Commissioner of Income Tax vs Kotak Securities Ltd. (No. 1)

This appeal by the Revenue u/s 260A of the income tax Act, 1961, arises from a decision of the income tax Appellate Tribunal dated July 16, 2010. The assessment year to which the appeal relates is the assessment year 2002-03. The following questions of law have been raised by the Revenue :

(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing depreciation on the first stock exchange membership card purchased by the assessee in the financial year 1995-96 when under the provisions of section 32 of the income tax Act, depreciation on such an intangible asset is available if the asset is acquired on or after April 1, 1998 ?

(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in setting aside the order of the Commissioner of income tax (Appeals) on the issue of the claim of the assessee for software expenses and remitting the matter back to the file of the Assessing Officer to decide the issue afresh in the light of the decision of the Special Bench in the case of Amway India Enterprises v. Deputy CIT (2008) 301 ITR (AT) 1 (Delhi); (2008) 111 ITD 112 (Delhi) [SB] after giving reasonable opportunity to the assessee when the said decision has not been accepted by the Revenue?

(iii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the issue of bad debt is covered by the decision of the Special Bench in the case of Shreyas S. Morakhia [2010] 5 ITR (Trib) 1; [2010] 40 SOT 432 when the Revenue has not accepted the said decision and has filed an appeal against the said order in the hon''ble High Court of Bombay?

As regards question (i), the Tribunal has in paragraph 5 of its decision, followed its earlier decision in the case of the assessee for the assessment year 2005-06. That decision of the Tribunal dated August 26, 2008, for the assessment year 2005-06 was challenged before this Court in The Commissioner of Income Tax-4(3), Aayakar Bhavan, M.K. Road, Churchgate, Mumbai - 40020 Vs. M/s. Kotak Securities Limited, 1st Floor, Bakthawar 229, Nariman Point, Mumbai - 400021, . In the judgment of this Court dated October 21, 2011, the court noted that of the six questions of law raised by the Revenue in the appeal, the Revenue did not press the first five questions on the ground that they were covered against the Revenue by a decision of the Supreme Court in Techno Shares and Stocks Ltd. Vs. The Commissioner of Income Tax IV, . The admitted position, therefore, is that for the assessment year 2005-06, the decision of the Tribunal dated August 26, 2008, has attained finality. The decision of the Tribunal, a copy of which is produced in the record, would indicate that in that case as well, the issue related to, inter alia, a membership card of the Bombay Stock Exchange purchased by the assessee during the year 1995-96. The Revenue having accepted the decision of the Tribunal for the assessment year 1995-96, the first question will not raise any substantial question of law.

As regards question (ii), the Tribunal has restored the issue for reconsideration to the Assessing Officer in paragraph 11 of its decision for a fresh decision in the light of the decision of the Special Bench of the Tribunal in the case of Amway India Enterprises v. Deputy CIT (2008) 301 ITR (AT) 1 (Delhi); 111 ITD 112 (Delhi) [SB]. The Tribunal accordingly restored the issue to the file of the Assessing Officer. No question of law, much less a substantial question of law, will arise. The court has also been informed by counsel that in the appeal which arose from the decision of the Special Bench, the Delhi High Court held that the entire expenditure was liable to be allowed as revenue expenditure. Commissioner of Income Tax Vs. M/S Amway India Enteprises, .

As regards question (iii), counsel appearing on behalf of the Revenue and counsel appearing on behalf of the assessee state that the issue is covered in favour of the assessee by a decision of the Division Bench of this Court dated February 28, 2012, in CIT v. Shreyas S. Morakhia I.T.A. No. 89 of 2011, decided on February 28, 2011--since reported in (2012) 342 ITR 285 (Bom). Consequently, the third question will not raise any substantial question of law. The appeal would not raise any substantial question of law and is accordingly dismissed.