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TMI Blog2012 (9) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. AR for the assessee argued that depreciation on BSE card is allowable in view of the judgment of Hon'ble Supreme Court in the case of Techno Shares & Stocks Ltd. vs. CIT (2010)(193 Taxman 248). The ld. DR on the other hand submitted that the said judgment of the Apex Court had been considered by the Mumbai Bench of the Tribunal in the case of Sino Securities P. Ltd. in ITA No.6264/M/09 for the assessment year 2006-07 order dated 23.11.2011, in which the Tribunal disallowed the claim of depreciation. In reply, the ld. AR for the assessee submitted that the said decision related to BSE card whereas the assessee had both BSE card and NSE membership cards. It was also submitted that depreciation in this case had been allowed in the earlier year and therefore depreciation has to be allowed and only in the year in which the asset is sold or discarded, demolished, destroyed, the money payable in respect of the asset has to be reduced from the WDV under the provisions of section 43(6). In the present case, it was pointed out that the card was neither sold nor discarded nor destroyed/demolished and therefore, depreciation had to be allowed on the basis opening WDV. It was further submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Office software for BSE cash, NSE cash and NSE derivative which had been taken from Financial Technologies India Ltd. The assessee had taken 97 such licences which had been installed at various branches, franchisee locations and the head office. Similarly, Rs.1,56,000/- had been claimed on account of Web Edition of Moneyware Integra to provide online information to PMS clients about the NAV and fund value status and various other related reports. The assessee during assessment proceedings submitted that the assessee had obtained licenses for different softwares and the expenditure was allowable as revenue expenditure. The AO, however, observed that with effect from assessment year 2003-04, software had been included in Appendix -1 in Income Tax Rules for providing depreciation @ 60%. He therefore, held that the expenditure was capital in nature and disallowed the same. He however, allowed depreciation @ 30%. In appeal CIT(A) following the decision in the earlier year confirmed the disallowance made by AO, aggrieved by which, assessee is in appeal before the Tribunal. 3.1 Before us, the ld. AR for the assessee submitted that, earlier, Special Bench of the Tribunal in case of Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. We, therefore, set aside the order of CIT(A) and allow the claim of the assessee as revenue expenditure. 4. The third dispute is regarding disallowance of rebate under 88E of the IT Act. The AO noted that the assessee had shown profit from derivative transactions at Rs.62,67,650/- and losses from share transactions at Rs.14,78,763/-. The assessee had claimed the deduction on account of Security Transaction Tax (STT) at Rs.7,87,431/- from gross profits. The AO for the purpose of allowing rebate on account of STT, computed income from share transactions and derivative transactions after allocating expenses towards these transactions. He thus computed profit from derivative transactions at Rs.30,89,407/- and loss from share transaction at Rs.22,28,624/-. He allowed rebate under section 88E @30% on the net income of Rs.8,60,783/- (30,89,407 - 22,28,624) which came to Rs. 2,58,235/- and balance claim was disallowed. In appeal CIT(A) obtained details of STT which was Rs.2,56,449/- in respect of derivative transactions and Rs.5,30,982/- in respect of share transaction. Since there was loss in respect of share transactions, CIT(A) held that rebate with reference to STT of Rs.5,30,982/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 449/-. We, therefore, see no infirmity in the order of CIT(A) and the same is, therefore, upheld. 5. The fourth dispute is regarding disallowance of claim of deduction of Rs.29.36 lacs claimed by the assessee against the share of profit in the branch. The assessee during the assessment proceedings explained that the assessee had opened a branch at Lokhandawala, Andheri, and since the assessee was finding it difficult to get a person as branch manager who could take care of the business, the assessee entered into an arrangement with M/s. J.S. Financial Services (in short, JSMS) to manage the activities of the branch. It was submitted that it was assessee's own branch where all assets and equipments belonged to the assessee. As per the arrangement, all policy decisions were to be taken at head office and day to day decision making was left to JSMS. The net profit after accounting all expenses of the branch but before tax was to be shared between the assessee and JSMS in the ratio of 65:35. The assessee further submitted that such type of payment was neither fees for professional services as prescribed under section 194J not it was covered as brokerage or commission under section 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding of AO that Shri K.P. Shroff was managing the entire affairs of the branch which was nothing but managerial services, therefore, provisions of section 194J were applicable and the claim was also not allowable under section 40(a)(ia) as the assessee had not deducted tax at source. CIT(A) accordingly confirmed the disallowance made by AO, aggrieved by which, the assessee is in appeal before the Tribunal. 5.3 Before us, the ld. AR for the assessee reiterated the submissions made before the lower authorities that arrangement made with M/s. J.S. Financial services was not a joint venture as the investments had been made by the assessee and policy decisions were taken by the assessee. The case was, therefore, different from the case of CIT vs. Panipat Woolen and General Mills Company Ltd. (supra). It was also submitted that, in case, the arrangement was treated as joint venture, the income has to be assessed as AOP and payment made to M/s. JSMS would be share of profit which can not be assessed in the name of the assessee. Reliance was placed on the judgment of Hon'ble High Court of Delhi in the case of CIT vs. Malibu Estate P. Ltd. (298 ITR 72). It was also pointed out, that in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eas in this case, the assessee was only sharing profit with M/s. JSMS who was managing only day to day affairs of the branch whereas policy decisions were taken by the assessee and the entire investments had also been made by the assessee. We, therefore, hold that the arrangement was not a case of joint venture. The authorities below have also disallowed the claim on the ground that the payment made to M/s. JSMS was of the nature of fees for professional services/ technical services on which tax was required to be deducted under section 194J and since assessee had not deducted tax at source, claim was not allowable under section 40(a)(ia). We agree with the authorities below that nature of work done by M/s. JSMS was professional or managerial in nature as they were managing day to day work of the branch by providing professional services. Therefore, provisions of Section 194J were applicable. However, the ld. AR for the assessee has brought to our notice a recent decision of the Special Bench of the Tribunal in the case of Merilyn Shipping and Transports vs. ACIT (16 ITR 01), in which case it has been held that the word "payable" used in section 40(a)(ia) has to be given its natura ..... X X X X Extracts X X X X X X X X Extracts X X X X
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