (No.2) Act, 2004 with effect from 1st April, 2005; and Explanation 2 of Section 9(1)(vii) which are relevant for the purpose of the present .....

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other mode, whichever is earlier, deduct an amount equal to five per cent of such sum as income-tax on income comprised therein: ….............................. ….............................. Explanation.-For the purposes of this section,- (a)............................ (b) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9; ….............................. 40. Amounts not deductible. Notw .....

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ut any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of section 200: Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted in the previous year but paid in any subsequent year a .....

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... (b) ............... (c) ............... Explanation 2.-For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the .....

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itur a sociis, particularly, because the words technical services in section 9(1)(vii) read with Explanation 2 comes in between the words managerial and consultancy services . 7. Managerial and consultancy services and, therefore, necessarily technical services , would obviously involve services rendered by human efforts. This has been the consistent view taken by the courts including this Court in Bharti Cellular Ltd. (supra). However, it cannot be lost sight of that modern day scientific and t .....

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e and surveillance of the essential parameters connected with the trade including those of a particular/ single transaction that would lead credence to its authenticity is provided for by the Stock Exchange. All such services, fully automated, are available to all members of the stock exchange in respect of every transaction that is entered into. There is nothing special, exclusive or customised service that is rendered by the Stock Exchange. Technical services like Managerial and Consultancy se .....

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ock Exchange for which transaction charges are paid fails to satisfy the aforesaid test of specialized, exclusive and individual requirement of the user or consumer who may approach the service provider for such assistance/service. It is only service of the above kind that, according to us, should come within the ambit of the expression technical services appearing in Explanation 2 of Section 9(1)(vii) of the Act. In the absence of the above distinguishing feature, service, though rendered, woul .....

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carry out trading in securities in the Stock Exchange. The view taken by the High Court that a member of the Stock Exchange has an option of trading through an alternative mode is not correct. A member who wants to conduct his daily business in the Stock Exchange has no option but to avail of such services. Each and every transaction by a member involves the use of the services provided by the Stock Exchange for which a member is compulsorily required to pay an additional charge (based on the tr .....

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