TMI Blog2016 (12) TMI 1134X X X X Extracts X X X X X X X X Extracts X X X X ..... ard of Ahmedabad Stock Exchange is liable to Wealth Tax Act in spite of Supreme Court decisions in Stock Exchange, Ahmedabad vs. ACIT (2001) 248 ITR 209 and Vinaj Bubna Vs. Stock Exchange, Mumbai (1999) 6 SCC 215 ? 3.0. The facts leading to the present appeal in nutshell are as under: 3.1. That the appellant-assessee is a share broker and is a member of Ahmedabad Stock Exchange. As a member, the Stock Exchange has given him Card which is called as Stock Exchange Card . For the AY 199192, the assessee submitted Wealth Tax Return, however treating the said Stock Exchange Card not an asset within the meaning of word asset as defined in Section 2(e) of the Wealth Tax Act, 1957 (hereinafter referred to as Act, 1957 ). Therefore, according to the assessee no tax was payable in respect of said Card. The Assessing Officer rejected the said contention and held that the Stock Exchange Card is liable to Wealth Tax. The learned CIT(A) agreed with the Assessing Officer. The learned Tribunal by impugned judgment and order has also confirmed the orders passed by the Assessing Officer confirmed by the learned CIT(A). Feeling aggrieved and dissatisfied with the impugned judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vations made in para 11 and 17 of the said decision, it is submitted by Shri Shah, learned advocate for the appellantassessee that in the said decision the Hon'ble Supreme after following decision in the case of Vinaj Bubna(supra) and in the case of Stock Exchange Ahmedabad 248 ITR 209, it is held that the Membership Card is only a personal privileges from the Stock Exchange to exercise the rights and privileges that may be given subject to Rules, Byelaws and Regulation of the Stock Exchange. It is submitted that in the said decision, the Hon'ble Supreme Court has again reiterated what was stated in the case of Vinaj Bubna (supra) and Ahmedabad Stock Exchange (supra248 ITR 209. Making above submissions, it is requested to hold that on the membership Card of the Ahmedabad Stock Exchange, the assessee is not liable to pay Wealth Tax, under the provisions of Wealth Tax Act as the same cannot be said to be an asset , as per Section 2(e) of the Act, 1957 and consequently to answer the question in favour of assessee and against the Revenue. 6.0. Present Appeal is vehemently opposed by Shri Nitin Mehta, learned advocate for the Revenue. 6.1. Shri Mehta, learned advocate f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is vehemently submitted by Shri Shah, learned counsel for the assessee that the decision of the Hon'ble Supreme Court in the case of Ms. Techno Shares and Stocks Ltd (supra) shall not be applicable to the facts of the case on hand as in that case the Hon'ble Supreme Court was considering Section 32(1)(ii) of the Income Tax Act and considering the provisions of Section 32(1)(ii) of the Income Tax Act, it was held that Membership Card is a License, which is included in Section 32(1)(ii) of the Income Tax Act. 7.1. It is further submitted by Shri Shah, learned counsel for the appellant-assessee that even if there is a conflict between decisions of the Hon'ble Supreme Court in the case of V.S. Kandalgaonkar and Ors (supra) and in the case of Ms Techno Shares and Stocks Ltd (supra), in that case, the decision of V.S. Kandalgaonkar and Ors (supra) shall prevail as the said decision is by a three Judge Bench and in a latter point of time. However, the decision of the Hon'ble Supreme Court in the case of Ms Techno Shares and Stocks Ltd (supra) is earlier decision in point of time and that it is by two Judge Bench. It is submitted that therefore, the decision of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is a non defaulting Member. 10. Now, so far as submission of Shri Shah, learned counsel for the assessee that if it is found that there is conflict between decisions of the Hon'ble Supreme Court in the case of V.S. Kandalgaonkar and Ors (supra) and in the case of Ms Techno Shares and Stocks Ltd (supra), in that case, the decision of V.S. Kandalgaonkar and Ors (supra) shall prevail and / or shall hold field is concerned, at the outset, it is required to be noted that there is no conflict between the decision in the case of V.S. Kandalgaonkar and Ors (supra) and decision in the the case of Ms Techno Shares and Stocks Ltd (supra). As observed herein above, in the case before the Hon'ble Supreme Court in the case of V.S. Kandalgaonkar and Ors (supra), it was case of defaulting Member and in the case before the Hon'ble Supreme Court in the case of Ms Techno Shares and Stocks Ltd (supra), it was case of non defaulting Member and therefore, as assessee is continued to hold the Card and is non defaulting Member, direct decision of the Hon'ble Supreme Court in the case of Ms Techno Shares and Stocks Ltd (supra) shall be applicable. 12. After considering the decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an expense incurred by the assessee which satisfies the test of being a licence or any other business or commercial right of similar nature in terms of Section 32(1)(ii). 20. Since heavy reliance is placed by the Department on the judgments of this Court in the following cases, we need to discuss those judgments and clarify the position in law: (i) Vinay Bubna v. Stock Exchange, Mumbai [(1999) 6 SCC 215] (ii) Stock Exchange, Ahmedabad v. Assistant Commissioner of IncomeTax [(2001) 248 ITR 209] 21. In the case of Vinay Bubna (supra), one Yogesh Mehta who was a member of BSE was declared a defaulter by the Exchange. An amount of ₹ 21.81 crores was due and payable by the defaulter to Vinay Bubna who had moved the Bombay High Court by way of an arbitration petition against Yogesh Mehta (defaulter). In the said proceedings, an application was filed for appointing a court receiver. The High Court did not grant to Vinay Bubna any relief in respect of the membership card of the defaulter member. In the said proceedings, Rule 16 was challenged on the ground that membership of BSE was an asset of the sharebroker and on its sale from the proceedings thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the deceased member, as a deemed defaulter . By the said resolution, the Board resolved that the membership rights of the deceased member who was declared to be a deemed defaulter should vest in the Stock Exchange and the said membership rights be disposed of by inviting offers within a minimum floor price of ₹ 25 lakhs. It is the said declaration dated 12th February, 1994 by which Rajesh Shah was declared to be a deemed defaulter came to be challenged. Another interesting fact which needs to be mentioned was that on 15th February, 1994 a provisional attachment order was passed under Section 281B of the 1961 Act in respect of the membership card in the name of Rajesh Shah. On 16th February, 1994, the Stock Exchange issued advertisement inviting claims from member creditors to lodge their claims within 30 days. They invited offers for purchase of membership also within the minimum floor price of ₹ 25 lakhs. On 5th December, 1994, ASE passed a resolution disposing of the membership right of the deceased in favour of UTI Security Ltd. for ₹ 27 lakhs. However, a garnishee notice was issued by the Department under Section 226(3) of the 1961 Act in the sum of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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