1. These appeals are preferred by the assessee against the order of the CIT(A) on a common ground that the CIT(A) has erred in not allowing depreciation on Bombay Stock Exchange (BSE) Card owned by the assessee.
2. During the course of the hearing, the learned Counsel for the assessee has invited our attention to the provisions of Section 32 of the IT Act, with the submission that the depreciation is allowable on know-how, patent, copy rights, trademarks, license, franchise or any other business or commercial rights of similar nature, being intangible assets acquired on or after 1st April, 1998. Since assessee has acquired right to trade on the floor of the stock exchange through BSE card, it is an intangible asset and the assessee is entitled for depreciation under Section 32 of the IT Act. The learned Counsel for the assessee, however, invited our attention to the following orders of the Tribunal and the judgment of different High Courts in which it has been held that the acquisition of card of BSE is a capital asset.Upendra M. Dalai v. Dy. CIT ITA No. 6202/Mum/1999 [reported at (2004) 83 TTJ (Mumbai) 828Ed.] (2) Ravindra Kumar Jain v. CIT (2003) 184 CTR (Raj) 391 : (2003) 132 Taxman 882 (Raj)J.P. Khandelwal v. Dy. CIT (4) Jagan Nath Sayal v. Asstt. CGT (2000) 67 TTJ (Del)(SB) 1 : (2000) 72 ITD 1 (Del)(SB) (5) V.G. Gajjar v. Dy. CIT (2005) 93 TTJ (Ahd) 70 : (2005) 1 SOT 702 (Ahd).
3. We have carefully perused the orders of the authorities below in the light of the aforesaid judgments and we find that it had been repeatedly held in series of orders of the Tribunal that the BSE card is a capital asset and whenever it is transferred a capital gain accrued therein. In the case of Upendra M. Dalai v. Dy. CIT (supra), the Tribunal has held that when the member puts his membership for sale and realizes substantial value, it is difficult to deny that valuable asset has been transferred. When the Bombay Stock Exchange is put on the same through nomination, personal privilege is converted into an asset and the consequential gain is eligible to tax. In the case of Ravindra Kumar Jain v. CIT (supra) their Lordships of the Rajasthan High Court have held that whenever a membership of the stock exchange which has some value in terms of money had been transferred for consideration less than its market value, it will be deemed to be a gift to a transferee and will attract the provisions of Section 4(1)(a) of the GT Act. Likewise, in the case of J.P. Khandelwal (supra), the Tribunal has held that the membership card of the stock exchange is an asset and profit arising out of the same is the income under the head of "Capital gain" and is taxable. Similar view was also expressed in the case of Jagan Nath Sayal v. Asstt. CGT (supra) in which it has been held that the shares in Delhi Stock Exchange should be separately valued apart from BSE membership card value and composite value of the share and ticket is to be adapted. In the case of V.G. Gajjar v. Dy.
CIT supra, the Tribunal has held that the membership card of the stock exchange is an asset within the meaning of Section 2(e) of the WT Act.
4. From the perusal of the aforesaid judgments, it has been made emphatically clear that the BSE card is a capital asset through which right to trade on the floor of the stock exchange is acquired by the assessee. Since it is an intangible asset within the definition of Section 32 of the IT Act, the assessee is entitled for depreciation thereon. We, therefore, find no merit in the disallowance made by the Revenue authorities. Accordingly, we set aside the order of the CIT(A) and direct the AO to allow the depreciation as per law.
5. So far as Appeal No. 1951/2004 is concerned, assessee has raised one more ground with regard to order of the CIT(A) in not directing the AO to carry forward the speculation loss of Rs. 42,416.
6. We have carefully perused the orders in this regard and we find that the AO has disallowed a sum of Rs. 42,416 which was loss incurred on account of assessee's own trading in shares. The AO having invoked the provisions of Section 73 and disallowed the loss incurred amounting to Rs. 42,416 on the purchase and sales of shares. Before the CIT(A), this disallowance was not agitated by the assessee and he confirmed the disallowance. Similar is the position before us and we, therefore, find no merit therein.
7. In the result, Appeal Nos. 4885/Mum/2005, 778 and 779/Mum/2004 are allowed and Appeal No. 1951/Mum/2004 is partly allowed.