2018 (11) TMI 388 - AT - Income Tax

Depreciation @25% on BSE Trading Right - treating the same as an intangible asset - Held that - As consequent to demutualization and corporatization Scheme of BSE, 2005, the shares were allotted to the assessee in lieu of the membership card and therefore, the depreciation against the same could not be allowed to the assessee. treating the same as an intangible asset. The issue, at present, stood covered against the assessee by the decision of this Tribunal rendered in Sino Securities (P.) Ltd. Vs ITO 2011 (11) TMI 535 - ITAT MUMBAI . Disallowance u/s 14A read with Rule 8D - Held that - As decided in ACIT Vs. Vireet Investment (P.) Ltd. 2017 (6) TMI 1124 - ITAT DELHI whereas it has been held that for the purpose of computing disallowance, only those investments which yielded exempt income during impugned AY were to be considered. Therefore, finding strength the argument of Ld. AR, the matter stand remitted back to the file of Ld. AO to verify the computations made by the assessee in this regard. The Ld. AO is directed to consider only those investments which have yielded exempt income during the year. The assessee, in turn, is directed to provide necessary computations in this regard. This ground stand allowed for statistical purposes. The appeal stand partly allowed for statistical purposes. Disallowance of dealing error - AO has disallowed the same invoking the explanation to Section 73 treating the same as speculation business loss - Held that - Both the lower authorities have proceeded on wrong footing in view of the fact that these were mere punching errors which arose in the normal course of brokerage business. The complete details of these transactions have already been placed in the paper-book. Viewing from any angle, these transactions cannot be said to have arisen out of speculation business as being concluded by the lower authorities. These losses have arisen on account of the fact that these are punching errors while executing the trades and considering the volume of overall business being carried out by the assessee, the proportion of these losses was very miniscule in nature. Therefore, by deleting the same, we allow this ground of appeal.

Issues:
1. Depreciation on BSE Trading Rights for AY 2010-11
2. Disallowance u/s 14A for AY 2010-11
3. Depreciation on BSE Trading Rights for AY 2011-12
4. Disallowance u/s 14A for AY 2011-12
5. Disallowance of dealing error for AY 2011-12
6. TDS credit discrepancy for AY 2011-12
7. Deduction under Chapter VIA for AY 2011-12
8. Interest charges u/s 234B and 234C for AY 2011-12

Depreciation on BSE Trading Rights for AY 2010-11:
The assessee claimed depreciation on BSE Trading Rights, but the AO disallowed it due to shares being allotted in lieu of membership card. The Tribunal dismissed the appeal based on a previous judgment.

Disallowance u/s 14A for AY 2010-11:
The AO disallowed expenses under section 14A. The Tribunal remitted the matter back to the AO to consider only investments yielding exempt income, following a Delhi Tribunal ruling. The appeal was partly allowed for statistical purposes.

Depreciation on BSE Trading Rights for AY 2011-12:
Similar to AY 2010-11, the AO disallowed depreciation on BSE Trading Rights. The Tribunal dismissed the appeal based on a previous judgment.

Disallowance u/s 14A for AY 2011-12:
The AO disallowed expenses under section 14A. The Tribunal remitted the matter back to the AO to consider only investments yielding exempt income. The appeal was partly allowed for statistical purposes.

Disallowance of dealing error for AY 2011-12:
The AO treated dealing error loss as speculation loss, but the Tribunal disagreed, stating it was a normal part of brokerage business. The appeal was allowed, and the loss was not considered as speculation loss.

TDS credit discrepancy for AY 2011-12:
The AO allowed a lower TDS credit than claimed, leading to a discrepancy. The Tribunal directed the AO to verify and allow the correct TDS credit as per law.

Deduction under Chapter VIA for AY 2011-12:
The AO denied a deduction under Chapter VIA, but the Tribunal directed to verify and allow the deduction as per law.

Interest charges u/s 234B and 234C for AY 2011-12:
The AO charged excess interest under sections 234B and 234C. The Tribunal directed the AO to re-compute the interest charges as per law.

This detailed analysis covers the various issues raised in the judgment, providing insights into the legal reasoning and outcomes for each matter addressed.

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