{"id":2034,"date":"2010-09-10T17:59:50","date_gmt":"2010-09-10T12:29:50","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=2034"},"modified":"2010-09-10T17:59:50","modified_gmt":"2010-09-10T12:29:50","slug":"techno-shares-stocks-vs-cit-supreme-court-bse-card-is-an-intangible-asset-and-eligible-for-depreciation-us-32_1_ii","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/techno-shares-stocks-vs-cit-supreme-court-bse-card-is-an-intangible-asset-and-eligible-for-depreciation-us-32_1_ii\/","title":{"rendered":"Techno Shares & Stocks vs. CIT (Supreme Court)"},"content":{"rendered":"\n\n
Click here to download the judgement (Techno_Shares_BSE_Card_depreciation.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n

BSE Card is an “intangible asset” and eligible for depreciation u\/s 32(1)(ii) <\/strong><\/p>\n

S. 32 (1), as amended w.e.f. 1.4.1998 allows depreciation on \u201cintangible assets\u201d being, inter alia, \u201clicenses \u2026 or any other business or commercial rights of similar nature<\/em>\u201d. The Tribunal took the view that a BSE card was an \u201cintangible asset\u201d eligible for depreciation. On appeal by the Revenue, the High Court (323 ITR 69)<\/a> reversed the Tribunal on the ground that it was not a “license” and the words \u201cbusiness or commercial rights\u201d relate to intellectual properties and not all categories of business or commercial rights. On appeal by the assessee, HELD reversing the High Court:<\/p>\n

(i) On the analysis of the Rules of BSE, it is clear that the right of membership allows the non-defaulting member to participate in the trading session on the floor of the Exchange. Thus, the said membership right is a \u201cbusiness or commercial right\u201d conferred by the Rules of BSE on the non-defaulting continuing member<\/strong>;<\/p>\n

(ii) The question as to whether the membership right can be said to be owned<\/strong> by the assessee and used for the business purpose<\/strong> in terms of s. 32(1)(ii) is answered in the affirmative for the reason that the Rules and Bye-laws permit the member to participate in the trading session on the floor of the Exchange; to deal with other members of the Exchange and to nominate. Moreover, under Explanation 3 to s. 32(1)(ii) commercial or business right which is similar to a \u201clicence\u201d or \u201cfranchise\u201d is declared to be an intangible asset. <\/p>\n

(iii) Under Rule 5 of the BSE Rules, membership is a personal permission from the Exchange which is nothing but a \u201clicence\u201d which enables the member to exercise rights and privileges attached thereto. It is this licence which enables the member to trade on the floor of the Exchange and to participate in the trading session on the floor of the Exchange. It is this licence which enables the member to access the market. Therefore, the right of membership, which includes right of nomination, is a \u201clicence\u201d or \u201cakin to a licence\u201d which is one of the items which falls in s. 32(1)(ii)<\/strong>. The right to participate in the market has an economic and money value<\/strong>. It is an expense incurred by the assessee which satisfies the test of being a \u201clicence\u201d or \u201cany other business or commercial right of similar nature\u201d in terms of s. 32(1)(ii).<\/p>\n

(iv) The judgment is strictly confined to the right of membership conferred upon the member under the BSE membership card and should not be understood to mean that every business or commercial right would constitute a \u201clicence\u201d or a \u201cfranchise\u201d in terms of s. 32(1)(ii).<\/p>\n","protected":false},"excerpt":{"rendered":"

Under Rule 5 of the BSE Rules, membership is a personal permission from the Exchange which is nothing but a \u201clicence\u201d which enables the member to exercise rights and privileges attached thereto. It is this licence which enables the member to trade on the floor of the Exchange and to participate in the trading session on the floor of the Exchange. It is this licence which enables the member to access the market. Therefore, the right of membership, which includes right of nomination, is a \u201clicence\u201d or \u201cakin to a licence\u201d which is one of the items which falls in s. 32(1)(ii)<\/strong>. The right to participate in the market has an economic and money value<\/strong>. It is an expense incurred by the assessee which satisfies the test of being a \u201clicence\u201d or \u201cany other business or commercial right of similar nature\u201d in terms of s. 32(1)(ii)<\/p>\n

Read more ›<\/a><\/div>\n

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