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TMI Blog2018 (1) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed assets. It is to be analysed by the AO if the assessee was claiming it to be a fixed asset, then what was the value of acquisition at the time of acquiring the membership and how the WDV of the assets have been worked out after its acquisition and also whether the assessee after acquiring it as investment has claimed any expenditure / deduction / claim against the said acquisition or not. We remand the matter to the file of the AO to adjudicate after consider the following : i) The date of acquisition of the membership with NSE / BGSE ii) The consideration, if any, for which the membership was acquired iii) What were the rights of the members of the stock exchange as per the rules and regulations prevalent at the time of acquisition and at the time of claim of depreciation iv) Whether the assessee has claimed any expenditure / deduction / claim etc., on the investment made in NSE / BGSE membership cards v) Effect of the decisions of the Mumbai Tribunal in Pavak Securities P. Ltd (2013 (9) TMI 608 - ITAT MUMBAI) and Sino Securities P. Ltd (2011 (11) TMI 535 - ITAT MUMBAI) vi) Whether the rules and regulations of BGSE / NSE relevant for the impugned assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 4 has reproduced the statement of fact and objection raised by the assessee which is as under : 4. The appellant in support of above grounds of appeal vide statement of facts, has stated as follows: The appellant, a company, filed its return of income for the A. Y. 2006-07 2007-08 on 29.11.2006 12.10.2007 declaring total loss of ₹ 74,38,928/- ₹ 85,84,107/-. The assessment was concluded U/s.143(3) of the act, on 30.12.2008 15.09.2009 accepting the loss declared. A notice U/s. 148 of the act was issued to the asessee on 15.02.2013. In response the appellant filed a return on 23.03.2013 declaring the same loss as was declared in the original return. The reasons for issue of notice U/s. 148 of the act was sought for. In response the Assessing Officer has furnished the following as reasons for issue of notice U/s. 148 of the act. REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT In this case the assessee company returned loss being depreciation loss of ₹ 74,38,928/- ₹ 85,84,107/- for the A.Y. 2006-07 2007-08 was accepted in scrutiny by the Assessing Officer. The loss was arrived by claiming depreciation, inter-alia, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 147 of the act could not have been invoked. It was further submitted to the Assessing Officer that, on merits depreciation is allowable on BGSE card and NSE card, since the same are intangible assets eligible for depreciation. Disagreeing with the claims and submissions, an order U/s. 143(3) r.w.s 147 of the act, has been passed on 03.03.2014, disallowing the depreciation on BGSE NSE cards. Aggrieved by the order, the appellant prefers this appeal. 04. The conclusion reached by the CIT (A) is as under: 5.2 In the case of Techno Shares Stocks Ltd. Vs. CIT (2010 327 ITR 323 (SC) the Hon'ble Apex Court has answered the question in affirmative that whether BSE Membership Card can be considered an intangible asset for the purpose of depreciation under Section 32(1)(ii) of the Income Tax Act, 1961 but put a rider that that judgment is strictly confined to the right of membership conferred upon the member under the BSE membership card during the relevant assessment years. In the case of Techno Shares Stocks Ltd Vs. CIT (Supra) the facts was similar to the appellant. In the referred case the vcase was reopened u/s 148 and the assessee file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready reference, we are reproducing herein below the order passed u/s.143(3) on 30.12.2008, which is as under : The assessee company filed its return of income on 29.11.2006 declaring a total loss of ₹ 74,38,928/-. The return was processed u/s.143(1) on 08.09.2008. Subsequently, the return was selected for scrutiny. Notices u/s.143(2) and 142(1) were issued and served on the assessee company. The assessee company is engaged in the business of Stock broking financial intermediary. During the course of assessment proceedings, various details as to financial statements, profit loss a/c, balance sheet, notes to accounts etc., were examined. After examination and verification of the details filed, the income returned is accepted. 06. From a perusal of the above, it is clear that the issue of depreciation has neither been considered by the AO nor any question was raised nor any adjudication has taken place in this regard. Therefore there was no occasion for the AO to form an opinion. In our view, the situation before us clearly falls within the four corners of Section 147 r.w.s.148, as the assessee has failed to disclose all the material facts necessary for asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at sense it is a licence or akin to licence in terms of section 32(1)(ii) of the 1961 Act. That, such a right vests i the exchange only on default / demise in terms of the Rules and Bye-laws of BGSE, as they stood at the relevant time. Our judgment should not be understood to mean they every business or commercial right would constitute a licence or a franchise in terms of section 32(1)(ii) of the 1961 Act. 09. The Ld. DR further submitted that any person after depositing the amount can become the member of BGSE / NSE and therefore BGSE / NSE memberships stand on a different premises and therefore the judgment of the Hon ble Supreme Court is not applicable. It was further submitted that the membership, if any, gets a premium on reselling the same. The membership card instead of depreciating will appreciate in value with the passage of time and it carries the goodwill, clients etc., Therefore, instead of depreciation, the card value will appreciate. 10. We have heard the rival submissions and perused the record, as also the written submissions filed before us. It is beyond cavil that the block assets included intangible assets, licences, franchises or any other business o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en: 13. The eligible criteria for the partnership firm, LLP and corporate company institution is given, and then the other eligibility criteria are mentioned as under : BMC Requirement SEBI vide circular No. CIR/MRD/DRMNP/36/2012 dated December 19, 2012 has enhanced the requirement of BMC for trading members with a view to realign the BMC requirements with the risk profiles of the stock brokers / trading members in case / derivative segment of the stock exchange. The revised BMC requirements as prescribed by SEBI vide their aforesaid circular are given below:- Sr. No. Categories Base Minimum Capital Deposit (in Rs. lakhs) 1. Only Proprietary trading without Algorithmic trading (Algo) 10 2. Trading only on behalf of Client (without proprietary trading) and without algo 15 3. Proprietary trading and trading on behalf of Client without Algo 25 4. All Trading Members/Brokers with Algo 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lations for the relevant years under consideration and the rules and regulations at the time of acquisition of membership, it is not possible to conclude whether the privilege which the assessee was having are similar to that of the privilege as available to BGSE membership during that period. In our view in the absence of this information, it is not possible for the bench to conclude anything for or against the assessee. 18. Further the assessee in Schedule VI claimed the same investment, whereas now the assessee is claiming depreciation by treating the investment as fixed assets. It is to be analysed by the AO if the assessee was claiming it to be a fixed asset, then what was the value of acquisition at the time of acquiring the membership and how the WDV of the assets have been worked out after its acquisition and also whether the assessee after acquiring it as investment has claimed any expenditure / deduction / claim against the said acquisition or not. 19. The bench is taking judicial notice of the fact that BGSE, has surrendered its registration certificate and is now registered as a company dealing in properties under the companies Act . Further, recently the Mumbai T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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