Income Tax Appellate Tribunal - Ahmedabad
Edelweiss Financial Advisors Ltd., ( ... vs Department Of Income Tax on 4 April, 2016
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ, अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER आयकर अपील सं./ ITA.No.2676/Ahd/2015 नधा रण वष /Block Asstt. Year: 2009-2010 DCIT, Cir.1(3) Edelweiss Financial Advisors Ltd.
Ahmedabad. Vs [Formerly known as Anagram Stock
Broking Ltd.)
'Anagram House', Nr. H.L.
Commerce College
Stadium Road, Navrangpura
Ahmedabad.
PAN : AABCA 9956 F
अपीलाथ&/ (Appellant) '(यथ&/ (Respondent)
Revenue by : Shri Shiv Sewak, Sr.DR
Assessee by : Shri Vijay Ranjan
सन
ु वाई क तार ख/ Date of Hearing : 13/01/2016
घोषणा क तार ख / Date of Pronouncement: 04/04/2016
आदे श/O RDER
The Revenue is in appeal before the Tribunal against the order of the ld.CIT(A)-10, Ahmedabad dated 15.7.2015 passed for the Asstt.Year 2009- 2010.
2. Solitary grievance of the Revenue is that the ld.CIT(A) has erred in deleting the penalty of Rs.12,03,184/- which was imposed by the AO under section 271(1)(c) of the Income Tax Act.
3. Brief facts of the case that the assessee has filed its return of income on 28.9.2009 declaring total income at Rs.44,66,340/-. The assessee has claimed ITA No.2676/Ahd/2015 2 depreciation on stock exchange card amounting to Rs.31,02,147/-. This claim of the assessee was disallowed by the AO on the ground that Bombay Stock Exchange Ltd. has adopted corporatization and demutualization scheme, 2005. It has allotted shares to the assessee, and these are not akin to erstwhile membership card. Therefore, on the alleged stock exchange card, the assessee is not entitled for depreciation. The ld.AO has imposed penalty with regard to this addition upon the assessee.
4. On appeal, the ld.CIT(A) has deleted the penalty by observing as under:
" On careful consideration of entire facts, it is observed that Assessing Officer has levied penalty under Section 271(1)(c) for Rs. 12,03,184 on disallowance of depreciation on stock exchange card as well as disallowance of brokerage refund. So far as levy of penalty on disallowance on stock exchange card is concerned, it is observed that said claim was denied by Assessing Officer as well as CIT (Appeals) mainly on the ground that due to demutualization of Stock Exchange, Appellant was allotted equity shares hence as per provisions of Section 55(2)(ab), cost of acquisition of trading and clearing right shall be deemed to be nil hence depreciation cannot be allowed. It is pertinent to note that above demutualization of Stock Exchange was made in A.Y. 2006-07 and pursuant to such demutualization claim of Appellant for allowing depreciation on stock exchange card was disallowed for first time in A.Y. 2006-07. However, Hon'ble Ahmedabad ITAT, in Appellant's own case in ITA No. 1168/Ahd/2011 has deleted disallowance so made by Assessing Officer and observed as under:
"6. Ground No.2 is against disallowance of depreciation on the membership of the Stock Exchange card. The Id. counsel for the assessee reiterated the submissions as were made in the statement of facts-cum- synopsis. The Id. counsel for the assessee submitted that the issue is squarely covered by the judgement of Coordinate Bench (ITAT Mumbai "G" Bench Ahmedabad) rendered in the case of M/s. Grishma Securities Pvt. Ltd. vs. ITO in ITA No.6098/M/2010 for AY 2007-08, dated 29/03/2011.
6.1. On the contrary, Id. Sr. DR supported the orders of the authorities below.ITA No.2676/Ahd/2015 3
7. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the decision relied upon by the Id. counsel for the assessee.
The Id. CIT(A) has decided this issue in para-8 of his order by observing as under: -
"8. The trading rights which have been conferred upon the erstwhile card hold of BSE after its corporatization and demutualization has no value is evident from the provisions of proviso to section 55(2)(ab) of the Act which has been brought on a statue by the Finance Act 2003 w.e.f. 01/04/2004. In present case under consideration, it is admitted fact that the assessee has been allotted equity shares under the BSE corporatization and Demutualization Scheme 2005 and same is evident from the balance sheet where under the head investment of Rs. 10000 equity shares of BSE limited has been reflected. Once the assessee has been allotted equity shares of BSE limited under scheme then as per provisions of section 55(2)(ab), the cost of acquisition of trading and clearing right shall be deemed to be NIL hence depreciation cannot be allowed. Considering the same, disallowance made by AO is upheld and related ground of appeal is dismissed."
7.1. We find that the Coordinate Bench in ITA No.6098/M/2010 for AY 2007-08 in the case of M/s. Grishma Securities Pvt. Ltd. vs. ITO (supra), has held as under-
"2. We have heard both the parties, perused the records and considered the matter carefully. The dispute is regarding allowability of depreciation on a stock exchange card. Under the provisions of section 32(1 )(ii) depreciation is allowable on certain intangible assets such as know-how, patents, copy rights and license etc. Earlier the Hon'ble High Court of Mumbai in case of Techno Shares and Stock Ltd. (supra) had held that stock exchange card was not covered under section 32(1 )(ii) and therefore depreciation was not allowable. However the said judgment of the Bombay High Court has recently been considered by the Hon'ble Supreme Court in the same case and it was held that stock exchange card is akin to a license and therefore it is covered under section 32(1 )(ii) and depreciation is allowable. We therefore respectfully following the said judgment of Hon'ble Supreme Court, set aside the order of CIT(A) and allowed the claim of the assessee."
7.2. Since the facts are identical and no change into the facts and circumstances has been pointed out by the Id. Sr. DR, we have no ITA No.2676/Ahd/2015 4 reason to take a different view than taken by the Coordinate Bench in the case of M/s. Grishma Securities Pvt. Ltd.(supra). Thus, this ground of assessee's appeal is allowed."
8. In the result, the appeal of the Assessee is allowed."
Thus, it is observed that a similar claim made by Appellant is accepted by Hon'ble Ahmedabad I.T.A.T., hence such claim in present year cannot be held as false or non-genuine claim which require imposition of penalty under Section 271(1)(c) of the Act for concealment of income or for furnishing of inaccurate particulars of income. In any case such claim is bonafide claim in view of said decision of I.T.A.T. Considering these facts penalty levied under Section 271(1)(c) on disallowance of stock exchange card for Rs. 31,02,147 is deleted.
So far as levy of penalty on brokerage refund is concerned, it is observed that such rebate/refund is credited to respective client's account and such account is settled though account payee cheques. It is further observed that during the year under consideration, Appellant has earned total brokerage of Rs,22.09 crores against which refund is only of Rs.4.38 lacs which represents 0.20% of total brokerage income. It is further observed that brokerage rebate is given to clients who are not relatives of Appellant. Though disallowance is upheld in quantum proceeding, it does not mean that Appellant has concealed income because explanation of Appellant is bona fide and supported by evidences. It is pertinent to note identical disallowance was made in Appellant's Group case being Edelweiss Financial Advisory Limited for A.Y. 2008-09 wherein CIT (Appeals) vide his order dated 28th April, 2011 has deleted similar disallowance and held as under:
"7.3.7 The appellant has given the list of parties to whom brokerage rebate has been given. It was further stated that brokerage rebate is given effect in client's ledger account and to that extent ledger balance of client was decreased. I agree with the appellant that claim is allowable. From the above it can be seen that the appellant has been able to show that the refund of brokerage has been given in respect of all cases. In view of the above discussion, the refund of brokerage is genuinely explained, and the claim is therefore allowed. The entire ground of appeal is allowed."ITA No.2676/Ahd/2015 5
The facts discussed herein above clearly suggest that claim of Appellant is bona fide and same cannot be held as furnishing inaccurate particulars of income. The Hon'ble Supreme Court in the case of CIT V/s Reliance Petroproducts Pvt. Limited 322 ITR 158 has held as under:
"From the Head Notes -
Penalty-Concealment of particulars of income-No information given in return found to be incorrect-Making incorrect claim-Does not amount to concealment of "particulars'-lncome-tax Act, 1961, s. 271(1)(c).
A glance at the provisions of section 271(1)(c) of the Income-tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word "particulars" used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous.
Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. Decision of the Gujarat High Court affirmed.
Dilip N. Shroff v. Joint CIT [2007] 291 ITR 519 (SC) and Sree Krishna Electricals v. State of Tamil Nadu [2009] 23 VST 249 (SC) relied on."
It is further observed that similar disallowance was made in Appellant's own case in A.Y. 2008-09 and such disallowance was ITA No.2676/Ahd/2015 6 upheld by CIT (Appeals). However, penalty under Section 271(1)(c) levied on such addition was deleted by my predecessor CIT (Appeals) vide her order dated 8th December, 2014.
Considering the facts and legal position discussed herein above, Assessing Officer is not justified in levying penalty under Section 271(1)(c) on disallowance of brokerage refund for Rs. 4,37,669. In the nutshell, entire penalty levied under Section 271(1)(c) for Rs. 12,03,184 is deleted. In the result, related grounds of appeal are allowed."
5. While hearing the quantum appeal bearing no.1583/Ahd/2012, Tribunal has allowed depreciation to the assessee by following the order of the ITAT in the Asstt.Year 2006-07. Therefore, very basis of visiting the assessee with penalty no more survive. Disallowance itself has been deleted by the Tribunal vide order dated 1.4.2016. In view of the above, there is no merit in this appeal, hence, it is dismissed.
6. In the result, appeal of the Revenue is dismissed.
Order pronounced in the Court on 4th April, 2016 at Ahmedabad.
Sd/-
(RAJPAL YADAV) JUDICIAL MEMBER