TaxTMI 
TaxTMI 
2011 (3) TMI 896
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....On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in ignoring the provision of section 41(1) and 38(iv) of the Income Tax Act." 2. The assessee is a company. It is engaged in the business of stock broking and share trading. The asessee was a member of the Bock Stock Exchange(BSE). Till A.Y. 2005-06 the assessee was claiming depreciation on BSE Card. The assessee has originally acquired the BSE Card for a sum of Rs. 1,30,00,000/-. The assessee has been claiming depreciation of BSE Card and was allowed depreciation. The WDV of the BSE Card as on 1/4/2005 was Rs.20,24,505.61. During the previous year consequent to Corporatisation and demutualization, the BSE become a Limited Company i.e., BSE Ltd. The m....
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....essee sells the shares of BSE Ltd. it would claim the cost of acquisition of the shares at Rs. 1,30,00,000/-, whereas the assessee has already availed the benefit of depreciation to the extent of Rs. 1,09,75,494/-(Rs. 1,30,00,000 - Rs. 20,24,506). According to the AO, therefore, the assessee had received a benefit to the extent of Rs.1,09,75,494/- in the form of recovery of depreciation already allowed on the BSE Card which would be taxable under section 41(1)(a) of the Act. Alternatively the AO was also of the view that the benefit received by the assessee is taxable under section 28(1)(iv) of the Act. 5. The AO was of the view that the depreciation was allowed to the assesse only because the orders of the ITAT in assessee's own ca....
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....the other hand, the cost of BSE shares would be original cost of BSE Card at Rs. 1,30,00,000/- and thus the assessee would get a double benefit is not correct, as the assesseee has sold the part of the shares, i.e. 6386 share and has taken the cost only at Rs. 12,99,235/- i.e. proportionate to I.T. written down value of the Card + 10,000/- and declared Long Term Capital Gain of Rs.3,17,66,801/- by taking the cost of 6386 shares at Rs. 12,99,235/- and indexing the same and thus it is very clear that the assesseee has not taken the cost of BSE shares at the original cost of Rs.1,30,00,000/-. The assessee enclosed a copy of computation filed with the Return of Income for A.Y 2008-09. 7. The CIT(A) held as follows: "1.3 I have g....
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....the basis of protective assessment made in the order of assessment is erroneous because the assessee has sold 6386 shares of BSE Ltd. out of 10000 shares of BEE Ltd., which it had got on Corporatization and demutualization of the BSE as a limited company, in the assessment year 2008-09. While computing capital gain on such transfer the assessee calculated its cost of acquisition on the basis of the written down value and Re.1 which had paid per share at the time of issue of shares by BSE Ltd. Thus the grievance of the revenue as projected by the AO is found to be non-existent in this case. With regard to the remaining shares of BSE Ltd. which the assessee holds the question of computation of capital gain would continue to be the same basis ....