TaxTMI 
TaxTMI 
2016 (12) TMI 1134
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....dabad Stock Exchange. As a member, the Stock Exchange has given him Card which is called as "Stock Exchange Card". For the AY 199192, the assessee submitted Wealth Tax Return, however treating the said "Stock Exchange Card" not an "asset" within the meaning of word "asset" as defined in Section 2(e) of the Wealth Tax Act, 1957 (hereinafter referred to as "Act, 1957"). Therefore, according to the assessee no tax was payable in respect of said Card. The Assessing Officer rejected the said contention and held that the "Stock Exchange Card" is liable to Wealth Tax. The learned CIT(A) agreed with the Assessing Officer. The learned Tribunal by impugned judgment and order has also confirmed the orders passed by the Assessing Officer confirmed by the learned CIT(A). Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned ITAT in upholding the Stock Exchange Card of Ahmedabad Stock Exchange is liable to Wealth Tax, the assessee has preferred present Tax Appeal. 4.0. Shri J.P. Shah, learned advocate has appeared on behalf of the assessee and Shri Nitin Mehta, learned advocate has appeared on behalf of the Revenue. 5.0. Shri J.P. Shah, learned advocate ....
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....ge to exercise the rights and privileges that may be given subject to Rules, Byelaws and Regulation of the Stock Exchange. It is submitted that in the said decision, the Hon'ble Supreme Court has again reiterated what was stated in the case of Vinaj Bubna (supra) and Ahmedabad Stock Exchange (supra248 ITR 209. Making above submissions, it is requested to hold that on the membership Card of the Ahmedabad Stock Exchange, the assessee is not liable to pay Wealth Tax, under the provisions of Wealth Tax Act as the same cannot be said to be an "asset", as per Section 2(e) of the Act, 1957 and consequently to answer the question in favour of assessee and against the Revenue. 6.0. Present Appeal is vehemently opposed by Shri Nitin Mehta, learned advocate for the Revenue. 6.1. Shri Mehta, learned advocate for the Revenue has heavily relied upon the decision of the Hon'ble Supreme Court in the case of MS Techno Shares & Stocks Limited vs. Commissioner of Income Tax IV reported in 327 ITR 323 in support of his submissions that so long as the assessee continues to hold the Membership Card and consequently continues to be the Member of Stock Exchange, the assessee is liable to pay Wea....
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....of the Income Tax Act, it was held that Membership Card is a License, which is included in Section 32(1)(ii) of the Income Tax Act. 7.1. It is further submitted by Shri Shah, learned counsel for the appellant-assessee that even if there is a conflict between decisions of the Hon'ble Supreme Court in the case of V.S. Kandalgaonkar and Ors (supra) and in the case of Ms Techno Shares and Stocks Ltd (supra), in that case, the decision of V.S. Kandalgaonkar and Ors (supra) shall prevail as the said decision is by a three Judge Bench and in a latter point of time. However, the decision of the Hon'ble Supreme Court in the case of Ms Techno Shares and Stocks Ltd (supra) is earlier decision in point of time and that it is by two Judge Bench. It is submitted that therefore, the decision of the Hon'ble Supreme Court in the case of V.S. Kandalgaonkar and Ors (supra) shall be applicable/ prevail. 8.0. Heard the learned advocates for the respective parties at length. The short question posed for the consideration of this Court is as to whether on the "Stock Exchange Card" of the Ahmedabad Stock Exchange the assessee is liable to pay Wealth Tax or not and whether "Stock Exchange Car....
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.... shall hold field is concerned, at the outset, it is required to be noted that there is no conflict between the decision in the case of V.S. Kandalgaonkar and Ors (supra) and decision in the the case of Ms Techno Shares and Stocks Ltd (supra). As observed herein above, in the case before the Hon'ble Supreme Court in the case of V.S. Kandalgaonkar and Ors (supra), it was case of defaulting Member and in the case before the Hon'ble Supreme Court in the case of Ms Techno Shares and Stocks Ltd (supra), it was case of non defaulting Member and therefore, as assessee is continued to hold the Card and is non defaulting Member, direct decision of the Hon'ble Supreme Court in the case of Ms Techno Shares and Stocks Ltd (supra) shall be applicable. 12. After considering the decisions of the Hon'ble Supreme Court in the case of Vinaj Bubna(supra), Stock Exchange Ahmedabad - 248 ITR 209 and on the analysis of the Rules of the Bombay Stock Exchange which as such paramateria to Rules of the Ahmedabad Stock Exchange; the Hon'ble Supreme Court has answered the question whether the Membership right could be said to be owned by the assessee in the affirmative. On analysis of the....
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....99) 6 SCC 215] (ii) Stock Exchange, Ahmedabad v. Assistant Commissioner of IncomeTax [(2001) 248 ITR 209] 21. In the case of Vinay Bubna (supra), one Yogesh Mehta who was a member of BSE was declared a defaulter by the Exchange. An amount of Rs. 21.81 crores was due and payable by the defaulter to Vinay Bubna who had moved the Bombay High Court by way of an arbitration petition against Yogesh Mehta (defaulter). In the said proceedings, an application was filed for appointing a court receiver. The High Court did not grant to Vinay Bubna any relief in respect of the membership card of the defaulter member. In the said proceedings, Rule 16 was challenged on the ground that membership of BSE was an asset of the sharebroker and on its sale from the proceedings thereof payment should be made to creditors like Vinay Bubna and proceeds should not be allowed to be distributed by BSE in the manner indicated by Rule 16. On behalf of the Stock Exchange, it was submitted that after respondent No. 3, Yogesh Mehta stood declared to be a defaulter he ceased to be the member of the Stock Exchange whereupon his rights of membership vested in the Exchange free of all rights, claims and interest....
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....ed defaulter came to be challenged. Another interesting fact which needs to be mentioned was that on 15th February, 1994 a provisional attachment order was passed under Section 281B of the 1961 Act in respect of the membership card in the name of Rajesh Shah. On 16th February, 1994, the Stock Exchange issued advertisement inviting claims from member creditors to lodge their claims within 30 days. They invited offers for purchase of membership also within the minimum floor price of Rs. 25 lakhs. On 5th December, 1994, ASE passed a resolution disposing of the membership right of the deceased in favour of UTI Security Ltd. for Rs. 27 lakhs. However, a garnishee notice was issued by the Department under Section 226(3) of the 1961 Act in the sum of Rs. 12.25 lakhs. That notice was addressed to the Executive Director of the Stock Exchange by the Department. Under the said circumstances, ASE filed a writ petition in the High Court challenging the orders of provisional attachment as well as the garnishee notice. The question for determination which arose in the said judgment was as to the nature of the rights of the deceased or his legal representatives in the membership card. It was held ....