TMI Blog2021 (10) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... ities provided by stock exchange and no TDS was deductible u/s 194J of the Act. In view of the decision of the Hon ble Supreme Court in the case of Kotak Securities Ltd [ 2016 (3) TMI 1419 - SUPREME COURT] , no doubt, the claim of the assessee is liable to be allowable, hence, we ordered accordingly. Accordingly, this issue is decided in favour of the assessee against the revenue. Calculation of the long term capital gain for the period w.e.f. allocation of shares - contention of the assessee is that the indexation to calculate the capital gain is liable to be reckoned w.e.f allotment of BSE card and not from the date of BSE equity shares issued to the appellants - HELD THAT:- The Hon ble Third Member in case of M/s. Techno Shares Stock Ltd. [ 2019 (8) TMI 1770 - ITAT MUMBAI] has held that the period of holding of shares of BSE Ltd. shall be reckoned from the date of original membership of BSE and not from date of allotment of shares in BSE Ltd. Now it is clear that for computing the capital gain, indexation is liable to be considered from the date of original membership of BSE and not from the date of allotment of shares in BSE Ltd. By honoring the decision of Hon ble I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ER AMARJIT SINGH, JM: The assessee has filed the present appeal against the order dated 20.01.2012 passed by the Commissioner of Income Tax (Appeals)-09, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Y. 2008-09. 2. The assessee has raised the following grounds: - 1(a). On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-Tax(Appeals) erred in confirming the disallowance of additional amount of ₹ 2,98,258/- under the provisions of section 14A r.w.r. 8D of the Income Tax Rules, 1962 by rejecting the explanations and submission given by the appellant and the reasons assigned for doing so are wrong and contrary to the facts and circumstances of the case, provisions of Income Tax Act, 1961, and Rules made thereunder. 1(b). On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-Tax(Appeals) erred in confirming the disallowance of proportionate interest u/r 8D(2)(ii) [ i.e. ₹ 2,20,1 12 (3,58,615 - 1,38,503)] attributable to earning of tax free income without appreciating that the investments in shares and units of mutual funds have been made out of own f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a). On the facts and in the circumstances of the case and in law the learned Commissioner of Income-Tax (Appeals) erred in confirming the additions made for sub-brokerage paid to various parties to the extent of ₹ 1,40,611/- being the difference in the amount accounted for by the appellant in its books of accounts and the amount accounted for by the remisers and the reasons assigned by him for doing so are wrong and contrary to the facts and circumstances of the case, the provisions of Income Tax Act, 1961 and the Rules made thereunder. 4(b). On the facts and in the circumstances of the case and in law the learned Commissioner of Income-Tax (Appeals) failed to appreciate that the difference of ₹ 6,305/- in the amount of sub-brokerage paid was due to the double deduction of tax at source while making payment to M/s Krupa Investment Co. and difference of ₹ 1,34,306/- in the case of Kiran N Shukla was on account of the opening balance appearing in the books of accounts of remiser as on 1.4.2007 which was inadvertently considered by the remiser while responding to notice u/s 133(6) of the Income Tax Act, 1961. 4(c). Without prejudice to above the learned Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,98,258/- was added to the income of the assessee. The assessee has also incurred the expenses on leaseline amounting to ₹ 26,938/-. The same was disallowed in view of the provisions u/s 40a(ia) of the Act and added to the income of the assessee. The bad debts in sum of ₹ 8,76,079/- was also added to the income of the assessee. The assessee claimed the capital gain on share of BSE in sum of ₹ 2,64,75,092/- which was also disallowed and added to the income of the assessee. Sub-brokerage in sum of ₹ 37,87,578/- was also disallowed and added to the income of the assessee. After some more addition and disallowance, the total income of the assessee was assessed in sum of ₹ 7,82,50,992/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who partly allowed the claim of the but the assessee was not satisfied on the grounds mentioned above, therefore, the assessee has filed the present appeal before us. ISSUE No.1 4. Under this issue the assessee has challenged the disallowance in view of the provisions u/s 14A r.w. Rule 8D of the Rule. It is also argued by Ld. Representative of the assessee is that its own funds is more than the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Kotak Securities Ltd (supra), no doubt, the claim of the assessee is liable to be allowable, hence, we ordered accordingly. Accordingly, this issue is decided in favour of the assessee against the revenue. ISSUE No. 3 6. Under this issue the assessee has challenged the calculation of the long term capital gain for the period w.e.f. allocation of shares. However, the contention of the assessee is that the indexation to calculate the capital gain is liable to be reckoned w.e.f allotment of BSE card and not from the date of BSE equity shares issued to the appellants. In support of these contentions, the Ld. Representative of the assessee has placed reliance upon the Third Member decision in the case of M/s. Techno Shares Stock Ltd. Vs. ACIT in ITA. No.5938/Mum/2012 date 30.08.2019, wherein it was held as under:- 24. I have heard the rival submissions and considered the material on record. Ostensibly, the facts have been succinctly noted in the earlier paras, and there is no dispute on facts. The controversy before me is whether the cost of shares allotted to members of BSE pursuant to its corporatisation/ demutualisation should be computed as per S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer is that since the assessee has claimed depreciation on the cost of membership card, the computation of Capital Gains on sale of shares of BSE Ltd. will be governed by Section 50 of the Act, which provides for calculation of Capital Gains on assets forming part of the block of assets and on which depreciation has been allowed under this Act. The relevant extract of Section 50 of the Act reads as under: *Special provision for computation of capital gains in case of depreciable assets. 50. Notwithstanding anything contained in clause (42A) of section 2, where the capital asset is an asset forming part of a block of assets in respect of which depreciation has been allowed under this Act or under the Indian Income-tax Act, 1922 (11 of 1922), the provisions of sections 48 and 49 shall be subject to the following modifications : (underlined for emphasis by me) As is evident from a perusal of Section 50 of the Act, in order to get governed by the provisions of Section 50 of the Act, twin conditions need to be satisfied; namely, the capital asset must be an asset forming part of block of assets; and, depreciation must have been allowed on the said assets under the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lined for emphasis by me) The above analysis clearly reveals that while interpreting the taxing statute, nothing is to be assumed, nothing is to be implied. One has to only look at the language used in the statute. The interpretation which prevailed with the learned Accountant Member will require assumption to the fact that the legislature never intended the double deduction. However, on a plain reading of the section, there is no ambiguity, a facet, which even the learned Accountant Member agrees to. The interpretation accepted by the learned Accountant Member will require one to go beyond the language employed in the section, even when there is no ambiguity in the text of Section 55 of the Act. The above aspect also gets support when one is to consider the provisions of Section 50 and 55(2)(ab) of the Act, as the following discussion would show. I further find that provisions of Section 50 of the Act are general in nature and does not provide for any case specific situation. The provisions of Section 55(2)(ab) of the Act were subsequently brought into statute book and specifically provides for cost of acquisition of the shares allotted to the members of the BSE pursuant to the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble, then the moot question which arises is as to what was the purpose of insertion of Section 55(2)(ab) of the Act. It is a well settled principle of interpretation that all the sections dealing with the same subject should be given effect to in such a way that none of the sections are rendered infructuous. If I interpret the provisions of Section 50 and Section 55(2)(ab) of the Act the way the learned DR has canvassed, it will surely make the provisions of Section 55(2)(ab) of the Act redundant and infructuous, an approach which ought to be avoided, especially when the language of Section 55(2)(ab) of the Act is unambiguous and clear. 29. At this stage, it would also be important to refer the cases, which arose in a situation wherein the cost of purchase of fixed assets by the Charitable Trusts was allowed as application of income in the year of purchase and on the same cost of purchase, the Trusts were allowed depreciation in subsequent year, leading to making of a charge of double deduction by the Assessing Officer. The matter travelled upto the Hon ble Supreme Court in the case of Rajasthan and Gujarati Charitable Foundation (supra) and the Trust s claim of both application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee as computed under Chapter IV. Thus, for example, section 80A provides : In computing total income of an assessee, there shall be allowed from his gross total income, the deductions specified in sections 80C to 80U. These are additional deductions. They are quite different in kind from deductions which fall under Chapter IV. Under section 80J what is provided is an additional deduction which is calculated as a percentage of the capital employed by the assessee in certain undertakings as set out in section 80J. Section 80J(1A)(II) prescribes the manner of ascertaining the value of such capital assets. The assets which are to be taken into account for computation of capital are also specified in that section. These include under sub-clause (i) of section 80J(1A)(II) assets entitled to depreciation. In that case their written down value has to be taken into account. It also includes assets which are acquired by purchase and which are not entitled to depreciation, such as, assets in the present case. In the case of such assets, we have to take into account the actual cost of such assets to the assessee. Since the assets are acquired by the assessee by purchase, the actu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be of the same nature and thus, the ratio of the Hon ble Supreme Court in the case of Escorts Ltd. (supra) cannot be said to be militating against the position canvassed by the assessee. 30. I may also refer to the reasoning taken by the Hon ble Madras High Court in the case of Kali Aerated Water Works vs. CIT, 242 ITR 79 (Mad), in the context of Section 50 of the Act, which was to the effect that Section 50 will apply only to cases where the depreciation had been obtained by the assessee . The assessee before the Hon'ble Madras High Court was the new partnership firm formed after dissolution of the old firm. The case of the Revenue was that the WDV as on the date of dissolution of the firm was to be adopted for the purposes of calculation of Capital Gain, which was resisted by the assessee therein. The claim of the Revenue, based on Section 50 of the Act, was negatived by the Hon'ble High Court on the ground that the assesseefirm had not obtained depreciation after the asset became property of the newly constituted firm, which was the assessee therein. Applying the same analogy, it is quite pertinent to find herein that the asset, which is the subjectmatter of conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion this bench cannot suo-moto put certain conditions to take away the benefit granted by the statute even when the same may lead to double deduction. Such an act on our part will be without jurisdiction, and without authority of law. 32. As regards the reference made by the learned Accountant Member and learned DR on the decision of our co-ordinate in case of Twin Earth Securities (P.) Ltd. vs. ACIT 66 taxmann.com 258, I find that in that case none appeared on behalf of the assessee therein and as such, arguments of the losing party were not articulated before the bench. In this regard, it is pertinent to refer to the reliance placed by the learned Representative for the assessee on the book of P. J. Fitzgerald, M.A. named Salmond on Jurisprudence to argue that when the matter is not argued or is not fully argued, the same cannot be taken as valid precedent as in that case, the court did not have the occasion to consider the arguments of the losing party. The relevant extract from the said book is reproduced hereunder: We now turn to the wider question whether a precedent is deprived of its authoritative force by the fact that it was not argued or not fully argued, by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisation shall also be included in period of holding of shares. In terms of the clear and unambiguous language of the section, I hold that the period of holding of shares of BSE Ltd. shall be reckoned from the date of original membership of BSE and not from date of allotment of shares in BSE Ltd. 36. I thus agree with the view taken by the learned Judicial Member that the cost of shares will be original cost of the membership card in terms of Section 55(2)(ab) of the Act. 37. In view of the foregoing discussion, the questions put forth before me are answered in the positive and in favour of the assessee. The decision arrived at by learned Judicial Member is the appropriate view, and I concur with the view adopted by the learned Judicial Member on this issue. 38. The Registry of the Tribunal is directed to list this appeal before the Division Bench for passing an order in accordance with the majority view. The Hon ble Third Member in case of M/s. Techno Shares Stock Ltd.(supra) has held that the period of holding of shares of BSE Ltd. shall be reckoned from the date of original membership of BSE and not from date of allotment of shares in BSE Ltd. Now it is clear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) on this issue and allow the claim of the assessee. Accordingly, this issue is decided in favour of the assessee against the revenue. ISSUE No. 5 8. Under this issue the assessee has challenged the reduction of rebate u/s 88E to ₹ 23,33,544/- as against of ₹ 31,39,647/- claimed by the appellant. The contention of the assessee is that the bad debt expenses in sum of ₹ 876,079/- and Telephone Expense of ₹ 669,353/- nowhere rise in account trading share. The said disallowance is unjustifiable. However, on the other hand, the Ld. Representative of the Department has strongly passed by the CIT(A) in question. The working of the AO is as under:- 2. The learned Assessing Officer calculated rebate as under: Share Trading Income (A)-1,74,18,853/- Proportion of Share Trading income to total income-76% Total Expenses-₹ 101,25,989/- Proportionate Expesnes 76% (B)-₹ 76,95,752/- Eligible Income (A-B)-₹ 97,23,101 Rebate u/s 88E (Average 24%)-₹ 23,33,544/- However, the working of the AO has been confirmed by CIT(A), the said working nowhere demonstrate about the bad debts expenses, therefore, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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