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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 ..... eration is covered in favour of the assessee in the case of M/s.Techno Shares Stocks Ltd. [ 2019 (8) TMI 1770 - ITAT MUMBAI ] hold that the cost of acquisition of shares of BSE Ltd. shall be the original cost of acquisition of membership card in terms of Section 55(2)(ab) of the Act even though assessee has claimed depreciation on the cost of membership card in the earlier years. As regards the period of holding of shares of BSE Ltd., find that as per clause (ha) inserted in Explanation 1 to Section 2(42A) of the Act by the Finance Act, 2003, period for which the person was a member of the recognised stock exchange in India immediately prior to such demutualisation or corporatisation shall also be included in period of holding of shares. In terms of the clear and unambiguous language of the section, hold that the period of holding of shares of BSE Ltd. shall be reckoned from the date of original membership of BSE and not from date of allotment of shares in BSE Ltd. We thus, agree with the view taken by the learned Judicial Member that the cost of shares will be original cost of the membership card in terms of Section 55(2)(ab) of the Act. - Decided in favour of assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is submitted that directions given by the Commissioner of Income-tax (Appeals) are without jurisdiction and ought to be deleted. 4. The appellant reserves the right to add to, alter or amend the grounds of appeal. 3. At the time of hearing, Ld. AR of the assessee brought to our notice facts of this case and fairly accepted that this issue under consideration is against the assessee as per the decision passed by the ITAT in assessee s own case in ITA.No. 6710/Mum/2011 dated 15.02.2017. 4. Ld.DR also agreed with the above proposition. 5. Considered the rival submissions and material placed on record, we observe that this issue under consideration on disallowance of depreciation on WDV of BSE membership card, the Coordinate Bench has already dealt with this issue in assessee s own case for the sake of clarity it is reproduced below:- 3. Issue No.1: After hearing both the parties we find that assessee has claimed depreciation amounting to Rs.15,04,143/- towards depreciation on membership rights which was disallowed by the AO because BSE has been demutualised and assets were taken over by BSE Ltd. w.e.f. 19-8-2005 and as per the scheme trading members may of ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge Board of India Act, 1992, (15 of-1992) shall be the cost of acquisition of his original membership of the exchange. Provided that the cost of a capital asset, being trading or clearing rights of the recognised stock exchange acquired by a shareholder who has been allotted equity share or shares under such scheme of demutualisation or corporatisation, shall be deemed to be nil. 2(42)(h) in the case of a capital asset, being trading or clearing rights of a recognised stock exchange in India acquired by a person pursuant to demutualisation or corporatisation of the recognised stock exchange in India as referred to In clause (xiii) of section 47, there shall be included the period for which the person was a member of the recognised stock exchange in India immediately prior to such demutualisation or corporatisation. 2 (42) (h)in the case of a capital asset, being equity share or shares in a company allotted pursuant to demutualisation or corporatisation of a recognised stock exchange in India as referred to in clause (xiii) of section 47, there shall be induced the period for which the person was a member of the recognised stock exchange in India immediately prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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);] 32. All these sections deal with computation of capital gains under Chapter--IV(E) i.e., section 45 to 55A of the Act. In our considered opinion, sections which are for the computation of capital gains, have no relevance on the allowability of depreciation. The argument of the assessee that it had taken the original cost of the share 1, while computing capital gain in a latter year, does not effect our decision. Thus, we uphold the order the Assessing Officer as confirmed by the Commissioner (Appeals) wherein depreciation on membership card has been denied. Therefore, following the above order, we decide this issue against the assessee. 6. With regard to Ground No. 2 the issue involved is provisions of section 55(2)(ab) of the Act as per which cost of acquisition of membership rights of the exchange is deemed to be the cost of shares received on demutualization. While computing the capital gains arisen on sale of shares of Bombay stock exchange rate, the cost of acquisition on membership rates of the exch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I find that such a partial application of section 55(2)(ab) of the Act is not correct application of Section 55(2)(ab) of the Act and such the same is not a good precedent. 33. As regards the reliance placed by the learned DR on the decision of M/s Pavak Securities Pvt. Ltd. vs. ITO in ITA No. 1803/Mum/2012, the same is distinguishable on facts as in that case, assessee had not argued and claimed that it was eligible to claim entire cost of acquisition of membership card while computing Long Term Capital Gains. Rather, assessee itself chose to claim only the WDV as the cost of acquisition of membership card. Such an action on the part of the assessee in that case cannot be said to be a valid binding precedent and thus, the same cannot help the cause of Revenue in the present case. 34. In light of the above discussion, I hereby hold that the cost of acquisition of shares of BSE Ltd. shall be the original cost of acquisition of membership card in terms of Section 55(2)(ab) of the Act even though assessee has claimed depreciation on the cost of membership card in the earlier years. 35. As regards the period of holding of shares of BSE Ltd., | find that as per clause (ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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