TMI Blog2006 (9) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... enue expenditure. By becoming a member, the assessee is permitted to make use of the facility provided in the Stock Exchange and hence it is only revenue expenditure. It is seen from the record that there is no dispute by the Revenue in respect of the annual fee paid by the assessee to the Coimbatore Stock Exchange. Thus, we are of the view that the Tribunal is right in holding that amount paid towards admission fee as well as contribution to infrastructure development is revenue expenditure and in view of the same, we answer the questions of law in favour of the assessee and against the Revenue. Hence the tax cases are dismissed. - R. BALASUBRAMANIAN AND P.P.S. JANARTHANA RAJA, JJ. For the Appellant : T. Ravikumar, Adv. in TC(A) Nos. 67 and 68 of 2003 and N.Srinivasan, Adv. in TC(A) No. 920 of 2005 For the Respondents/Defendant: V. Ramachandran, Sr. Counsel for Anitha Sumanth, Adv. In TC(A) Nos. 67 and 68 of 2003 and T. Ravikumar, Adv. in TC(A) No. 920 of 2005 JUDGMENT P.P.S. JANARTHANA RAJA, J. 1. The judgment of the court was delivered by P. P. S. JANARTHANA RAJA J.-T. C. (A) Nos. 67 and 68 of 2003 : The present appeals in T. C. (A) Nos. 67 and 68 of 2003 are filed under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income-tax (Appeals) allowed the appeal. Aggrieved by the order, the Revenue filed an appeal to the Appellate Tribunal. All the appeals relating to both the assessment years were taken up together and the same was dismissed by the Tribunal by a common order. 3. Learned standing counsel appearing for the Revenue submitted that the assessee had incurred expenditure towards payment of admission fees as well as infrastructure development fund paid to the Coimbatore Stock Exchange for the purpose of obtaining the right to trade in shares and the benefit derived by the assessee is of enduring nature. Hence the same is only a capital expenditure. The membership card is an asset and it gives the benefit of an enduring nature lasting beyond the assessee s closure of business. By making these payments, the assessee. Has been given the privilege to function within the premises of the Coimbatore Stock Exchange. Hence it is only capital in nature. To support the above contention, the Revenue relied on the following judgments: (a) in the case of Rajendra Kumar Bachhawat v. CIT [2005] 276 ITR 567 (Cal); (b) in the case of Satya Narain Modani v. ITO [2005] 272 ITR 138 (Raj); in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the objects, deals with other objects not included in clauses A and B. 7. The articles of association of the Coimbatore Stock Exchange Limited, deals with members. Article 3 states that only certain persons shall become the members of the exchange. Article 4 states that the membership shall constitute a permission from the Exchange to exercise the rights and privileges attached thereto. Articles 9 and 10 of the articles of association of Coimbatore Stock Exchange Limited reads as under: 9. Every applicant applying for the membership of the exchange shall pay an admission fee of Rs. 1,00,000 (Rupees one lakh only) or such higher amount as the council may fix from time to time. Further, he/it shall also pay such contribution for infrastructure development as the council may fix from time to time. 25 per cent. of the admission fee shall be paid to the exchange along with the application. 10.(a) Every member shall pay an annual subscription of Rs. 2,000 (Rupees two thousand only) or such other higher amount as may be fixed by the council from time to time. Such annual subscription prescribed under these presents shall be payable on admission and there after on or before 30th day of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, 192 (HL), where the learned Law Lord stated: when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think that there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital.' 10. This test, as the parenthetical clause shows, must yield where there are special circumstances leading to a contrary conclusion and, as pointed out by Lord Radcliffe in Commissioner of Taxes v. Nchanga Consolidated Copper Mines Ltd. [1965] 58 ITR 241 (PC), it would be misleading to suppose that in all cases, securing a benefit for the business would be, prima facie, capital expenditure 'so long as the benefit is not so transitory as to have no endurance at all'. There may be cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y becoming a member, the assessee is permitted to make use of the facility provided in the Stock Exchange and hence it is only revenue expenditure. It is seen from the record that there is no dispute by the Revenue in respect of the annual fee paid by the assessee to the Coimbatore Stock Exchange. 12. In the case of Alembic Chemical Works Co. Ltd. v. CIT reported in [1989] 177 ITR 377, the Supreme Court held as follows (headnote): The idea of 'once for all' payment and' enduring benefit' are not to be treated as something akin to statutory conditions; nor are the notions of 'capital' or 'revenue' a judicial fetish. What is capital expenditure and what is revenue are not eternal verities but must needs be flexible so as to respond to the changing economic realities of business. The expression 'asset or advantage of an enduring nature' was evolved to emphasise the element of a sufficient degree of durability appropriate to the context. There is also no single definitive criterion which, by itself, is determinative whether a particular outlay is capital or revenue. The 'once for all' payment test is also inconclusive. What is relevant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember of the Calcutta Stock Exchange. In that judgment, we find that there are no discussions or details available. Hence, with great respect, we are not agreeing with the same. 15. Learned counsel for the Revenue further relied on the Rajasthan High Court judgment reported in the case of Satya Narain Modani v. ITO [2005] 272 ITR 138 and also the judgment reported in the case of Ravindra Kumar Jain v. CIT [2003] 263 ITR 368 (Raj) . In the above cases, the issue involved is whether the membership of the stock exchange is a property and on its transfer whether capital gains tax is attracted or not. Another issue is that, when the assessee has transferred the membership card at a lower value than its market value, the difference should be taxed as gift under the Gift-tax Act or not. In both the judgments, the issue is entirely different from the present case. Hence, these judgments have also no relevance. 16. In view of the foregoing reasons, we are of the view that the Tribunal is right in holding that amount paid towards admission fee as well as contribution to infrastructure development is revenue expenditure and in view of the same, we answer the questions of law in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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