TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 962
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.... expenses incurred on earning exempt income. By the impugned order the CIT(A) deleted disallowance on account of bad debts, depreciation on VSAT, Vanda loss, mark to market loss, depreciation on goodwill. Against the above order of CIT(A), both assessee and revenue are in appeals before us. 4. The first common ground in the assessment years 2009-2010 & 2010-2011, pertains to disallowance of depreciation on customer rights. From the record we found that in the assessment year 2009-2010, the assessee acquired customer rights aggregating to Rs. 6,83,52,328/- from three concerns in course of business acquisitions made through legally enforceable agreements in the immediately preceding year and had claimed 25% depreciation on the same. The AO disallowed assessee's claim and CIT(A) confirmed the action of the AO. 4.1 We have considered rival contentions and perused the record. The issue under consideration is covered by the order of the Tribunal in assessee's own case for the assessment year 2007-08, vide order dated 21-1-2015. The relevant para of the Tribunal order reads as under :- 26. Reverting to ground no. 4, the fact that the assessee acquired customers rights when it acquired ....
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.... been made for the purchase of goodwill of company 'AFC', it has to be accepted that in this line of business the goodwill of the broker is paramount. Because of certain stray in incidences which have taken place in the stock market which have shaken the confidence of the public at large in the past, the investors always depend upon the good will of the broker because no investor would like to burn his fingers by the unscrupulous activities undertaken by certain fraudulent broker. The company 'AFC' had a strong clientele base of 3709 persons which itself show that 'AFC' was holding a strong repute in the eyes of its clients. Undoubtedly by purchase of rights to do the business with these 3709 clients the assessee has actually purchased the goodwill of 'AFC' [Para 15] Commercial rights gain significance in the commercial world as they represent a particular benefit or advantage or reputation built over a certain span of time and the customer associate with such assets. [Pam 17] It is not in doubt or dispute that purchase of the clientele business by the assessee from 'AFC' is a right which can be used as a tool to carry on the business. It can also be seen from the angle o....
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....hares was suo motu offered for disallowance. So far as disallowance of interest is concerned, we found that interest income earned by the assessee was more than the interest expenditure and since the interest income is positive no interest disallowance can be made. For this purpose reliance can be placed on the decision in the case of Trade Apartments, ITA No.1277/Kol/2011, order dated 30-3-2012 and Morgan Stanley India Securities, ITA No.5072/Mum/2005, dated 13-4-2011. Respectfully following the proposition of law laid down in these cases, we direct the AO to delete the disallowance of interest. 6. With regard to disallowance of other expenditure ld. AR placed on record an order of Tribunal in the case of group concern i.e. M/s Stock Holding Corporation of India Ltd., ITA No.5348/Mum/2012 for assessment year 2009-2010. , wherein it has been held that before applying provisions of Rule 8D, the AO was duty bound to record his dissatisfaction that the working of disallowance made by the assessee u/s.14A of the Act was incorrect. It was also brought to our notice that in the case of sister concern of the assessee similar working was accepted by the AO for A.Y.2009-10 to 2011-12. It w....
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....order for assessment year 2007-08, deleted the disallowance, against which the revenue is in appeal before us. 8.1 We have considered rival contentions and found that the issue is covered in favour of the assessee by the order of Tribunal in assessee's own case for : i) A.Ys.2001-02 to 2004-05 being ITA No.6738 to 6741/Mum/2001; ii) AY.2005-06 being ITA No.4606/Mum/2008; iii) A.Y.2006-07 being ITA No.6371/Mum/2008; and iv) A.Y.2007-08 being ITA No.168/Mum/2011. As the facts and circumstances during the year under consideration are same, respectfully following the order of the Tribunal, as stated above, we confirm the action of CIT(A) for deleting the disallowance of depreciation on VSAT. 9. The revenue is also aggrieved for deleting disallowance of Vanda loss. The assessee incurred net loss on account of Vanda transactions of Rs. 82,68,912/-. The assessee claimed the said loss as normal business loss u/s.28/37(1) of the Act. The AO was of the view that the said loss is speculative in nature as per Explanation to Section 73 of the Act as the loss arising from the transactions were carried on by assessee himself for its own purpose. 9.1 We have considered rival contention....
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....o disallowance of depreciation on customers' rights, disallowance u/s.14A are same. Following the reasoning given hereinabove, we direct the AO to delete the disallowance of depreciation on customers' rights and disallowance on interest u/s.14A. The disallowance of other expenses is directed to be worked out afresh as per direction given in the assessment year 2009-2010 above. 13. The grounds taken by the revenue in its appeal with regard to disallowance on bad debts, depreciation non VSAT, disallowance on Vanda loss, mark to market loss, depreciation on goodwill, are the same as discussed in the assessment year 2009-2010. Following the reasoning given in the assessment year 2009-2010, we confirm the action of CIT(A) in terms of our observation given in the assessment year 2009-2010 above. Assessment Year 2008-09 : 14. In this year, the assessee is aggrieved for disallowance on foreign exchange loss. The issue is covered in favour of the assessee vide order of the Tribunal in assessee's own case for the assessment year 2007-08, ITA No.168/Mum/2011, dated 21-1-2015. As the facts and circumstance during the year under consideration are same, we direct the AO to delete the disallo....
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....to such demutualisation or corporatisation;]" 9. The long term capital asset has been defined under section 2(29A) of the Act as a capital asset which is not a short term capital asset. So in determining the period for which any capital asset is held by the assessee the provisions of section 42A will be applicable and after determining the period of holding of an asset as per the explanation 1 to section 42A, if the asset is found to be held by an assessee for not more than 36 months immediately preceding the date of its transfer, the same will fall in the definition of short term capital asset and if the period is more than 36 months then the asset will fall in the definition of long term capital asset. As per the express provisions of clause (ha) as reproduced above, for determining the holding period of capital asset being equity shares allotted in pursuance to demutualisation or corporatisation of a recognised stock exchange in hand, the period for which the assessee was a member of the recognised stock exchange prior to such demutualisation or corporatisation shall also be included. Hence, the holding period of the asset is to be calculated from the acquisition of date of '....