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TMI Blog2011 (7) TMI 1395X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be adjudicated by us as it is merely academic in nature. Accordingly, this ground of the assessee is not adjudicated. 3. Ground No. 2 pertains to disallowance of depreciation of stock exchange membership card. 4. Briefly the facts relating to raise this ground are that the assessee had stated that during the FY 1995-96, the assessee had purchased first BSE Membership Card for a sum of Rs. 2.00 crores and had incurred Rs. 13,25,000/- as incidental transfer expenses. During the course of assessment proceedings, the assessee had made a claim for depreciation on first stock exchange card amounting to Rs. 53,31,250/- on the ground that BSE Membership Card is a plant and an apparatus to carry on stock broking business and it is a tool of trade. The AO rejected the submissions of the assessee and disallowed the claim of depreciation. The CIT(A) confirmed the disallowance on the ground that the assessee is not entitled for depreciation on first BSE Membership Card purchased during the financial year 1995-06. Aggrieved by the order of CIT(A), the assessee is in appeal before the ITAT. 5. Before us the learned counsel for the assessee has canvassed that the issue unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal before ITAT. 10. The learned counsel for the assessee has submitted that this issue is covered by the decision of ITAT in assessee s own case in AY 2001-02 vide ITA No. 2950/M/05 3842/M/05, order dated 31st March, 2001, a copy of which has been filed on record. He has also submitted that this issue is also covered by the decision of ITAT Special Bench Delhi in the case of Amway India Enterprises Vs. DCIT, 111 ITD 112 (Del)(SB). On the other hand the learned DR, did not controvert the facts on record. 11. After hearing the learned representatives of the parties and perusing the record, we find that ITAT in AY 2001-02 (supra) remitted the issue back to the file of the AO with a direction to decide the issue afresh in the light of the decision of Special Bench in the case of DCIT Vs. Amway Enterprises, 111 ITD 112 (Del)(SB) after giving reasonable opportunity to the assessee. Since the issue under consideration is identical to that of AY 2001-02, we respectfully follow the decision of the ITAT in that year and in the light of that we set aside the order of CIT(A) and remit the matter back to the file of the AO to decide the issue afresh with identical direction as given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing assets like chairs, tables etc. would constitute expenditure for acquiring capital assets and cannot be allowed as revenue expenditure. We therefore uphold the order of the CIT(A) holding Rs. 15,78,972/- represents capital expenditure. 15. On the other hand, the learned DR, on the other hand, relied upon the orders of the authorities below. 16. After hearing both the sides, we find that the issue under consideration is identical to that of AY 2001-02 (supra), we respectfully follow the decision of ITAT in that year and in the light of we remit the matter to the file of the AO with a direction to decide the issue by examining the expenditure incurred by the assessee whether the same are revenue in nature or capital in nature and allow the expenditure, if revenue in nature, in the light of the decision of ITAT in AY 2001-02. Needless to say that the AO shall provide an opportunity of being heard to the assessee in the matter. Accordingly, this ground of appeal is treated as allowed for statistical purposes. 17. Ground No. 5 is in respect of disallowance of bad debts. 18. The AO had disallowed bad debts amounting to Rs. 58,76,826/- which was due from various parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the same are dismissed as not pressed. 24. Ground No. 8 is pertaining to levy of interest u/s 234D of the Act. 25. The assessee had received refund of Rs. 27,90,674/- on 29/08/03 and Rs. 10,25,030 on 30/09/03, which were withdrawn in the reassessment proceedings on account of various additions/disallowances. The AO charged interest u/s 234D on the said amounts. On appeal, before the CIT(A) the assessee had submitted that section 234D came into effect from 1st June, 2003. the provisions of section 234D do not apply to assessment year in question. It was contended that the law dealing with imposition of interest is substantive and not procedural law and, therefore, interest under s. 234D cannot be charged in respect of assessment years prior to coming into force of these provisions i.e. 2004-05. However, the CIT(A) held that Explanation to section 2343D clarifies where, in relation to an assessment year, an assessment is made for the first time under section 147 or section 153A, the assessment so made shall be regarded as a regular assessment for the purpose of this section. He, therefore, confirmed the action of the AO following the decision of ITAT in the case of Sardar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iss this ground. 31. Ground No. 3 is in respect of disallowance of bad debts amounting to Rs. 10,65,964/-. 32. The AO disallowed bad debts amounting to Rs. 10,65,904/- which was due from various parties for the secondary market transactions and was claimed by the assessee as bad debts u/s 36(1)(vii) r.w.s. 36(2) of the Act, on the ground that it does not fulfil the conditions of sec. 36(2). On appeal, the CIT(A) confirmed the action of the AO. 33. In AY 2002-03 similar ground raised by the assessee as Ground No. 5 and the same has been decided by us (supra). Since the issue is identical to that of the ground raised by the assessee in AY 2002-03, we respectfully follow the decision therein and in the light of that, we set aside the order of CIT(A) and allow the bad debts claim of the assessee. 34. In the result, appeal of the assessee is allowed. ITA NO. 1502/M/07 for AY 2004-05. 35. Ground No. 1 is in respect of disallowance of depreciation on the first stock exchange membership card. Similar ground is adjudicated by us in AY 2002-03 in Ground No. 2 (Supra). Since this ground is materially identical to that of AY 2002-03, following the conclusions drawn therein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not covered by the aforesaid exceptions. Further, in the case of CIT Vs. Anjum Ghaswala Others 252 ITR 1 (SC), the apex court held that the interest chargeable u/s 234A, 234B and 234C is mandatory in nature and there was no power to reduce or waive the same except in the conditions as prescribed under CBDT Circulars. As the appellant s case was not covered in any such conditions, the AO was justif ied levying interest u/s 234C of the Act. Accordingly, this ground of appeal is rejected. 41. Aggrieved by the order of CIT(A), the assessee is in appeal before the Tribunal. 42. Before us, the learned counsel for the assessee has submitted that the assessee has not committed any default for payment of advance tax and, therefore, charging interest u/s 234C is not justified. The payment of advance has to be calculated based on the estimation of the tax that has to be paid by the assessee. It is submitted that it had earned major income only during the last quarter and surge in come was totally unexpected and could not have been anticipated at all, therefore, it is difficult to anticipate what has to be paid. In support of assessee s case, the learned counsel for the assessee rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee to anticipate the events that were to take place in the next f inancial year and pay advance tax on the basis of those anticipated events. The amount of interest recovered from the assessee was to be refunded with interest in accordance with law. 46. The Hon ble jurisdictional High Court in the above case further observed that in our opinion, when the Supreme Court in Ghaswala s case [2001] 252 ITR 1 says that charging of interest under section 234B is mandatory, what is really means is that once the assessee is found liable to pay interest, then recovery of interest is mandatory and recovery of the interest cannot be waived for any reason. But for charging interest under that section, it has to be established that the assessee has committed default in payment of advance tax. In the case under consideration, neither the AO nor the CIT(A) has examined and brought on record that the assessee has committed default in payment of advance tax. After considering the facts of the case and in view of the decision of the Jurisdictional High Court in the case of Prime Securities Ltd. (supra), we remit the matter back to the file of the AO with a direction to examine and decide the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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