2014 (4) TMI 665 - AT - Income Tax

Tribunal Decides on Revenue Appeal for Depreciation & Assessee Appeal for Loss Disallowance

The Tribunal allowed both the Revenue's appeal regarding depreciation on a BSE card and the assessee's appeal challenging the disallowance of a loss in ... Depreciation on BSE card – Held that:- The decision in Sino Securities P. Ltd. Versus Income-tax Officer [2011 (11) TMI 535 - ITAT MUMBAI] and Sunidhi Consultancy Services Ltd. Versus Deputy Commissioner of Income-tax 4(2), Mumbai [2012 (4) TMI 392 - ITAT MUMBAI] followed - assessee received the shares in lieu of BSE Membership card then whatever written down value was standing in the books of account of the assessee has been received by the assessee by way of shares and therefore, no shortfall arises to be claimed as depreciation – Decided in favour of Revenue. Disallowance of loss of open positions in the future and options segment – Held that:- The decision in CIT Versus M/s Woodward Governor India P. Ltd. & M/s Honda Siel Power Products Ltd. 2009 (4) TMI 4 - SUPREME COURT] followed - loss suffered as on the date of balance sheet is an item of expenditure u/s 37(1) of the Act - No adverse findings have been given by the AO so far as the method of accounting employed by the assessee is concerned - There is also no finding of the AO that the assessee is not following the method of accounting employed during the year under consideration consistently - the AO is directed to allow the loss – Decided in favour of Assessee. Issues:1. Revenue's appeal: Allowance of depreciation on BSE card.2. Assessee's appeal: Disallowance of loss in Future and Options segment.Revenue's Appeal - Depreciation on BSE Card:The Revenue appealed against the Ld. CIT(A)'s decision to allow depreciation on a BSE card. The Tribunal noted that a similar issue was decided against the assessee in a previous year. The Tribunal referred to the decisions in the cases of Sino Securities Pvt. Ltd. and Suinidhi Consultancy Services Ltd., where the issue was conceded in favor of the Revenue. Since the facts were identical, the Tribunal decided the issue against the assessee, allowing the Revenue's appeal.Assessee's Appeal - Disallowance of Loss in Future and Options Segment:The assessee challenged the disallowance of a loss in the Future and Options segment. The AO disallowed the loss, stating that the loss materializes only when the contract is squared off. The assessee relied on the decision of the Hon'ble Supreme Court in the case of CIT Vs Woodward Governor India Pvt. Ltd. and the Tribunal's decision in the case of Edelweisse Capital Ltd. The Ld. CIT(A) upheld the disallowance, citing a similar decision in the previous year. The assessee argued that the issue was covered in their favor by the Supreme Court's decision and cited further Tribunal decisions. The Tribunal analyzed the accounting method employed by the assessee and found no adverse findings by the AO regarding the method. Relying on the Supreme Court's decision and previous Tribunal rulings, the Tribunal directed the AO to allow the loss. Consequently, the assessee's appeal was allowed.In conclusion, both the Revenue's appeal and the assessee's appeal were allowed by the Tribunal. The decision was based on the specific legal arguments presented by each party and the precedents set by previous court judgments and Tribunal decisions.