AI Drafter 
TaxTMI 
TaxTMI 
2015 (10) TMI 2121
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....the persons defined under section 40A(2)(b) on which no interest was charged. It was also noticed by the AO that the assessee had paid interest of Rs. 3,12,819/- on account of overdraft from bank. The AO worked out the peak debit in respect of above stated three persons and bank overdraft on the relevant debt and arrived at a conclusion that the assessee had paid the borrowed funds from bank and had paid the amount on behalf of the above stated three persons in respect of settlement of payment on 'Pay on debts' of the stock exchange. The AO worked out the interest expenditure on the amount paid by the assessee on account of the above stated three person at Rs. 9,13,571/- which was more than the interest of Rs. 3,12,819/- paid on overdraft from bank. Therefore, the AO restricted the disallowance of interest at Rs. 3,12,819/- holding it to be unreasonable and excessive as per the provisions of section 40A(2)(b) read with section 36 of the Act. 4. In appeal, The Ld. CIT(A) also agreed with the findings of the AO that the assessee had used its funds in settlement of payment of above stated specified persons. He, therefore, held that the interest bearing funds were used by the as....
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....rights. The cost of new trade rights and license was to be considered at nil as per proviso to section 55(2)(ab) of the Act. He, therefore, observed that since the value of stock membership card was deemed to be nil, hence the written down value (WDV) of that card would also be nil and therefore the assessee could not claim depreciation on the old card which had already been converted into new trade rights, the value on which was to be determined at nil. He, therefore, confirmed the findings of the AO. 9. Before us, the Ld. D.R. has brought our attention to the decision of the co-ordinate bench of the Tribunal, in the case of "Sino Securities (P.) Ltd. v. Income-tax Officer" [2011] 16 taxmann.com 354 (Mumbai), wherein, while adjudicating the identical issue of depreciation on stock exchange card after demutualization of the stock exchange, the Tribunal has observed that when the BSE under scheme of demutualization and corporatization was succeeded by a company under the name and style of BSE Ltd., the assessee, who consequent to demutualization, had acquired two separate rights in new company i.e. (i) Ownership rights of shares in lieu of the BSE Card and (ii) Trading rights, wh....
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....e assets held by the assessee after corporatization and demutualization of Stock Exchanges, which resulted in the assessee becoming a share holder in BSEL. 27. The ownership rights of the assessee gives it a right to participate in the ownership of the assets and management of the Stock Exchange. The assessee has been granted certain shares in BSEL at par. The assessee has disclosed them as investment. Rightly, the assessee has not claimed that the shares allotted in BSEL was a business and commercial right of similar nature under section 32(1)(ii) of the Act. 28. Coming to the trading rights, the report of the Group on corporatization and demutualization of Stock Exchange fixed the value as equivalent to the deposit requirement. The trading right is a business and commercial rights of similar nature under section 32(1)(ii) of the Act. 29. The business and commercial rights of similar nature held by the assessee as a holder of the membership card of the erstwhile BSE no longer exists. The same got extinguished. Hence, we are of the considered opinion that the Assessing Officer was right in holding that no depreciation can be granted on the written down va....
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....il. 2(42)(h) in the case of a capital asset, being trading or clearing rights of a recognised stock exchange in India acquired by a person pursuant to demutualisation or corporatisation of the recognised stock exchange in India as referred to in clause (xiii) of section 47, there shall be included the period for which the person was a member of the recognised stock exchange in India immediately prior to such demutualisation or corporatisation. (ha) in the case of a capital asset, being equity share or shares in a company allotted pursuant to demutualisation or corporatisation of a recognised stock exchange in India as referred to in clause (xiii) of section 47, there shall be included the period for which the person was a member of the recognised stock exchange in India immediately prior to such demutualisation or corporatisation] 113c[(hb) in the case of a capital asset, being any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer free of cost or at concessional rate to his employees (including former employee or employees), the period shall be reckoned from the date of allotment or transfer of such specifie....