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TMI Blog2007 (1) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. CIT(A) has erred in confirming the order of the Assessing Officer that the depreciation was not allowable on stock exchange card. The error in confirming the order of the Assessing Officer occurred on account of the following reasons: (a) The ld. CIT(A) failed to appreciate that the decision in Vinay Bubna v. Stock Exchange, Mumbai 97 Comp. Cas. 874, 21 SCL 216 and in Stock Exchange, Ahmedabad v. Asstt. CIT 248 ITR 209/115 Taxman 471 have been rendered in a totally different context. (b) The ld. CIT(A) has erred in confirming the view of the Assessing Officer that section 47(xi) of the Income-tax Act is irrelevant. (c) The ld. CIT(A) has erred in not appreciating that the membership Card is in the nature of licence or franchise. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rposes of the business and hence the assessee was entitled to depreciation. He invited our attention to the decision of a co-ordinate Bench of this Tribunal 41 Techno Shares Stocks Ltd v. ITO [2006] 101 TTJ (Mum.) 349 in which it has been held that BSE card is a capital asset eligible for depreciation under section 32 of the Income-tax Act. 6. Ld. Departmental Representative, on the other hand, supported the order of the CIT(A). 7. We have considered the rival submissions. Section 32 provides for the conditions required to be satisfied for claiming depreciation. Sub-section (1) of section 32, insofar as it is relevant to us in the present case, reads as under: "32. Depreciation.-(1) In respect of depreciation of- (i) buildings, ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry other animate and inanimate object, business premises, machinery, plant, furniture and other specified assets employed by the assessee in the course of its business, profession etc., have a limited effective life. The vigour, strength, capability, etc. of every such asset gradually exhaust by the factors of use and time. They undoubtedly aid the assessee to earn the "income" from such business or profession, which is subjected to the levy of tax. Section 32 incorporates a provision for proper recompense of such diminution in the vigour, strength, capability, etc., in order to give a correct picture of the profits from the business, profession etc. Depreciation is thus a measure of the effective life of an asset owing to use or obsolescen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v) obsolescence. The factors listed above include not only those relating to physical deterioration but also those referring to the suitability of the asset as an economically productive unit after a period of time. In depreciation accounting, the cost of the asset is spread over the years of its usefulness in a systematic and sensible manner and in so doing all the aforesaid agents or causes of depreciation are taken into account before the true profits are ascertained (vide Accountancy by William Pickles, third edition., page 168, Accountants Hand Book by Dickson, fourth edition, section 17.2 and Principles of Accountancy by Filney and Miller, fifth edition, pages 282-90)." 10. It is quite clear from the aforesaid observations which hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ownership is vested in the Card-holder by the aforesaid rules, the assessee would not be eligible to claim depreciation. 12. We are in agreement with the submission of the ld. Authorized Representative for the assessee as also with the decision of a co-ordinate Bench of this Tribunal in Techno Shares Stock Ltd.'s case that Membership card issued by a Stock Exchange is a capital asset as the term "Capital asset" has been defined by section 2(14) of the Income-tax Act to mean property of any kind held by an assessee, whether or not connected with his business or profession. The term property is a term of wide import. As held in Rustom Cavasjee Cooper v. Union of India AIR 1970 SC 564, 591 and Ahmed G.H. Ariff v. CWT [1970] 76 ITR 471, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to whether the assessee can be said to be the owner of the card under the rules notified by the Bombay Stock Exchange. Reasonable opportunity of hearing shall be given to the assessee. Appeal filed by the assessee is treated as allowed for statistical purposes. ITA No. 7805/Mum./2003 13. Ground No. 1 taken by the assessee is identical with ground No. 1 taken by the other assessee in ITA No. 7804/Mum./2003. We have already restored identical issue to the file of the Assessing Officer for a fresh decision in terms of the directions given by us. Following the aforesaid order, the issue raised by the assessee in the present appeal is also restored to the file of the Assessing Officer for a fresh decision in terms of the aforesaid di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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