TMI Blog2020 (10) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has not been able to establish any special circumstances for an opposite conclusion in the present case - expenditure incurred was for acquiring and bringing into existence an asset or advantage of enduring benefit and not for running business to produce more profits. Hon'ble Delhi High Court in the case of Abhipra Capital Ltd. v. DCIT (Investigation) [2018 (2) TMI 1294 - DELHI HIGH COURT] on identical facts had decided the issue in favour of the revenue. Cases relied on by the learned A.R., had proceeded on the basis that assessee on incurring the expenditure for acquiring membership of a stock exchange has not become owner of any asset and therefore cannot be said that any enduring benefit had accrued to the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 143(3) of the Income-tax Act,1961 ['the Act' for short] (Order dated 29-1-2016), the admission fees was disallowed as a capital expenditure. The relevant observations of the A.O. are as follows: 4.3 -------------The amount paid in the nature of license fee/acquisition of any permit/other expenses etc, which are essential to commence a business are to be treated as capital expenditure.--- ** ** ** 4. Aggrieved by the assessment order, the assessee filed an appeal to the first appellate authority. Before the first appellate authority, it was submitted that ₹ 11,34,836/- paid as admission fees in a stock exchange is only a permission to do trading in shares and no capital asset is acquired by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le is to be deleted. 2.3 In any case, without further prejudice, the learned Authorities below have erred in treating the fees paid as license/right/membership. On proper appreciation of facts and the law applicable, the conclusions drawn by the Authorities below are wholly erroneous and is to be disregarded. 7. The Ld. A.R. reiterated the submissions made before the CIT(A). The Ld. A.R. also filed a compilation of case laws (i) (ii). The Compilation of case laws (ii) are judicial pronouncements that are not cited before the first appellate authority. The Ld. D.R. on the other hand, relied on the judgement of the Hon'ble Apex court in the case of Techno Shares and Stock Ltd. 327 ITR 323 (SC). 8. We have heard the rival submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereto. The said rule makes it quite clear that acquisition of membership in stock exchange by the assessee creates intangible right in its favour, which was also transferable by nomination. It is this membership of the stock exchange which enable the assessee the benefits and privileges of trading member of stock exchange, thereby enabling it to carry on its trade as a member of stock exchange. 8.1 In order to constitute a 'capital asset', the asset should generally have an element of permanency about it and should be capable of being a source of income. This distinction is well brought out by the definition of 'capital asset' given in section 2(14) of the Income-tax Act. Section 2(14) of the Income-tax Act defines ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he term 'property' includes even rights in personam capable of being transferred or transmitted. Rights conferred by the Stock Exchange on its members are in the nature of rights in personam which are capable of being transferred and transmitted and, therefore, they constitute property and thereby a 'capital asset' within the meaning of section 2(14) of the Income-tax Act. Membership of a Stock Exchange is not in the nature of stock-in-trade, consumable stores or raw materials held for the purposes of the business or profession or in the nature of personal effects and, hence, it cannot be excluded from the purview of being called a 'capital asset' within the meaning of section 2(14). Membership of a stock exchange no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or commercial right conferred by the rules of exchange. The membership right could be said to be owned by the member and used for the purpose of business. It was similar to a license or franchise and was to be treated as an intangible asset. Hon'ble Apex Court, held that assessee being the owner and as the said asset was used for the purpose of business was entitled to depreciation on the same. The Hon'ble Apex Court had examined the nature and character of membership card, which enabled the assessee to trade on the floor or as a broker of the stock exchange. It was held by the Hon'ble Apex Court that this membership was a business or a commercial right in the nature of license u/s 32(1)(ii) of the Act. The Hon'ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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