Case Law Details
Unifi Capital Pvt. Ltd. Vs Income Tax Officer (ITAT Chennai)
Admittedly, membership fee paid to any stock exchange including MCX Exchange Ltd., is for acquiring a right in membership of exchanges for trading in shares and securities. Further membership rights in any stock exchange including MCX Exchange Ltd., is a transferable right. Therefore, said right is definitely a right in the nature of any commercial right of similar nature which falls under section 32(1)(ii) of the Act. Once amount paid is in the nature of an intangible asset, then same cannot be treated as revenue expenditure. This view is supported by decision of Hon’ble Supreme Court in the case of M/s. Techno Shares and Stocks vs. CIT in Civil Appeal No.7780 to 7781 of 2010 dated 09.09.2010, where the Hon’ble Supreme Court clearly held that membership card would constitute an intangible asset and the assessee could be entitled to depreciation on the cost of membership card u/s.32(1)(ii) of the Act. Therefore, we are of the considered view that there is no error in the findings recorded by the AO and confirmed by the ld. CIT(A) in disallowance of deduction claimed towards membership fee paid to MCX Exchange Ltd., as revenue expenditure. Insofar as, the case law relied upon by the ld.AR for the assessee in the case of S. Venkatasubramaniam vs. CIT, supra of Hon’ble Madras High Court, we find that although the Hon’ble Madras High Court has held that membership fees paid to any stock exchange is revenue expenditure, but because the Hon’ble Supreme Court has taken a different view in later judgment in the case of M/s. Techno Shares and Stocks Ltd., vs. CIT and held that membership fees paid to any stock exchange is an intangible asset and eligible for depreciation u/s.32(1)(ii) of the Act, we are of the considered view that case law relied upon by the ld.AR for the assessee has no application because said judgment was rendered before the decision of Hon’ble Supreme Court in the case of M/s. Techno Shares and Stocks Ltd., vs. CIT. Therefore, considering the facts and circumstances of the case and also by following the decision of Hon’ble Supreme Court in the case of M/s. Techno Shares and Stocks Ltd, we are of the considered view that there is no error in the findings recorded by the authorities below to disallow deduction claimed towards membership fee paid to MCX Exchange Ltd., as revenue expenditure and further allowing depreciation as intangible asset u/s.32(1)(ii) of the Act. Accordingly, we reject the ground taken by the assessee.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against order of learned Commissioner of Income Tax (Appeals)-11, Chennai, dated 13.12.2018 and pertains to assessment year 2013-14.
2. The assessee has raised the following grounds of appeal:-
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