2012 (5) TMI 745 - AT - Income Tax

Summary

Issues involved: Disallowance of depreciation on Membership card of Bombay Stock Exchange, disallowance of bad debts, disallowance u/s.14A, disallowance of entrance fee/subscription charges, rate of depreciation in respect of UPS, deletion of bad debts, disallowance u/s.40(a)(ia) for transaction charges and VSAT charges.

Disallowed depreciation on Membership card of Bombay Stock Exchange:
The assessee claimed depreciation on two Membership cards of the Bombay Stock Exchange, which was disallowed by the Assessing Officer (A.O.). The issue was found to be covered in favor of the assessee by the decision of the Hon'ble Supreme Court and the A.O. was directed to allow the depreciation on both Membership cards.

Disallowance of bad debts:
The A.O. disallowed bad debts claimed by the assessee, but it was contended that the issue is covered in favor of the assessee by the decision of the ITAT, Special Bench, Mumbai. The claim of bad debts was allowed as the issue stood covered in favor of the assessee.

Disallowance u/s.14A:
The A.O. disallowed expenses u/s.14A for earning dividend income, but it was noted that Rule 8D cannot be applied for the assessment year in question. The issue was restored to the A.O. for fresh adjudication in line with the principles laid down by the Hon'ble High Court of Bombay.

Disallowed entrance fee/subscription charges:
The issue of entrance fee/subscription charges paid to Otters Club was allowed as it was considered by the Hon'ble High Court of Bombay in a similar case and found to be covered by relevant decisions. The addition of the entrance fee was deleted.

Rate of depreciation in respect of UPS:
The A.O. restricted the depreciation claimed on UPS to 15%, but it was directed to allow depreciation at 80% based on the utilization of UPS as Automatic Voltage Controller, following a decision of the co-ordinate Bench of the ITAT.

Deletion of bad debts:
The deletion of bad debts was upheld based on a previous decision in the assessee's own case for a different assessment year.

Disallowance u/s.40(a)(ia) for transaction charges and VSAT charges:
The A.O. disallowed transaction charges and VSAT charges, but it was found that transaction charges were liable for TDS and VSAT charges were allowed based on relevant decisions. The order of the Ld. CIT (A) was partly reversed on this issue.

Conclusion:
The appeals were partly allowed for statistical purposes, with various issues being decided in favor of the assessee based on legal precedents and interpretations.