TMI Blog2017 (4) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... e do not find any reason to interfere in the order of CIT(A) for deleting the loss claimed under the head ‘Mark to Market Loss’. Claim of depreciation on Customer Rights - Held that:- No reason to interfere in the order of CIT(A) for allowing claim of depreciation on customer’s right as held that the purchase of clientele business was a right which could be used as a tool to carry on business and therefore eligible for depreciation on the payments made, since it falls within the expression "any other business or commercial rights of similar matter" used in section 32(1)(ii) of the Income Tax Act, 1961. Disallowance u/s.14A - Held that:- We have considered rival contentions and found that the own funds of assessee (Rs. 555.45 crores) are sufficient to cover up the value of investment (Rs. 41.07 crores) so no interest disallowing is required to be made u/ s 14A of the Act. With regard to administrative expenses, the issue is covered vide order of the Hon’ble Tribunal in assessee’s own case A.Y.s 2008-09 to 2010-11.The matter has been sent back to the file of Assessing Officer for deciding the issue in accordance with the direction given by the Hon’ble Tribunal in case of siste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of shares of BSE Ltd. On facts and circumstance of the case and in law, the learned CIT(A) erred in allowing indexation benefit on shares of BSE Ltd. from the date of acquisition of shares instead of the date on which the corresponding BSE Cards were acquired. The said shares were allotted to the appellant on account of conversion of BSE cards into shares pursuant to demutualization of stock exchange. Accordingly the disallowance of indexed cost of acquisition of ₹ 28,91,234/- is bad-in-law and must be deleted. 3. The appellant company craves leave to add, to amend, alter/delete and/ or modify the above grounds of appeal on or before the final hearing. 2. The following grounds have been taken by revenue:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additions amounting to ₹ 58,84,763/- on a/c. of bad debt, relying on the decision of the Hon'ble Bombay High Court in the case of Shreyas S. Morakhia ignoring the fact that the same was accepted by the Department only due to low tax effect. 2. On the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in holding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant in the earlier years. To quote from the for A.Y, 2007-08: I have gone through the issue. The Hon'ble ITAT Special Bench's decision in the case of Shreyas Morakhia ITA No. 3374/Mum -4 for A.Y. 1998-99 order dated 16.07.2010 is in favour of the appellant. The Hon'ble ITAT Special Bench has also held as follows:- 32. Keeping in view all the facts of the case and the legal position emanating from the various judicial pronouncements as discussed above, we are of the view that the amount receivable by the assessee, who is a share broker, from his clients against the transactions of purchase of shares on their behalf constitutes debt which is a trading debt. The brokerage/ commission income arising from such transactions very much form part of the said debt and when the amount of such brokerage/transaction has been taken into account in computation of income of the assessee of the relevant previous year or any earlier year, it satisfies the condition stipulated in sec. 36(2)(i) and the assessee is entitled to deduction u/ s. 36(1)(vii) by way of bad debts after having written of the said debts from his books of account as irrecoverable. We, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in assessee s own case, we do not find any infirmity in the order of CIT(A). 10. With regard to deleting the addition of ₹ 2,60,86,082/-, the assessee had incurred net loss on account of Vanda transaction, amounting to ₹ 2,60,86,982/-. According to the assessee, such loss incurred when the clients disowned the transaction undertaken by the Broker. This occurred when there might be trade errors while executing the orders by the Broker or the client might fail to satisfy its contractual obligation. Such obligation which the broker had to compulsorily undertake was transferred to Vanda / Error account which could result into net profit/loss. 11. By the impugned order, CIT(A) after following the orders of the earlier years held that Vanda loss of ₹ 2,60,86,982/- is allowed as business loss after having the following observation:- 8.2 I have considered the matter. The' said matter had arisen in the' earlier years and had been' elaborately adjudicated upon in A.Y. 2007:08 to A.Y. 2010-11 by the CIT(A) drawing support from the decisions as cited. Since there is no change in the facts of the case as compared to the earlier years, following the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the 'cash segment with that in the futures segment. Accordingly, these losses would also not be considered as speculative in nature since hedging is specifically excluded from the ambit of the definition of speculative transaction vide section 43(5)(d). 13.1. The assessee further stated that both the decisions relied on by the A.O. has been dealt with by the Delhi High Court decision in the case of Woodward (supra). The said decision of the Delhi High Court has been upheld. by the Supreme Court in. CIT vs. Woodward Governor India P Ltd. 312 ITR 254 (SC). This is relied on by the assessee in the instant case. Lastly, the assessee relied on the orders of the CIT(A) for A.Y. 2009-10 and A.Y. 2010-11, wherein similar disallowances have been deleted. 14. By the impugned order CIT(A) held that the loss of ₹ 2,09,10,495/- was held to be business loss u/s.28 after observing as under:- 9.3 I have considered the matter. The facts of the case are similar to that in A.Y. 2009-10 and A.Y. 2010-11. In view of the similarity of facts and relying on the earlier orders of the CIT(A), it is held that the case of the appellant is covered by the judgement of the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entele business was a right which could be used as a tool to carry on business and therefore eligible for depreciation on the payments made, since it falls within the expression any other business or commercial rights of similar matter used in section 32(1)(ii) of the Income Tax Act, 1961. The facts in the case of the appellant being similar to the facts of the above cited case, the A.O. is directed to allow depreciation on the acquisition of customer rights. The depreciation claim of ₹ 54,06,776/- is accordingly allowed. 18. We have considered rival contentions. AO relied on his order for A.Y.2007-08. The issue is covered in favour of assessee vide orders of the Hon ble Tribunal in assessee s own case for A.Y.2007-08 in ITA No.168/Mum/2011 dated 21/01/2015 and A.Y.2008-09 to 2010-11 in ITA No.4581/Mum/2012, 7328/Mum/2011 and 6204/Mum/2013 dated 19/02/2016. Respectfully following the order of the Tribunal, we do not find any reason to interfere in the order of CIT(A) for allowing claim of depreciation on customer s right. 19. In the appeal filed by assessee, the assessee is aggrieved for disallowance u/s.14A. 20. We have considered rival contentions and found that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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