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Issues Involved:
1. Entitlement to depreciation allowance under section 32 of the Income-tax Act on the cost of the BSE membership card. 2. Charging of interest under sections 234A and 234B. Detailed Analysis: 1. Entitlement to Depreciation Allowance on BSE Membership Card: The primary issue in this appeal is whether the assessee is entitled to a depreciation allowance under section 32 of the Income-tax Act on the cost of the Bombay Stock Exchange (BSE) membership card. The assessee's claim for depreciation was disallowed by the Assessing Officer and upheld by the Commissioner of Income Tax (Appeals) [CIT(A)], who referred to the Supreme Court decision in the case of Sitalpur Sugar Works Ltd. v. CIT [1963] 49 ITR 160, indicating that depreciation under section 32, as applicable up to the assessment year 1998-99, is admissible only on tangible assets. The assessee argued that the BSE membership card is a capital asset and constitutes an apparatus for carrying on the business activity, thus qualifying for depreciation. The assessee cited the ITAT, Mumbai Bench decision in Techno Shares & Stocks Ltd., which allowed depreciation on the BSE membership card under the amended provisions of section 32 effective from the assessment year 1999-2000. However, the assessment year in question is 1998-99, and therefore, the old provisions apply. The Tribunal examined whether the BSE membership card qualifies as 'plant' under section 32. The Tribunal reviewed several precedents, including the Supreme Court's decision in Scientific Engg. House (P.) Ltd. v. CIT [1986] 157 ITR 86 (SC) and the Gujarat High Court's decision in CIT v. Elecon Engg. Co. Ltd. [1974] 96 ITR 672 (Guj.), affirmed by the Supreme Court in CIT v. Elecon Engg. Co. Ltd. [1987] 166 ITR 66. These cases established that 'plant' includes any apparatus used for business, provided it has some degree of durability and serves as a tool of the trade. The Tribunal noted that the BSE membership card does not meet the criteria for 'plant' as it lacks tangibility and is not subject to physical wear and tear. Instead, its value fluctuates based on market conditions and regulatory changes. The Tribunal concluded that the BSE membership card is an intangible asset, and depreciation on intangible assets was not allowable under section 32 for the assessment year 1998-99. Therefore, the Tribunal upheld the CIT(A)'s decision to disallow the depreciation claim. 2. Charging of Interest under Sections 234A and 234B: The second issue pertains to the charging of interest under sections 234A and 234B, which the assessee admitted to be consequential. The Tribunal directed the Assessing Officer to recalculate the interest chargeable while giving effect to its order. Conclusion: The Tribunal dismissed the assessee's appeal, confirming that depreciation on the BSE membership card is not allowable for the assessment year 1998-99, as it is considered an intangible asset. The interest under sections 234A and 234B is to be recalculated based on the Tribunal's order.
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