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TMI Blog2022 (5) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and by the learned Assessing Officer is erroneous and contrary to the law. The Commissioner of Income-tax (Appeals) for the purpose of computing tax on long term capital gains arising on sale of shares of Bombay Stock Exchange Limited erred in directing the assessing officer to take cost of shares at Rs 66,72,217/- (WDV on 01.04.2005, cut of assessment year 2005-06, the year in which BSE changed from AOP to company) instead of 2,98,51,108/- (original cost of acquisition of membership rights of the BSE). It is submitted that in accordance with the provisions of section 55(2) (ab) of the Act, the cost of acquisition of the membership rights of the exchange is deemed to be Cost of the shares received on demutualization. Therefore, in computing capital gains arising on sale of shares of Bombay Stock Exchange Ltd, the learned assessing officer ought to have allowed the cost of acquisition of Membership rights of the Exchange as cost of the shares sold. The conclusion arrived at by the Commissioner of Income-tax (Appeals) and by the learned Assessing Officer is erroneous, contrary to the law. 3. The learned Commissioner of Income-tax (Appeals) erred in directing the assessing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was observed by the Tribunal in paras 31 & 32 as under: 31. Coming to trading rights, we find that the value that can be assigned from out of the value of BSE card is only to the extent of deposit made. Trading right Is no doubt a business in commercial rights but value is equivalent to the quantum of deposit. The assessee is entitled to refund of the deposit. When the value is equal to a refundable deposit, how can such value of refundable deposit be depreciated when the value in reality does not come down. If the refundable deposit is deducted from the value, then the present value of trading right is nil. Under these circumstances, there is no value to the trading in commercial right entitling the assessee for deduction by way of depreciation. Hence, no depreciation can be granted on this right. Thus, we uphold the finding of the Revenue authorities. We now discuss the impact of the following sections: "55(2) For the purposes of sections 48 and 49, "cost of acquisition ' - (ab) In relation to a capital asset, being equity share or shares allotted to a shareholder of a recognised stock exchange in India under a scheme for demutualisation or corporatisation approved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely before the succession become the shareholders of the company in the same proportion in which their capital accounts stood in the books of the firm on the date of the succession; (c) the partners of the firm do not receive any consideration or benefit, directly or indirectly, in any form or manner, other than by way of allotment of shares in the company; and (d) the aggregate of the shareholding in the company of the partners of the firm is not less than fifty per cent of the total voting power in the company and their shareholding continues to be as such for a period of five years from the date of the succession;. (e) the demutualisation or corporatisation 'of a recognised stock exchange in India is carried out in accordance with a scheme for demutualisation or corporatisation which is approved by the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);] 47(xiiia) any transfer of a capital asset being a membership right held by a member of a recognised stock exchange in India for acquisition of shares and trading or clearing rights acquired by such member in that recognised stock exchange ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the arguments of the losing party. The relevant extract from the said book is reproduced hereunder: "We now turn to the wider question whether a precedent is deprived of its authoritative force by the fact that it was not argued or not fully argued, by the losing party. If one looks at this question merely with the eye of common sense, the answer to it is clear. One of the chief reasons for the doctrine of precedents that a matter has once been fully argued and decided should not be allowed to be reopened. Where a 'judgement is given without the losing party having been represented there isno assurance that all the relevant consideration have been brought to the notice of the court and consequently the decision ought not to be regarded as possessing absolute authority, even if it does not fall within the sub Silentio rule." (underlined for emphasis by me) Due to the above reason, I am not inclined to follow the ratio laid down in the said decision. Further, I find that in the concluding para of the said decision, the Bench has partially applied Section 55(2)(ab) of the Act and held that cost of trading rights will be NIL as per Section 55(2)(ab) of the Act, whereas for cost ..... X X X X Extracts X X X X X X X X Extracts X X X X
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