2010 (3) TMI 1215 - AT - Income Tax

Summary

Issues involved: Appeal against order of ld. CIT(A) for Assessment Year 2005-06 regarding disallowance of depreciation on BSE Card and VSAT/leaseline charges u/s.40(a)(ia) of the IT Act, 1961.

Disallowed Depreciation on BSE Card:
The AO disallowed depreciation on BSE Membership Card, considering it a personal right, not a depreciable asset. The ld. CIT(A) allowed the claim based on Tribunal order. The revenue argued citing a Bombay High Court decision. However, the Tribunal referred to a Jurisdictional High Court ruling stating BSE Card did not qualify for depreciation u/s.32(1)(ii). Consequently, the depreciation claim was disallowed, reversing the CIT(A)'s decision.

VSAT and Leaseline Charges Disallowance:
The AO added charges to income u/s.40(a)(ia) for non-deduction of TDS on V-SAT and leaseline charges, considering them as "fees for technical services." The ld. CIT(A) deleted the disallowance, following a Tribunal order, stating the charges were for infrastructure use, not technical services. The Tribunal upheld this decision, emphasizing that stock exchanges provide facilities, not technical services, and dismissed the revenue's appeal.

Conclusion:
The Tribunal partly allowed the revenue's appeal, disallowing depreciation on BSE Card and upholding the deletion of disallowance on VSAT/leaseline charges. The decisions were based on legal interpretations and precedents, ensuring compliance with the IT Act provisions.