BAKLIWAL FINANCIAL SERVICES (I) P. LTD, MUMBAI v. ADDL CIT RG 4(1), MUMBAI

ITA 6610/MUM/2009 | 2006-2007
Pronouncement Date: 07-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 661019914 RSA 2009
Assessee PAN AABCB4880F
Bench Mumbai
Appeal Number ITA 6610/MUM/2009
Duration Of Justice 1 year(s) 9 day(s)
Appellant BAKLIWAL FINANCIAL SERVICES (I) P. LTD, MUMBAI
Respondent ADDL CIT RG 4(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 07-01-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted J
Tribunal Order Date 07-01-2011
Date Of Final Hearing 23-12-2010
Next Hearing Date 23-12-2010
Assessment Year 2006-2007
Appeal Filed On 29-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI PRAMOD KU MAR (AM) ITA NO.6610/MUM/2009 ASSESSMENT YEAR : 2006-07 M/S. BAKLIWAL FINANCIAL SERVICES (I) PVT. LTD. 19/21 AMBALAL DOSHI MARG 63 BOMBAY MUTUAL CHAMBERS FORT MUMBAI-23. ..( APPELLANT ) P.A. NO. (AABCB 4880 F) VS. ADDL. COMMISSIONER OF INCOME TAX RANGE-4(1) MUMBAI. ..( RESPONDENT ) APPELLANT BY : SHR I ANIL J. SATHE RESPONDENT BY : MS. K USUM INGLE O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 21.10.2009 PASSED BY THE LD. CIT(A) FOR T HE ASSESSMENT YEAR 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF SHARE TRADING AND STOCK BROKIN G AND IS MEMBER OF NATIONAL STOCK EXCHANGE AND BOMBAY STOCK EXCH ANGE. DURING THE COURSE OF ASSESSMENT PROCEEDING IT WAS INTERALIA OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS CLAIMED DEPRECI ATION OF RS.7 23 483/- ON BOMBAY STOCK EXCHANGE (BSE) CARD. TH E ASSESSING OFFICER AFTER DISCUSSING THE ISSUE AT LENGTH WHILE OBSERV ING THAT THE DEPARTMENT HAS NOT ACCEPTED THE CLAIM OF DEPRECIATION ON MEMBERSHIP CARD IN EARLIER YEARS AND APPEALS ARE LYING BEFORE TH E HONBLE HIGH ITA NO.6610/M/09 A.Y:06-07 2 COURT DISALLOWED THE DEPRECIATION OF RS.7 23 483/- AN D ADDED TO THE INCOME OF THE ASSESSEE. APART FROM THIS THE ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE HAS SHOWN DIVIDEND INCOME OF RS.13 43 024/- WHICH HAS BEEN CLAIMED AS EXEMPT U/S.10(3 4) OF THE ACT. THE ASSESSING OFFICER AFTER CONSIDERING THE ASSESSEE'S EX PLANATION ON THE ISSUE OF APPLICATION OF PROVISIONS OF SEC.14A RE AD WITH RULE -8D FOLLOWED THE DECISION OF THE SPECIAL BENCH OF THE TRIBU NAL IN DAGA CAPITAL MANAGEMENT P. LTD. AND MADE DISALLOWANCE U/S.1 4A OF RS.1 22 56 999/- AS PER WORKING GIVEN AT PAGE-9 OF TH E ASSESSMENT ORDER AND ADDED TO THE INCOME OF THE ASSESSEE. 3. ON APPEAL THE LD. CIT(A) WHILE AGREEING WITH THE VIEW OF THE ASSESSING OFFICER THAT BOTH THE ISSUES CONFIRMED THE DISALLOW ANCE MADE BY THE ASSESSING OFFICER. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN BOTH THE GROUNDS THE SUSTENANCE OF DISALLOWANCE OF RS.1 22 56 999/- U/S.14A OF THE ACT. 5. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREED T HAT THIS ISSUE STANDS COVERED BY THE JUDGMENT OF HON'BLE JURISDICTIONA L HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD. VS. DCIT THEREFORE TH E ISSUE MAY BE DECIDED ACCORDINGLY. 6. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL P ARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND ME RIT IN PLEA OF THE PARTIES THAT THE ISSUE STANDS COVERED BY THE RECENT JUDGM ENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG . CO. LTD. VS. DCIT IN INCOME TAX APPEAL NO.626 OF 2010 AND WRIT P ETITION NO.758 OF 2010 DATED 12.8.2010 SINCE REPORTED IN (2010) 328 ITR 81 (BOM.) ITA NO.6610/M/09 A.Y:06-07 3 WHEREIN THEIR LORDSHIPS AFTER CONSIDERING THE DECISION O F THE TRIBUNAL IN DAGA CAPITAL MANAGEMENT PVT. LTD. (117 ITD 169 ( MUM)(SB) WHILE HOLDING THAT THE PROVISIONS OF SUB SECTIONS (2) AND (3) OF SEC.14A OF THE ACT ARE CONSTITUTIONALLY VALID HAVE HELD VIDE PLA CITUM 88(VI) APPEARING AT PAGE 138 OF THE ITR AS UNDER : (VI) EVEN PRIOR TO ASSESSMENT YEAR 2008-09 WHEN RULE 8D WAS NOT APPLICABLE THE ASSESSING OFFICER H AS TO ENFORCE THE PROVISIONS OF SUB SECTION (1) OF SECTION 14A. FOR THAT PURPOSE THE ASSESSING OFFICER IS DUTY BOUND TO DET ERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. THE ASSESSING OFFICER MUST ADOPT A REASONABLE BASIS OR METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMST ANCES AFTER FURNISHING A REASONABLE OPPORTUNITY TO THE ASSESSEE TO PLACE ALL GERMANE MATERIAL ON THE RECORD; RESPECTFULLY FOLLOWING THE ABOVE JUDGMENT WE SET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEN D BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER WHO SHALL DECI DE THE SAME AFRESH IN THE LIGHT OF THE DIRECTIONS OF THE HON'BLE JU RISDICTIONAL HIGH COURT IN THE ABOVE CITED CASE AFTER PROVIDING REASONABL E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND ACCORDINGLY THE GROUNDS TA KEN BY THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. ADDITIONAL GROUND TAKEN BY THE ASSESSEE IS AGAINST THE SUSTENANCE OF DISALLOWANCE OF DEPRECIATION OF RS.7 23 483/ - ON BSE CARD. 8. AFTER HEARING THE RIVAL PARTIES AND PERUSING THE M ATERIAL AVAILABLE ON RECORD WE FIND THAT THERE IS NO DISPUTE THAT ALL THE FACTS RELATING TO THIS ISSUE ARE BORNE OUT FROM THE RECORDS I.E. IN THE ASSESSMENT ORDER AND AS WELL AS IN THE ORDER OF THE LD. C IT(A) THEREFORE IN THE ABSENCE OF ANY OTHER CONTRARY MATERI AL PLACED ON RECORD BY THE REVENUE WE ADMIT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE. ITA NO.6610/M/09 A.Y:06-07 4 9. THE ISSUE OF DEPRECIATION ON BSE MEMBERSHIP CARD RAI SED IN THE ADDITIONAL GROUND OF APPEAL IS NO MORE RES INTEGRA AND IS COVERED BY THE DECISION OF THE HON'BLE APEX COURT IN TECHNO SHAR ES AND STOCK LTD. VS. CIT (2010) 327 ITR 323(SC) WHEREIN IT HAS BEEN HELD (HEADNOTES): HELD REVERSING THE DECISION OF THE HIGH COURT ON A CONSIDERATION OF THE BSE RULES THAT THE RIGHT OF MEMBERSHIP WAS A BUSINESS OR COMMERCIAL RIGHT AND COULD BE SAID TO BE OWNED BY THE ASSESSEE AND USED FOR BUSINESS PURPOSES IN TERMS OF SECTION 32(1)(II). T HE RIGHT OF MEMBERSHIP WHICH INCLUDED THE RIGHT OF NOMINATI ON WAS A LICENCE OR AKIN TO A LICENCE WHICH WAS ON E OF THE ITEMS WHICH FELL IN SECTION 32(1)(II). THE RIGHT T O PARTICIPATE IN THE MARKET HAD AN ECONOMIC AND MONEY VALUE. IT WAS AN EXPENSE INCURRED BY THE ASSESSEE WHICH SATISFIED THE TEST OF BEING A LICENCE OR ANY OTH ER BUSINESS OR COMMERCIAL RIGHT OF SIMILAR NATURE IN TERMS OF SECTION 32(1)(II). RESPECTFULLY FOLLOWING THE ABOVE AUTHORITATIVE PRONOU NCEMENT OF THE HON'BLE APEX COURT WE HOLD THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION ON BSE MEMBERSHIP CARD AND ACCORDINGLY THE ADDITIONAL GROUND TAKEN BY THE ASSESSEE IS ALLOWED. 10. IN THE RESULT ASSESSEE'S APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 7.1.2011. SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 7.1.2011. JV. ITA NO.6610/M/09 A.Y:06-07 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.