Commissioner of Income-tax, Chennai v. Cholamandalam Securities Ltd
[Citation -2015-LL-0119-20]

Citation 2015-LL-0119-20
Appellant Name Commissioner of Income-tax, Chennai
Respondent Name Cholamandalam Securities Ltd.
Court HIGH COURT OF MADRAS
Relevant Act Income-tax
Date of Order 19/01/2015
Judgment View Judgment
Keyword Tags stock exchange membership card • commercial right
Bot Summary: 2254/Mds/2005 for the assessment years 2002-2003, and the same was admitted on the following question of law: Whether the Tribunal is right in holding that the stock exchange membership card is entitled to depreciation 2. The learned counsel on either side fairly submit that the question of law raised in this appeal has been decided in favour of the assessee and against the revenue by a decision of the Supreme Court in Techno Shares and Stocks Ltd. and others v. Commissioner of Income Tax, 327 ITR 323. In Techno Shares and Stocks Ltd. and others case, referred supra, the Supreme Court categorically held as under: ....... We hold that the said right of membership is a 'business or commercial right' which gives a non-defaulting continuing member a right to access the exchange and to participate therein and in that sense it is a licence or akin to licence in terms of section 32(1)(ii) of the 1961 Act. Our judgment should not be understood to mean that every business or commercial right would constitute a 'licence' or a 'franchise' in terms of section 32(1)(ii) of the 1961 Act. We answer the question at page 6 in the affirmative by holding that on the facts and circumstances of these cases the Tribunal was right in holding that depreciation was allowable on the cost of the membership card under section 32(1)(ii) of the 1961 Act. The above said view was reiterated by the Supreme Court in a subsequent decision in Commissioner of Income Tax v. Smifs Securities Ltd., 2012 348 ITR 302. In view of the law enunciated in the decisions cited supra, this appeal is dismissed by answering the substantial question of law against the Revenue and in favour of the assessee.


IN HIGH COURT OF JUDICATURE AT MADRAS DATED: 19.1.2015 CORAM HON'BLE MR.JUSTICE R.SUDHAKAR AND HON'BLE MR.JUSTICE R.KARUPPIAH T.C.(A).No.1108 of 2007 Commissioner of Income Tax Chennai. .. Appellant Vs. Cholamandalam Securities Ltd. Dare House No.2, NSC Bose Road Chennai 600 001. .. Respondent PRAYER: Appeal under Section 260A of Income Tax Act, 1961 against order of Income Tax Appellate Tribunal 'A' Bench, Chennai, dated 9.2.2007 made in I.T.A.No.2254/Mds/2005 for assessment years 2002- 2003. For Appellant : Mr.T.Ravi Kumar Senior Standing Counsel For Respondent : Mr.Venkat Narayanan for M/s.SUbbaraya Aiyar JUDGMENT (Delivered by R.SUDHAKAR, J.) Revenue has filed this appeal challenging order of Income Tax Appellate Tribunal 'A' Bench, Chennai, dated 9.2.2007 made in I.T.A.No.2254/Mds/2005 for assessment years 2002-2003, and same was admitted on following question of law: (2) Whether Tribunal is right in holding that stock exchange membership card is entitled to depreciation? 2. learned counsel on either side fairly submit that question of law raised in this appeal has been decided in favour of assessee and against revenue by decision of Supreme Court in Techno Shares and Stocks Ltd. and others v. Commissioner of Income Tax, (2010) 327 ITR 323. 3. In Techno Shares and Stocks Ltd. and others case, referred supra, Supreme Court categorically held as under: ....... We hold that said right of membership is 'business or commercial right' which gives non-defaulting continuing member right to access exchange and to participate therein and in that sense it is licence or akin to licence in terms of section 32(1)(ii) of 1961 Act. That, such right vests in exchange only on default/demise in terms of Rules and bye-laws of BSE, as they stood at relevant time. Our judgment should not be understood to mean that every business or commercial right would constitute 'licence' or 'franchise' in terms of section 32(1)(ii) of 1961 Act. We answer question at page 6 in affirmative by holding that on facts and circumstances of these cases Tribunal was right in holding that depreciation was allowable on cost of membership card under section 32(1)(ii) of 1961 Act. Accordingly, impugned judgment(s) of Bombay High Court is set aside and (3) appeal(s) filed by nominated non-defaulting continuing member stands allowed with no order as to costs. (emphasis supplied) 4. above said view was reiterated by Supreme Court in subsequent decision in Commissioner of Income Tax v. Smifs Securities Ltd., [2012] 348 ITR 302. 5. In view of law enunciated in decisions cited supra, this appeal is dismissed by answering substantial question of law against Revenue and in favour of assessee. No costs. (R.S.J.) (R.K.J.) 19.1.2015 Index : No Internet : Yes sasi To: 1. Assistant Registrar, Income Tax Appellate Tribunal Chennai Bench "A", Chennai. 2. Secretary, Central Board of Direct Taxes, New Delhi. 3. Commissioner of Income Tax (Appeals) - III Chennai. 4. Assistant Commissioner of Income Tax Company Circle I(3), Chennai. (4) R.SUDHAKAR,J. and R.KARUPPIAH,J. (sasi) T.C.(A).No.1108 of 2007 19.1.2015 Commissioner of Income-tax, Chennai v. Cholamandalam Securities Ltd
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