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TMI Blog2013 (8) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... n) vests in the Exchange only when a member commits default. Otherwise, he continues to participate in the trading session on the floor of the Exchange; that he continues to deal with other members of the Exchange and even has the right to nominate subject to compliance of the Rules. Moreover, by virtue of Explanation 3 to Section 32(1)(ii) the commercial or business right which is similar to a "licence" or "franchise" is declared to be an intangible asset. - Therefore, the right of membership, which includes right of nomination, is a "licence" or "akin to a licence" which is one of the items which falls in Section 32(1)(ii) of the 1961 Act. The right to participate in the market has an economic and money value. It is an expense incurred by the assessee which satisfies the test of being a "licence" or "any other business or commercial right of similar nature" in terms of Section 32(1)(ii) - Following decision of Techno Shares and Stocks Ltd. v/s CIT [2010 (9) TMI 6 - SUPREME COURT OF INDIA] - Decided against revenue. - ITA No.3112,3117/Mum/2011 - - - Dated:- 28-6-2013 - B Ramakotaiah and Amit Shukla, JJ. For the Appellant : Dr K Shivaram For the Respondent : Mr O P Sharm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. 5. Learned Departmental Representative, on the other hand, supported the order passed by the learned Commissioner (Appeals). 6. After carefully considering the rival submissions and the relevant findings of the Assessing Officer and the learned Commissioner (Appeals), we find that the Assessing Officer has worked out the disallowance based on the working as per Rule-8D. Such a calculation of disallowance has also been confirmed by the learned Commissioner (Appeals) even though Rule 8D was held to be not applicable in this year. The approach of the learned Commissioner (Appeals) cannot be held to be justified as the calculation of disallowance was based on Rule 8D only and the same cannot be sustained in the assessment year 2007-08 in view of the judgment of Hon'ble Jurisdictional High Court in Godrej Boyce Mfg. Co. Ltd. (supra). Neither the Assessing Officer nor the learned Commissioner (Appeals) has pointed out any defect in the working of the calculation of disallowance under section 14A furnished by the assessee and has not pointed out any specific expenditure incurred for earning of dividend income. In the absence of such a finding, we do not find any reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vehicles were taken on lease for the purpose of employees and the assessee has also paid fringe benefit tax on the lease rentals and also made its claim about depreciation and for allowing of lease rent as revenue expenditure. The learned Commissioner (Appeals), after incorporating altogether different set of facts, which has been reproduced from Pages-8 to 11 of the appellate order, dismissed the assessee s appeal in view of his finding given in Para 7.3. The sum and substance of his finding in the impugned order are as under:- i) The cars were not taken by the appellant on lease for its own business purpose. ii) There is no genuine lease between the lessor and lessee. iii) The Co-lessee i.e. the employee is paying back the appellant company the amount of loan taken for car and interest thereon in disguise of lease rental. iv) The appellant company is merely working as a conduit between its employees and the lessor company. v) The expenses are not the business expenditure of the appellant company. vi) The lease does not meet the tests as set out by the Special Bench in the case of Mid East Portfolio Management Ltd. V. DCIT (2004) 271 ITR (AT) 87. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in IDCS Ltd. (supra) has also laid down the law relating to allowance of depreciation on leased vehicles and whether it is for the business purpose or not. Therefore, in the interest of justice, we are of the considered opinion that the entire issue should be restored back to the file of the Assessing Officer for denovo adjudication. Consequently, we set aside the impugned order passed by the learned Commissioner (Appeals) and restore the entire issue back to the file of the Assessing Officer for fresh adjudication in the light of the judicial pronouncements of the Hon'ble Supreme Court in IDCS Ltd. (supra). 14. In the result, assessee s appeal is treated as allowed for statistical purposes. We now take up Revenue s appeal in ITA no.3117/Mum./2011. 15. In ground no.1, the Revenue has challenged the allowance of depreciation of Bombay Stock Exchange (BSE) and National Stock Exchange (NSC) Card on the ground that the same has ceased to exist in the financial year 2005 06 after demutualisation. 16. Brief facts, apropos the aforesaid issue, are that the assessee has claimed depreciation on membership rights of Stock Exchange i.e., BSE and NSE Card for sums aggregat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o disallowance under section 40a(ia) can be made. Further, detailed explanation was given with regard to the meaning of Professional Services and Fee for Technical Services as stipulated in section 194J. The Assessing Officer rejected the assessee s contentions after detailed reasoning as per the observation made in Pages-9 to 15 of the assessment order and held that V-SAT and lease line charges are technical services falling within the purview of section 194J and, therefore, liable for deduction of tax. Accordingly, he made disallowance under section 40a(ia) for sums aggregating to Rs 8,91,452. 24. Before the learned Commissioner (Appeals), the assessee relied upon the decision of Mumbai Bench of the Tribunal in Kotak Securities v/s ACIT, [2009] 25 SOT 440 and DCIT v/s Angle Broking, [2010] 3 ITR (Trib.) 294 (Mum.). The learned Commissioner (Appeals), relying upon these case laws, held that payment towards V-SAT and lease line charges cannot be treated as fees for technical services within the meaning of section 194J and, therefore, no disallowance under section 40a(ia) can be made. 25. Before us, both the parties agreed that this issue now stands decided by the Hon'ble Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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