2010 (2) TMI 783 - AT - Income Tax

Depreciation on BSE Membership Card. - Held that - BSE Membership Card is not any one of the items of intangible items listed in section 32(1)(ii) of the Income-tax Act 1961 (the Act) and therefore depreciation cannot be allowed on the value of the BSE Membership Card. - Decided against Assessee.

Summary

Issues:
1. Rectification of order allowing depreciation on BSE Membership Card.
2. Applicability of subsequent decisions of higher forums on rectification applications.

Analysis:

Issue 1: Rectification of order allowing depreciation on BSE Membership Card
The Revenue filed a Miscellaneous Application (MA) requesting the Tribunal to rectify the order allowing depreciation on the BSE Membership Card claimed by the assessee. The Revenue argued that a decision by the Hon'ble Bombay High Court held that the BSE Membership Card did not fall under the intangible items listed in the Income-tax Act, and thus, depreciation should not be allowed. The assessee contended that the subsequent decision by the High Court should not give rise to a mistake apparent from the record. The Tribunal, citing the decision in the case of Saurashtra Kutch Stock Exchange Ltd., held that non-consideration of a decision by the jurisdictional High Court or the Supreme Court can be a "mistake apparent from the record" and can be rectified under the Act. The Tribunal emphasized that judicial decisions act retrospectively, and rectification is essential to uphold justice.

Issue 2: Applicability of subsequent decisions of higher forums on rectification applications
The assessee relied on the case of Mepco Industries Ltd. to argue against the rectification based on subsequent decisions. However, the Tribunal distinguished the case by highlighting that in the present matter, there was no dispute regarding the disallowance of depreciation on the BSE Membership Card post the decision of the Hon'ble Bombay High Court. The Tribunal concluded that the decision in the Mepco Industries Ltd. case would not assist the plea of the assessee. Consequently, the Tribunal allowed the Miscellaneous Application of the Revenue, thereby restoring the disallowance of depreciation on the BSE membership card made by the Assessing Officer.

In conclusion, the Tribunal upheld the rectification of the order, emphasizing the retrospective effect of judicial decisions and the importance of rectification to ensure justice. The decision reaffirmed the applicability of subsequent decisions by higher forums in rectification applications, particularly when there is no dispute regarding the issue at hand post the higher court's ruling.