Tribunal rules in favor of assessee, directs AO to delete disallowances under Section 14A.

The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal in part. The AO was directed to delete disallowances under Section 14A exceeding Rs. 11.84 lakhs. The Tribunal ruled in favor of the assessee regarding the indexation benefit on the sale of shares of BSE Ltd. Additionally, the Tribunal upheld the deletion of additions on account of bad debts, depreciation on VSAT, Vanda loss, Mark to Market loss, and depreciation on customer rights. The order was pronounced on 31/03/2017.

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Issues Involved:
1. Disallowance under Section 14A
2. Disallowance of indexed cost of acquisition on sale of shares of BSE Ltd.
3. Deletion of additions on account of bad debts
4. Depreciation on VSAT
5. Deletion of addition on account of Vanda loss
6. Deletion of addition on account of Mark to Market (MTM) loss
7. Depreciation on Customer Rights

Detailed Analysis:

1. Disallowance under Section 14A:
The assessee contested the enhancement of disallowance under Section 14A by the CIT(A), arguing that the AO failed to provide cogent reasons for not accepting the disallowance already made by the appellant. The Tribunal found that the assessee's own funds were sufficient to cover the value of investments, thus no interest disallowance was required under Section 14A. The issue of administrative expenses was sent back to the AO for reconsideration based on the Tribunal's directions in a sister concern's case. The AO was directed to delete the disallowance exceeding Rs. 11.84 lakhs.

2. Disallowance of Indexed Cost of Acquisition on Sale of Shares of BSE Ltd.:
The assessee argued that the indexation benefit should be allowed from the date of acquisition of BSE Cards, not the date of conversion into shares. The Tribunal found the issue in favor of the assessee, following its own previous orders for earlier assessment years, and directed the deletion of the disallowance.

3. Deletion of Additions on Account of Bad Debts:
The CIT(A) allowed the assessee's claim for bad debts, referencing the ITAT Special Bench decision in the case of Shreyas Morakhia, which held that amounts receivable by a share broker from clients constitute trading debt. The Tribunal upheld the CIT(A)'s decision, citing the Bombay High Court's ruling in Shreyas S. Morakhia and other relevant case laws.

4. Depreciation on VSAT:
The AO had allowed depreciation on VSAT at 25%, treating it as a wireless communication device. The CIT(A), following earlier years' orders, allowed depreciation at 60%. The Tribunal upheld the CIT(A)'s decision, referencing its own previous rulings in the assessee's case.

5. Deletion of Addition on Account of Vanda Loss:
The CIT(A) allowed the Vanda loss as a business loss, following earlier years' orders. The Tribunal agreed, noting that the issue was covered by previous Tribunal decisions in the assessee's favor.

6. Deletion of Addition on Account of Mark to Market (MTM) Loss:
The CIT(A) treated the MTM loss as a business loss under Section 28, referencing the Supreme Court's decision in Woodward Governor. The Tribunal upheld this view, noting that the issue was covered by previous Tribunal and Supreme Court rulings.

7. Depreciation on Customer Rights:
The CIT(A) allowed depreciation on customer rights, referencing the ITAT decision in India Capital Markets (P) Ltd. The Tribunal upheld this decision, following its own previous orders in the assessee's case.

Conclusion:
The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal in part, directing the AO to delete certain disallowances and uphold the CIT(A)'s decisions on various issues. The order was pronounced in the open court on 31/03/2017.

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