9911796707
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Issues Involved:
1. Disallowance of depreciation on intangible asset. 2. Alternative plea for allowing capital expenditure as revenue expenditure. 3. Deletion of addition due to non-deduction of TDS on Bloomberg Data Services charges. 4. Applicability of section 2(22)(e) regarding deemed dividend. Summary: Issue 1: Disallowance of Depreciation on Intangible Asset The assessee challenged the disallowance of depreciation on an intangible asset amounting to Rs. 62,50,000/-. The Assessing Officer (AO) observed that the assessee, a share broker, purchased the entire clientele business of M/s. Ashmavir Financial Consultants Pvt. Ltd. (M/s. AFC) for Rs. 2.50 crores, booked as goodwill, and claimed 25% depreciation. The AO disallowed the claim, stating that goodwill does not find reference in section 32 of the Act and that the clientele business does not qualify as a depreciable intangible asset. The CIT(A) upheld the AO's decision, stating the payment was for the clientele business, not goodwill. The Tribunal, however, concluded that the right over 3709 clients constitutes a commercial right eligible for depreciation u/s 32(1)(ii), allowing the depreciation claim of Rs. 62,50,000/-. Issue 2: Alternative Plea for Allowing Capital Expenditure as Revenue Expenditure The assessee's alternative plea was that if depreciation is not allowed, the expenditure should be treated as revenue expenditure. Since the Tribunal allowed the depreciation claim, this ground was dismissed as otiose. Issue 3: Deletion of Addition Due to Non-Deduction of TDS on Bloomberg Data Services Charges The Revenue contested the deletion of an addition of Rs. 4,74,109/- made by the AO for non-deduction of TDS on Bloomberg Data Services charges. The CIT(A) held that the payment was for a subscription to a financial e-magazine, not liable for TDS. The Tribunal upheld the CIT(A)'s decision, confirming that the payment was a subscription fee and not subject to TDS. Issue 4: Applicability of Section 2(22)(e) Regarding Deemed Dividend The Revenue challenged the deletion of an addition of Rs. 1.40 crores treated as deemed dividend u/s 2(22)(e). The CIT(A) noted that similar additions were deleted in the previous year as the loan was in the ordinary course of business where lending was substantial. The Tribunal upheld the CIT(A)'s decision, referencing its earlier ruling that deemed dividend u/s 2(22)(e) applies only to shareholders, and the assessee-company was not a shareholder of NFSPL. Conclusion: The assessee's appeal was partly allowed, granting depreciation on the intangible asset, while the Revenue's appeal was dismissed.
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