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TMI Blog1993 (11) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... right of the member is inalienable. Relying upon the decision of the Bombay High Court in the case of Mrs. Sejpal R. Dalai v. Stock Exchange [Writ Petition No. 2084 of 1989], it was contended that the membership of the Stock Exchange is a personal permission and this permission is not a property or an asset which can be transferred. The case of the assessee was distinguished by the CWT(Appeals) from the case relied upon by the assessee, and the issue was decided against the assessee, opining that the membership of Stock Exchange card is a property or an asset as per section 2(e) of the Wealth-tax Act as the word 'property' is a term of widest import as used in the Wealth-tax Act. She further opined that the membership of the Exchange cannot be equated on par with the membership of professional bodies like Institute of Chartered Accountants of India and Medical Association of India because unlike Chartered Accountants and practitioners, no qualification was necessary to be a nominee or heir of the Stock Exchange card. She further held so, in view of the fact that the membership card issued by the Association bestows upon the holder of the card certain rights and privileges, subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther to rule 6 which states that the right of membership is inalienable. The membership rules give to a member a right of nomination which shall be personal and non-transferable. This right under rule 11 can be exercised by a member of not less than 7 years standing who desires to resign. He may in turn nominate a member as set out in rule 11. In the case of deceased member, under rule 9, on his death, high right of nomination ceases and vests in the Exchange. There is, therefore, no property in membership." contended that in spite of the specific finding of the High Court that the membership is not a transferable right, and it is only a personal permission granted by the Stock Exchange to an individual member, the order of the ITO that the Stock Exchange card is a property under the Wealth-tax Act, 1957 (under section 2(e) of the Wealth-tax Act, and the confirmation of that view by the learned CWT (Appeals) is clearly a finding without merit and liable to be set aside. 6. Learned representative for the Department supported the orders of the revenue authorities. We have heard the rival submissions and gone through the orders of the revenue authorities and the decisions relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the sanction of the Governing Board nominate his own son eligible under these rules for admission to membership of the Exchange as a candidate for admission in his place. (b) The legal representatives of a deceased member or his heirs or the persons mentioned in Appendix C to these rules may with the sanction of the Governing Board nominate any person eligible under these rules for admission to membership of the Exchange as a candidate for admission in the place of the deceased member. In considering such nomination the Governing Board shall be guided so far as practicable by the instructions set out in Appendix C to these rules. Rule 17 deals with conditions of eligibility. It states that any person who is not less than 21 years and an Indian citizen can be elected as a member. It further states that in suitable cases regarding the nationality of a member can be relaxed with the prior approval of the Central Government. 17(iiA) as inserted by a Resolution dated 21-10-1991 and approved by the Government on 6-11-1991 prescribes educational qualification of a membership. It states that when a person who is either a matriculate of the educational qualification of 10+2+3 years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 states that the membership shall constitute a personal permission from the Stock Exchange to exercise the rights and privileges attached thereto subject to the Rules, Bye-laws and Regulations of the Exchange. Rule 6 states that the right of membership is inalienable. Though rule 6 states the right of membership as inalienable Rule 11 deals with nomination by an existing person. Rule 8 however, states that the right of nomination shall not be exercised by a former member who has been expelled or who has ceased to be a member under certain circumstances. Rule 11(a) deals with right of nomination of existing member. Rule 11(a) stated that any member who has a standing of not less than 7 years, if so desires to resign, be allowed to nominate a person eligible under these rules for admission to a membership of the Exchange as a candidate for admission in his place. In other words, it indirectly states that though rule 6 says that the right of membership is inalienable, rule 11(a) states that a member can select a person he desires. 11(a) first proviso states that a person of 7 years' standing if so desires to resign may, with the sanction of the Governing Board nominate his own son el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o select certain persons. 10. Coming to the decision of the Bombay High Court in the case of Mrs. Sejal R. Dalal we are of the view that this case is not applicable in the instant case of the assessee. In this case there was a professional misconduct on the part of the deceased member in holding himself as a partner of the firm and doing business in partnership's name, when in fact he was not a member. There was another highly speculative irregular dealing conducted by the deceased in the name of another firm M/s. Haresh Company. In the second mentioned dealing the amount involved was Rs. 32,34,900. Under these circumstances the Governing Board of the Stock Exchange cannot entertain by virtue of rule 15, the application approved by the legal heirs of HUFs in favour of the daughter-in-law Mrs. Sejal R. Dalal. As we have noted in the preceding paras, rule 15 of the Stock Exchange Rules, Bombay deals with dues and claims. This rule stipulates that the Governing Board cannot approve a nomination unless the nominating member or in the case of a deceased member, his legal representatives or heirs or any other persons mentioned in Appendix 'C' paid and satisfied in full dues of the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Supreme Court in the case of J. K. Trust v. CIT [1957] 32 ITR 535. In the years gone-by there was a notion that any right incapable of transfer or sale cannot be treated as a property. This notion has been set aside by the decision of the Supreme Court in the case of Purshottam N. Amarsay v. CWT [1973] 88 ITR 417. The old notion conceived from Roman English Law of property of saleable asset has been replaced by the theory of paper wealth. The latest addition to the property is in the field of "intellectual property". Perhaps, as now it stands this right to intellectual property is the most valuable and precious right. 12. In the preceding para, we have seen that the word 'property' has been widened so as to include even non-transferable assets. As far as the membership right of the Stock Exchange is concerned, it can be sold and the consideration received can be utilised in the manner prescribed in Rules, Bye-laws and Regulations. Under these circumstances the stand of the assessee that membership cannot be treated as a property under section 2(e) cannot be accepted. It may be mentioned that before the CWT (Appeals) the assessee did not place any material. 13. For the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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