1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL (L) NO.971 OF 2006
AND
INCOME TAX APPEAL NO.218 OF 2007
Commissioner of Income Tax - 4,
3rd floor, Aayakar Bhavan,
M.K. Road, Mumbai - 400 020 ..Appellant.
V/s.
M/s. Techno Shares & Stocks Limited
1st Floor, 93 Mumbai Samachar Marg,
Engineer Premises, Mumbai - 400 023
ig ..Respondent
Mr.Vimal Gupta for the appellant.
Mr.F.V. Irani with Mr.P.C. Tripathi & Ms.Vandana Rawale for the respondent.
INCOME TAX APPEAL NO.157 OF 2008
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K. Road, Mumbai-400 020. ..Appellant.
V/s.
M/s. J.M. Morgan Stanley Retail Services Ltd.
141, Maker Chambers III, Nariman Point,
Mumbai- 400 021 ..Respondent.
Mr. Vimal Gupta for appellant.
Dr. K. Shivram with A.R. Singh & P.S. Savla for respondent.
AND
INCOME TAX APPEAL (L) NO.958 OF 2009
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K. Road, Mumbai-400 020. ..Appellant.
V/s.
M/s. J.M. Morgan Stanley Retail Services Ltd.
141, Maker Chambers III, Nariman Point,
Mumbai- 400 021 ..Respondent.
Mr. Suresh Kumar for appellant.
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Dr. K. Shivram with A.R. Singh & P.S. Savla for respondent.
AND
INCOME TAX APPEAL (L) NO.1328 OF 2009
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K. Road, Mumbai-400 020. ..Appellant.
V/s.
M/s. J.M. Morgan Stanley Retail Services Ltd.
141, Maker Chambers III, Nariman Point,
Mumbai- 400 021 ..Respondent.
Mr. Ram Upadhyay for appellant.
Dr. K. Shivram with A.R. Singh for respondent.
ig AND
INCOME TAX APPEAL NO.375 OF 2008
The Commissioner of Income Tax-4,
6th floor Aayakar Bhavan, M.K. Road,
Mumbai-400 021. ..Appellant.
V/s.
M/s. J.M. Morgan Stanley Securities,
Forbes Building, Charanjit Rai Margt,
Fort, Mumbai- 400 021 ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. Balasaheb Yewale i/b. Rajesh Shah & Co. for respondent.
AND
INCOME TAX APPEAL (L) NO.258 OF 2009
The Commissioner of Income Tax-4,
6th floor Aayakar Bhavan, M.K. Road,
Mumbai-400 020. ..Appellant.
V/s.
M/s. J.M. Morgan Stanley Securities,
Forbes Building, Charanjit Rai Margt,
Fort, Mumbai- 400 001 ..Respondent.
Ms. Padma Divekar for appellant.
Mr. Balasaheb Yewale i/b. Rajesh Shah & Co. for respondent.
AND
INCOME TAX APPEAL (L) NO.946 OF 2007
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The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K. Road, Mumbai-400 020. ..Appellant.
V/s.
M/s. Gupta Equities Pvt. Ltd.
37, Haman Street, Opp. Haman House, Ambalal
Doshi Marg, Fort, Mumbai- 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.959 OF 2009
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K. Road, Mumbai-400 020.
ig ..Appellant.
V/s.
M/s. J.M. Morgan Stanley Retail Services Ltd.
Appejay House, 3rd Floor, Dinshaw Vaccha Road.
Mumbai- 400 020 ..Respondent.
Mr. Suresh Kumare for appellant.
Dr. K. Shivram with A.R. Singh & P.S. Savla for respondent.
AND
INCOME TAX APPEAL (L) NO.259 OF 2009
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K. Road, Mumbai-400 020. ..Appellant.
V/s.
M/s. Kotak Securities Ltd..
1st Floor, Bakthawar, 229, Nariman Point,
Mumbai- 400 021 ..Respondent.
Mr. R.B. Upadhyay for appellant.
Mr. F.V. Irani with A.K. Jasani for respondent.
AND
INCOME TAX APPEAL NO.158 OF 2008
The Commissioner of Income Tax-4,
3rd Floor, Aayakar Bhavan, M.K. Road,
Mumbai-400 020. ..Appellant.
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V/s.
M/s. Stanford Trading Co. Pvt. Ltd.
C/o. Devji Hirji Investment Co., Hind
Rajasthan Chamber, 3rd Floor,
6 Oak Lane, Fort, Mumbai - 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL NO.756 OF 2009
AND
INCOME TAX APPEAL NO.496 OF 2007
The Commissioner of Income Tax-4,
6th Floor Aayakar Bhavan, M.K. Road,
Mumbai-400 020. ..Appellant.
V/s.
M/s. Pas Securities Pvt. Ltd.
PS-II Rotunda BSF Building, Dalal Street,
Fort, Mumbai- 400 023 ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL NO.718 OF 2007
AND
INCOME TAX APPEAL NO.100 OF 2008
The Commissioner of Income Tax,
Mumbai City-4, Aayakar Bhavan,
M.K. Road, Mumbai-400 020. ..Appellant.
V/s.
M/s. Shivnarayan Nemani Share & Stock Brokers
Pvt. Ltd. 9/42, 2nd floor, Bhupen Chambers,
Dalal Street, Fort, Mumbai- 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
Ms. Pallavi Divekar for respondent.
AND
INCOME TAX APPEAL (L) NO.934 OF 2009
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The Commissioner of Income Tax-4,
6th Aayakar Bhavan, M.K. Road,
Mumbai-400 020. ..Appellant.
V/s.
M/s. Citigroup Global Markets India P. Ltd.
4th Floor, Bakhtawar, Nariman Point,
Mumbai- 400 021 ..Respondent.
Mrs. Padma Divekar for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.935 OF 2009
The Commissioner of Income Tax-4,
6th floor, Akar Bhavan, M.K. Road, Mumbai-400 020.
ig ..Appellant.
V/s.
M/s. Prabhudas Liladhar P. Ltd.
702, Raheja Centre, Free Press Journal Marg,
Nariman Point, Mumbai- 400 021. ..Respondent.
Mrs. Padma Divekar for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.89 OF 2009
The Commissioner of Income Tax-4,
Aayakar Bhavan, Mumbai-400 020. ..Appellant.
V/s.
Dynamic Stock Broking (I) Pvt. Ltd.
Rehman Building, 4th Floor, 24, Veer
Nariman Road, Opp. Akbarally's.
Fort, Mumbai - 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.3010 OF 2008
The Commissioner of Income Tax-4,
Mumbai, Room No.629, Aayakar Bhavan,
M.K. Road, Mumbai - 400 020. ..Appellant.
V/s.
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M/s. Rosy Blue Securities P. Ltd.,
154/C, Mittal Court, Nariman Point,
Mumbai - 400 021. ..Respondent.
Mr. P.S. Sahadevan for appellant.
None for respondent.
AND
INCOME TAX APPEAL NO.882 OF 2008
AND
INCOME TAX APPEAL NO.883 OF 2008
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
Shilpa Stock Broker Pvt. Ltd.
5, Natvar Chamber, 1st Floor, Nagindas
Master Road, Fort, Mumbai - 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
Dr. K. Shivram with A.R. Singh & P.S. Savla for respondent.
AND
INCOME TAX APPEAL NO.769 OF 2009
AND
INCOME TAX APPEAL NO.776 OF 2009
AND
INCOME TAX APPEAL NO.777 OF 2009
AND
INCOME TAX APPEAL (L) NO.2596 OF 2008
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhava, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. R.R. Chokhani Stock Brokers Pvt. Ltd.
9/16-D, Fort Mansion, British Hotel Lane,
B.S. Marg, Mumbai - 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. A.K. Jasani with P.C. Tripathi & Ms. Vandana Rawale for respondent.
AND
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INCOME TAX APPEAL (L) NO.373 OF 2009
The Commissioner of Income Tax-4,
having office at Aayakar Bhavan,
M.K. Road, Mumbai - 400 020. ..Appellant.
V/s.
M/s. K. Damani Securities Pvt. Ltd.,
5, Surya Mahal, 1st Floor, Bhurjorji Bharucha
Marg, Fort, Mumbai - 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.1330 OF 2009
The Commissioner of Income Tax-4,
Aayakar Bhavan, Maharshi Karve Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s.Kaynet Capital Ltd.
10B,3rd floor, Haji Kasam Bldg.,
56, Tamarind Lane, Mumbai-400 001. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL NO.271 OF 2009
AND
INCOME TAX APPEAL NO.272 OF 2009
The Commissioner of Income Tax-4,
Room No.501, 5th Floor, Aayakar Bhavan,
M.K. Road, Mumbai-400 020. ..Appellant.
V/s.
M/s. Dhyan Stock Broking Pvt. Ltd.
305/A, Vikas Bldg., 3rd Floor, 11,
Bank Street, Mumbai- 400 023 ..Respondent.
Mr. Suresh Kumar for appellant.
Mr. A.K. Jasani with P.C. Tripathi & Ms. Vandana Rawle for respondent.
AND
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INCOME TAX APPEAL (L) NO.1327 OF 2009
AND
INCOME TAX APPEAL (L) NO.1332 OF 2009
The Commissioner of Income Tax,
having his office at Aayakar Bhavan,
M.K. Road, Mumbai - 400 020. ..Appellant.
V/s.
M/s. Joindre Capital Services Ltd.,
32, Rajbahadur Mansion, Ground Floor,
Samachar Marg, Fort, Mumbai-400 023. ..Respondent.
Mr. Ram Upadhyay for appellant.
None for respondent.
ig AND
INCOME TAX APPEAL (L) NO.3886 OF 2008
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Marg,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. Parklight Investment Pvt. Ltd.,
Bombay Mutual Chambers, Block No.36,
19/21, Ambalal Doshi Marg, Mumbai-400 023. ..Respondent.
Mrs. Devki Iyer for appellant.
None for respondent.
AND
INCOME TAX APPEAL NO.136 OF 2008
AND
INCOME TAX APPEAL (L) NO.4144 OF 2008
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K. Road, Mumbai-400 020 ..Appellant.
V/s.
M/s. Jagdish Dalal Shares Securities Pvt. Ltd.,
2nd Floor, Engineer House, 86, Bombay
Samachar Marg, Mumbai - 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. Balasaheb Yewale i/b. Rajesh Shah & Co. for respondent.
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AND
INCOME TAX APPEAL NO.1028 OF 2008
The Commissioner of Income Tax,
Central-II, 4th floor, Aayakar Bhavan,
M.K. Road, Mumbai- 400 020. ..Appellant.
V/s.
M/s. Ohm Stock Broker P. Ltd.,
Room No.507, Rotunda Bldg.,
B.S. Marg, Fort, Mumbai - 400 001. ..Respondent.
Mr. P.S. Sahadevan for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.326 OF 2009
The Commissioner of Income Tax,
6th floor, Aayakar Bhavan,
M.K. Road, Mumbai- 400 020. ..Appellant.
V/s.
M/s. Ohm Stock Broker P. Ltd.,
155-C, Mittal Tower, Nariman Point,
Mumbai - 400 001. ..Respondent.
Mr. Vimal Gupta for appellant.
Dr. K. Shivram with A.R. Singh for respondent.
AND
INCOME TAX APPEAL NO.1127 OF 2007
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K. Road, Mumbai-400 020. ..Appellant.
V/s.
M/s. Santco Securities & Financial Services Ltd.,
196, Makhija Chambers, Turner Road, Bandra (W),
Mumbai - 400 050. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. Balkrishna V. Jhaveri with Preeti Shukla for respondent.
AND
INCOME TAX APPEAL (L) NO.3638 OF 2008
AND
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INCOME TAX APPEAL (L) NO.3642 OF 2008
AND
INCOME TAX APPEAL (L) NO.3643 OF 2008
AND
INCOME TAX APPEAL (L) NO.3695 OF 2008
The Commissioner of Income Tax-4,
having his office at 6th Floor, Aayakar Bhavan,
M.K. Road, Mumbai - 400 020. ..Appellant.
V/s.
M/s. Bakliwal Securities Pvt. Ltd.,
19/21, Ambalal Doshi Marg, 63, Bombay
Mutual Chambers, Fort, Mumbai - 400 023 ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent. ig AND
INCOME TAX APPEAL (L) NO.3684 OF 2008
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan,
M.K. Road, Mumbai - 400 020. ..Appellant.
V/s.
M/s. Visaria Securities Pvt. Ltd.,
301-A,Commerce House, 140,
N.M. Road, Fort, Mumbai - 400 023 ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.3194 OF 2008
The Commissioner of Income Tax, Central-IV,
Room No.660, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. Nirmal Bang Securities P. Ltd.,
37 Khatau Building, 2nd Floor,
Alkesh Dinesh Mody Marg, Fort,
Mumbai - 400 023. ..Respondent.
Mr.Suresh Kumar for appellant.
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Mr. A.K. Jasani for respondent.
AND
INCOME TAX APPEAL (L) NO.3195 OF 2008
The Commissioner of Income Tax, Central-IV,
Room No.660, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. Bang Securities P. Ltd.,
38-B, Khatau Building, 2nd Floor,
Alkesh Dinesh Mody Marg, Fort,
Mumbai - 400 023. ..Respondent.
Mr. Suresh Kumar for appellant.
Mr. A.K. Jasani for respondent.
ig AND
INCOME TAX APPEAL (L) NO.1942 OF 2006
AND
INCOME TAX APPEAL (L) NO.3451 OF 2008
AND
INCOME TAX APPEAL (L) NO.360 OF 2009
The Commissioner of Income Tax-4,
having his office at Aayakar Bhavan,
M.K. Road, Mumbai - 400 020. ..Appellant.
V/s.
Bhavik Rajesh Khandar Shares & Stock Brokers
Pvt. Ltd., 278, Jeevan Udyog Bldg., Above Khadi
Bhandar, D.N. Road, Fort, Mumbai-400 001. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. S.G. Dalal for respondent.
AND
INCOME TAX APPEAL (L) NO.3452 OF 2008
AND
INCOME TAX APPEAL (L) NO.1108 OF 2009
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020 ..Appellant.
V/s.
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M/s. D.J. Shah Securities Pvt. Ltd.
9, Khatau Bldg., 8-10, A.D. Mody Marg,
Fort, Mumbai - 400 001. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. Denzil D'mello for respondent.
AND
INCOME TAX APPEAL NO.544 OF 2008
The Commissioner of Income Tax-4,
Room No.629, Aayakar Bhavan,
M.K. Road, Mumbai-400 020 ..Appellant.
V/s.
M/s. Wallfort Financial Services Ltd.,
205, Gundecha Chambers Nagindas Master
Road, Fort, Mumbai - 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL NO.920 OF 2008
The Commissioner of Income Tax-4,
having his office at Aayakar Bhavan,
M.K. Road, Mumbai - 400 020. ..Appellant.
V/s.
KJMC Capital Market Services Ltd.,
168, Atlanta, 16th Floor, Nariman Point,
Mumbai - 400 021. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. R. Murlidhar with P.C. Tripathi & Vandana Rawale for respondent.
AND
INCOME TAX APPEAL NO.32 OF 2008
The Commissioner of Income Tax-4,
Room No.629, Aayakar Bhavan,
M.K. Road, Mumbai - 400 020. ..Appellant.
V/s.
M/s. Sunidhi Consulatancy Services Ltd.,
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Maker Chambers IV, 14th Floor,
Nariman Point, Mumbaio - 400 021. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. Subhash S. Shetty for respondent.
AND
INCOME TAX APPEAL (L) NO.729 OF 2009
AND
INCOME TAX APPEAL (L) NO.732 OF 2009
The Commissioner of Income Tax-4,
Aayakar Bhavan, Mumbai - 400 020. ..Appellant.
V/s.
M/s. Phoneix Shares & Stock Broking P. Ltd.,
Rehman Building, 4th Floor, Veer Nariman
Road, Fort, Mumbai - 400 023. ..Respondent.
Mrs. Padma Divekar for appellant.
Mr. S.C. Tiwari for respondent.
AND
INCOME TAX APPEAL (L) NO.359 OF 2009
The Commissioner of Income Tax-4.
having his office at Aayakar Bhavan,
M.K. Road, Mumbai - 400 020. ..Appellant.
V/s.
M/s. Jhunjhunwala Stock Brokers P. Ltd..
16/1 Khatau Building, Alkesh Dinesh Modi
Marg, Fort, Mumbai- 400 014. ..Respondent.
Mrs. Padma Divekar for appellant.
Mr. Balasaheb Yewale i/b. Rajesh Shah & Co. for respondent.
AND
INCOME TAX APPEAL (L) NO.82 OF 2009
The Commissioner of Income Tax-4.
having his office at Aayakar Bhavan,
M.K. Road, Mumbai - 400 020. ..Appellant.
V/s.
M/s. Jhunjhunwala Stock Brokers P. Ltd..
16/1 Khatau Building, Alkesh Dinesh Modi
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Marg, Fort, Mumbai- 400 014. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. Balasaheb Yewale i/b. Rajesh Shah & Co. for respondent.
AND
INCOME TAX APPEAL (L) NO.363 OF 2009
The Commissioner of Income Tax-4,
Aayakar Bhavan, Mumbai - 400 020. ..Appellant.
V/s.
India Broking Ltd.,
PS-18 'Rotunda', The Stock Exchange,
Bombay Samachar Marg, Mumbai - 400 001. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent. ig AND
INCOME TAX APPEAL NO.1042 OF 2009
AND
INCOME TAX APPEAL NO.1044 OF 2009
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. Networth Stock Broking Ltd.,
102, Natwar Chambers, Nagindas Master
Road, Fort, Mumbai - 400 023. ..Respondent.
Mrs. Padma Divekar for appellant.
Mr. B.V. Jhaveri for respondent.
AND
INCOME TAX APPEAL NO.1314 OF 2009
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. HDFC Securities Ltd.,
Trade World, "E" Wing, Kamala Mills,
Compound, Lower Parel, Mumbai - 400 010. ..Respondent.
Mr. Vimal Gupta for appellant.
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Mr. A.K. Jasani for respondent.
AND
INCOME TAX APPEAL NO.1309 OF 2009
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K.Road, Mumbai-400 020. ..Appellant.
V/s.
M/s. ICICI Brokerage Services Ltd.,
163, Backbay Reclamation, H.T. Parekh
Mark, Churchgate, Mumbai-400 020. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.1130 OF 2008
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K.Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. Credit Suisse first Boston (India) Pvt. Ltd.
Ceejay House, Plot F, Shiv Sagar Estate,
Dr. A.B.Road, Worli, Mumbai - 400 018. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. F.V. Irani with A.K. Jasani for respondent.
AND
INCOME TAX APPEAL (L) NO.1249 OF 2009
The Commissioner of Income Tax-2,
Aayakar Bhavan, M.K. Road, Mumbai-400 020. ..Appellant.
V/s.
Anand Rathi Securities Pvt. Ltd.,
3rd floor, J.K. Somani Building, British Hotel Lane,
B.S. Marg, Fort, Mumbai-400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. A.K. Jasani for respondent.
AND
INCOME TAX APPEAL NO.1315 OF 2009
The Commissioner of Income Tax-4,
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Aayakar Bhavan, M.K. Road, Mumbai-400 020. ..Appellant.
V/s.
M/s. Creative Global Stock Broking Ltd.,
401, Sun Industrial Estate, Sun Mill Compound,
Lower Parel, Mumbai - 400 013. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. K. Gopal for respondent.
AND
INCOME TAX APPEAL NO.1352 OF 2009
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K.Road,
Mumbai. ..Appellant.
V/s.
M/s. Brijmohan Sagarmal Capital Services Pvt. Ltd.,
203, Unique Tower, Near Kamath Club, Gaikwadi,
Off. S.V. Road, Goregaon (W), Mumbai-400 062. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. P.R. Toprani for respondent.
AND
INCOME TAX APPEAL (L) NO.1812 OF 2008
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K.Road, Mumbai-400 020. ..Appellant.
V/s.
M/s. Brijmohan Sagarmal Capital Services Pvt. Ltd.,
412, Stock Exchange Tower, Dalal Street,
Mumbai-400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. P.R. Toprani for respondent.
AND
INCOME TAX APPEAL (L) NO.1505 OF 2009
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
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M/s. Amu Shares and Securities Ltd.,
Crescent Chambers, 4th Floor, Horni Modi
Cross Road, Fort, Mumbai-400 023. ..Respondent.
Mr. Ram Upadhyay for appellant.
Mr. A.K. Jasani for respondent.
AND
INCOME TAX APPEAL (L) NO.3014 OF 2008
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. Amu Shares and Securities Ltd.,
Crescent Chambers, 4th Floor, Horni Modi
Cross Road, Fort, Mumbai-400 023. ..Respondent.
Mr. Vimal Gupta i/b. Devki Iyer for appellant.
Mr. A.K. Jasani for respondent.
AND
INCOME TAX APPEAL (L) NO.916 OF 2009
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. Amu Shares and Securities Ltd.,
Crescent Chambers, 4th Floor, Horni Modi
Cross Road, Fort, Mumbai-400 023. ..Respondent.
Mrs Padma Divekar for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.1620 OF 2008
AND
INCOME TAX APPEAL (L) NO.1622 OF 2008
AND
INCOME TAX APPEAL (L) NO.1630 OF 2008
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
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V/s.
M/s. Ramesh S. Damani Finance P. Ltd.,
619, P.J. Tower, Dalal Street, Fort,
Mumbai - 400 001. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.1542 OF 2009
AND
INCOME TAX APPEAL (L) NO.1754 OF 2009
AND
INCOME TAX APPEAL (L) NO.1755 OF 2009
AND
INCOME TAX APPEAL (L) NO.1756 OF 2009
The Commissioner of Income Tax Central-III,
1st Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. Lark Consultancy Pvt. Ltd.,
Moti Sagar, Ground Floor, Mulund(W),
Mumbai - 400 080. ..Respondent.
Mrs. Padma Divekar for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.1813 OF 2009
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. Malini Sanghvi Securities Pvt. Ltd.,
1017-A, 10th Floor, Jijibhoy Towers,
Dalal Street, Mumbai - 400 001. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.1933 OF 2008
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19
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. M.S.S. Securities Pvt. Ltd.,
1017-A, 10th Floor, Jijibhoy Towers,
Dalal Street, Mumbai - 400 001. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL NO.1046 OF 2009
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K. Road, Mumbai-400 020.
ig ..Appellant.
V/s.
M/s. SPS Share Brokers P. Ltd.,
66, Tamarind Lane, 4/5, Haji Kasam Bldg.,
1st Foor, Fort, Mumbai-400 001. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.1944 OF 2006
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K. Road, Mumbai-400 020. ..Appellant.
V/s.
M/s. D.K. Modi Securities Pvt. Ltd.,
515, Rotunda, Mumbai Samachar Marg,
Fort, Mumbai - 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
Ms.Aasifa Khan for respondent.
AND
INCOME TAX APPEAL (L) NO.1961 OF 2006
AND
INCOME TAX APPEAL (L) NO. 80 OF 2009
AND
INCOME TAX APPEAL (L) NO. 83 OF 2009
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20
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K.Road, Mumbai-400 020. ..Appellant.
V/s.
M/s. Magnum Equity Broking Ltd.
D-30, Empire Mahal, 806, Dr. B.A.Road,
Khodad Circle, Dadar T.T., Mumbai-400 014. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. J.D. Mistri with A.K Jasani for respondent.
AND
INCOME TAX APPEAL (L) NO.775 OF 2008
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K. Road, Mumbai-400 020. ..Appellant.
V/s.
M/s. G. Das Capital Markets Pvt. Ltd.,
20, Rajabhadur Mansion, Office No.6,
Ambalal Doshi Marg, Fort, Mumbai- 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL NO.1207 OF 2007
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K. Road, Mumbai-400 020. ..Appellant.
V/s.
M/s. RRS Shares & Stock Brokers P. Ltd.,
24/B, Ambalal Doshi Marg, Raja Bahadur
Compound, Fort, Mumbai- 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.1959 OF 2007
AND
INCOME TAXL APPEAL (L) NO.3459 OF 2008
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K. Road, Mumbai-400 020. ..Appellant.
V/s.
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21
M/s. Unique Stock Brokers Pvt. Ltd.,
61/8, Chandanbala, Road No.25-C,
Sion (West), Mumbai - 400 022. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL NO.1181 OF 2008
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. The Omniscient Securities Pvt. Ltd.,
1003, P.J. Towers, Dalal Street, Mumbai-400 023.
ig ..Respondent.
Mr. Vimal Gupta i/b. Devki Iyer for appellant.
None for respondent.
AND
INCOME TAX APPEAL NO.1360 OF 2009
The Commissioner of Income Tax-4,
Aayakar Bhavan, M.K. Road, Mumbai - 400 020. ..Appellant.
V/s.
Keynote Capitals Ltd.,
4th Balma Lawrie Building, 5, J.M.Herodia Marg,
Ballard Estate, Mumbai-400 001. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. A.K. Jasani for respondent.
AND
INCOME TAX APPEAL NO.739 OF 2007
The Commissioner of Income Tax-IV,
Aayakar Bhavan, M.K. Road, Mumbai - 400 020. ..Appellant.
V/s.
M/s. Shivnarayan Nemani Share & Stock Brokers
Pvt. Ltd., 9/43, 2nd floor, Bhupen Chambers,
Mumbai-400 023. ..Respondent.
Mr. Vimal for appellant.
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22
Ms. P. Jain i/b. Pallavi Divekar for respondent.
AND
INCOME TAX APPEAL NO.357 OF 2009
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
Sino Securities Pvt. Ltd.,
Sanwa House, 97/99, Bombay Samachar
Marg, Fort, Mumbai - 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. Balasaheb Yewale i/b. Rajesh Shah & Co. for respondent.
ig AND
INCOME TAX APPEAL NO.58 OF 2009
The Commissioner of Income Tax-IV,,
Aayakar Bhavan, M.K. Road, Mumbai - 400 020. ..Appellant.
V/s.
M/s. SSJ Finance & Securities P. Ltd.,
Surya Mahal, 1st Floor, Burjorji Bharucha
Marg, Fort, Mumbai - 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
Mr. Deepak Tralshawala with Vishnu S.Hadade for respondent.
AND
INCOME TAX APPEAL (L) NO.834 OF 2009
The Commissioner of Income Tax-IV,,
Aayakar Bhavan, M.K. Road, Mumbai - 400 020. ..Appellant.
V/s.
M/s. SSJ Finance & Securities P. Ltd.,
Surya Mahal, 1st Floor, Burjorji Bharucha
Marg, Fort, Mumbai - 400 023. ..Respondent.
Mrs Padma Divekar for appellant.
Mr. Deepak Tralshawala with Vishnu S.Hadade for respondent.
AND
INCOME TAX APPEAL (L) NO.817 OF 2009
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23
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. Gupta Equities P. Ltd.,
D-21 Dhanraj Mahal, CSM Marg,
Colaba, Mumbai - 400 005. ..Respondent.
Mrs. Padma Divekar for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.914 OF 2009
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. G. Das Capital Markets P. Ltd.,
12-B, Khatau Bldg. Annexue, 1st Floor,
Alkesh Dindsh Mody Marg, Fort,
Mumbai - 400 023. ..Respondent.
Mrs. Padma Divekar for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.803 OF 2009
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. PAS Securities Pvt. Ltd.,
PSII, Rotunda Stock Exchange Bldg.,
Dalal Street, Fort, Mumbai - 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.739 OF 2009
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24
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. Stanford Trading Co. Pvt. Ltd.,
Hamam House, Mezanine floor, Shop No.16,
Ambalal Doshi Marg, Fort, Mumbai - 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.599 OF 2008
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ig ..Appellant.
V/s.
K. Damani Securities Pvt. Ltd.,
Surya Mahal, 1st Floor, Burjorji Marg,
Fort, Mumbai - 400 023. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.1333 OF 2009
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
Mumbai - 400 020. ..Appellant.
V/s.
M/s. M.R. Share Broking Pvt.Ltd.,
285, Princess Street Chaturbhuj Jivandas
House, 2nd floor Fort, Mumbai - 400 002. ..Respondent.
Mr. Vimal Gupta for appellant.
None for respondent.
AND
INCOME TAX APPEAL (L) NO.1334 OF 2009
The Commissioner of Income Tax-4,
6th Floor, Aayakar Bhavan, M.K. Road,
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25
Mumbai - 400 002. ..Appellant.
V/s.
M/s. KJMC Capital Market Service Pvt. Ltd.,
168, Atlanta 16th Floor, Nariman Point,
Fort, Mumbai - 400 021. ..Respondent.
Mr. Ram Upadhyay for appellant.
Mr. R. Murlidhar with A.K. Jasani for respondent.
CORAM : V. C. DAGA AND J. P. DEVADHAR, JJ.
JUDGMENT RESERVED ON : 11TH AUGUST, 2009
JUDGMENT PRONOUNCED ON : 11TH SEPTEMBER, 2009
JUDGMENT (PER J.P. DEVADHAR, J.)
1. The only question raised in all these appeals is, whether
depreciation under section 32 of the Income Tax Act, 1961 is allowable on
the stock exchange membership card acquired by an assessee on or after
1/4/1998 ?
2. The ITAT has held that the Bombay Stock Exchange
Membership Card (hereinafter referred to as the ‘BSE card’) acquired by an
assessee on or after 1/4/1998, either by nomination or directly through the
Stock Exchange is an intangible asset covered under Section 32 of the
Income Tax Act, 1961 (`Act’ for short) and therefore, depreciation is allowable
on the BSE Card. These appeals are filed by the revenue to challenge the
aforesaid orders passed by the ITAT.
3. Since the question of law set out hereinabove is common in all
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26
these appeals, by consent, all these appeals are heard finally on the
aforesaid substantial question of law and disposed of by this common
judgment.
4. Mr. Gupta and Mr. Sahadevan, learned counsel for the revenue
submit that depreciation under section 32 of the Act is allowable on
depreciable asset. They contend that the BSE card is neither an asset nor a
capital asset which is subject to wear and tear and therefore depreciation is
not allowable on the BSE Card. In this connection, reliance is placed by
them on the decision of the Apex Court in the case of C.I.T. V/s. Alps Theatre
reported in 65 ITR 377 (S.C.).
5. In the light of the decisions of the Apex Court in the case of
Stock Exchange, Ahmedabad V/s. ACIT (248 ITR 209) and Vinay Bubna V/s.
Stock Exchange reported in (1999) 6 SCC 215, it is contended by the
counsel for the revenue that the BSE card is only a personal privilege
granted to a member to trade in shares on the floor of the Stock Exchange
and such a privilege cannot be equated with the expression ‘licences’ or the
expression ‘any other business or commercial right of similar nature’
enumerated in Section 32 of the Act. It is contended that there is a difference
between acquiring a knowhow, patent, copyright or a trade mark and
acquiring a licence to use such knowhow, patents, copyright, trade mark or
franchise. It is further contended that the expression ‘business or commercial
right of similar nature’ in section 32(1)(ii) of the Act has to be construed by
applying the principles of ejusdem generis and so read, it would be clear that
the expression ‘business or commercial rights of similar nature’ in Section
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27
32(I)(ii) of the Act would take colour from the preceding words, namely
knowhow, patents, copyrights, trade marks and franchises which belong to a
class of intellectual property rights. In other words, it is contended that the
expression ‘business or commercial rights of similar nature’ in Section 32(I)(ii)
of the Act is referable to the business or commercial rights relating to
intellectual property rights such as know-how, patents, copy rights, trade
marks and franchises and licences in respect thereof. Accordingly, it is
contended that the expression ‘licences’ as well as the expression ‘business
or commercial rights of similar nature’ in Section 32(1)(ii) of the Act are
referable to the intellectual property rights such as knowhow, patents,
copyrights, trade marks and franchises. As the BSE card does not fall in any
of the above categories it is submitted that depreciation cannot be allowed on
the BSE card acquired by the assessees. In this context reliance is placed
on the decision of the Apex Court in the case of CIT V/s. Hoogly Mills Co.
Ltd. reported in 287 ITR 333 (S.C.).
6. Mr.Irani, Mr.Mistri, Dr.Shivram, Mr.Tralshawala, Mr.Jhaveri,
Mr.Toprani and Mr. D’mello appearing on behalf of their respective clients, on
the other hand supported the order of the Tribunal. They contend that by
amending section 32 of the Act with effect from 1/4/1998 the legislature has
considerably enlarged the scope of the depreciation allowance. They contend
that by amending section 32 of the Act, the depreciation which was hitherto
restricted only on buildings, machinery, plant or furniture has now been
extended to knowhow, patents, copyrights, trade marks, licences, franchises
or any other business or commercial rights of similar nature acquired by the
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28
assessees on or after 1-4-1998. It is contended that the expression ‘licences’
in section 32 of the Act has been deliberately used in a wider sense so as to
allow depreciation on all types of licences, except personal licences which
are purely regulatory in nature.
7. Referring to various Dictionaries, it is contended by the counsel
for the assessees that the expression ‘licence’ would ordinarily mean a
permission to carry on any trade, business or profession which in the
absence of such licence, would be illegal. It is contended that the BSE card
is nothing but a `licence’ which permits or entitles an assessee to carry on
the business of trading in shares on the floor of the Stock Exchange. BSE
card is a source from which the revenue income flows. Acquisition of the
BSE card is a must for entering into a share broking business and without
acquiring such a card, share broking business cannot be carried on by an
assessee. Therefore, the BSE card which permits or entitles an assessee to
carry on share broking business would be covered within the meaning of the
expression ‘licences’ set out under section 32(1)(ii) of the Act and accordingly
depreciation is allowable on the BSE card.
8. It is further contended by the counsel for the assessees that the
very fact that the expression ‘licences’ has not been defined in the Act clearly
shows that the legislature intended to give common parlance meaning to the
expression ‘licences’. However, it is conceded by the counsel for the
assessees that the expression ‘licences’ in section 32(1)(ii) of the Act would
not cover every conceivable `licence’ as the said expression is commonly
understood. For example, it is conceded that the licence to occupy premises
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29
or immovable property or personal licences like a driving licence or a licence
to practice medicine or law are not intended to be covered under section
32(1)(ii) of the Act. It is contended that section 32(1)(ii) of the Act applies to
licences which are capable of being acquired at a cost or on payment. It is
contended that the BSE card acquired by the assessees either by nomination
or through auction at a cost would squarely fall under the expression
‘licences’ enumerated in section 32 of the Act and therefore the Tribunal was
justified in holding that the assessees are entitled to depreciation on the BSE
card.
9.
Alternatively, it is contended by the counsel for the assessees
that the BSE card is a ‘business or commercial right’ on which depreciation is
allowable under section 32 of the Act provided such right is acquired on or
after 1/4/1998. In all these cases, the BSE card is acquired by the
assessees on or after 1/4/1998 and that card gives business or commercial
rights to the assessees to carry on the business of share broking and
therefore, depreciation is allowable on the BSE card. It is contended that the
fact that the legislature has used the expression ‘business or commercial
rights of similar nature’ it does not mean that the legislature has intended to
grant depreciation to a restricted class of licences or a restricted class of
business or commercial rights. It is contended that since the expression
‘licences’ in section 32 of the Act is applicable to all types of licences (except
personal licences) it is clear that the expression ‘business or commercial
rights of similar nature’ would apply to all business or commercial rights
which are akin to licences. It is contended that neither the rule of noscitur a
sociis nor the rule of ejusdem generis are applicable in the present case,
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30
because the legislature has intentionally used the expression ‘licences’ which
has a wider meaning and the said intention has been reiterated in the
Memorandum explaining the amendment to section 32 of the Act by Finance
Act, 1997. Accordingly, it is submitted that the BSE card being a business or
commercial right, the Tribunal has rightly allowed depreciation on the BSE
card.
10. Dealing with the argument of the revenue that the BSE card is
neither a ‘depreciable asset’ nor a ‘capital asset’, it is contended by the
counsel for the assessees that the legislature by inserting clause (xi) to
section 47 of the Act with effect from 1/4/1998 has made it abundantly clear
that the membership of a recognised stock exchange is a capital asset and
liable to capital gains tax. Therefore, it is contended that, if acquisition of a
BSE card on or after 1/4/1998 is a capital asset for the purposes of capital
gains tax, then, there is no reason as to why the BSE card acquired by the
assessees on or after 1/4/1998 should not be treated as a capital asset for
the purposes of depreciation. Thus, it is submitted by the counsel for the
assessees that in any view of the matter, the BSE card would be squarely
covered under section 32 of the Act and therefore, no fault can be found with
the orders passed by the Tribunal in granting depreciation to the BSE cards
acquired by the assessees on or after 1/4/1998. Accordingly, it is submitted
that the question raised by the revenue in all these appeals be answered in
favour of the assessees and against the revenue.
11. Before considering the rival submissions, we may quote the
relevant provisions relating to the grant of depreciation allowance under the
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31
Act prior to 1/4/1998 and after 1/4/1998.
12. Section 32 of the Act prior to its amendment with effect from
1/4/1998 (to the extent relevant) read thus:-
” 32 (1) In respect of depreciation of buildings, machinery, plant or
furniture owned, wholly or partly, by the assessee and used for the
purposes of the business or profession, the following deductions shall,subject to the provisions of section 34, be allowed– ”
13. Section 32 of the Act after its amendment with effect from
1/4/1998 (to the extent relevant) reads thus:-
“32.
(1) In respect of depreciation of-
(i) buildings, machinery, plant or furniture, being tangible assets;
(ii) know-how, patents, copyrights, trade marks, licences,
franchises or any other business or commercial rights of similar
nature, being intangible assets acquired on or after the 1st dayof April, 1998,
owned, wholly or partly, by the assessee and used for the purposes of
the business or profession, the following deductions, shall be allowed.
(i) in the case of assets of an undertaking engaged in
generation or generation and distribution of power, suchpercentage on the actual cost thereof to the assessee as may
be prescribed;(ii) in the case of any block of assets, such percentage on the
written down value thereof as may be prescribed;14. On perusal of section 32 of the Act as amended with effect from
1/4/1998, it is seen that the legislature has extended depreciation to the
intangible assets which was until then restricted to buildings, machinery, plant
or furniture. It is pertinent to note that even after the amendment, the
depreciation under section 32 of the Act is restricted to the tangible /
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32intangible assets which are specifically enumerated therein and depreciation
is not allowable on all tangible / intangible assets. In other words,
depreciation even under the amended section 32 of the Act is allowable only
on the restricted categories of tangible / intangible assets which are
specifically enumerated in the section.
15. The intangible assets on which depreciation is made allowable
under section 32(1)(ii) of the Act are, knowhow, patents, copyrights, trade
marks, licences, franchises or any other business or commercial rights of
similar nature acquired on or after 1/4/1998.
16. In all the appeals before us, the specific case of the assessees
is that the BSE card acquired by them on or after 1/4/1998 is an intangible
asset covered under the expression ‘licences’ or alternatively covered under
the expression ‘any other business or commercial rights of similar nature’
enumerated in section 32(1)(ii) of the Act and therefore, depreciation is
allowable on the BSE card acquired by them.
17. The first question therefore to be considered is, whether the
BSE card acquired by the assessees on or after 1/4/1998 is covered under
the expression ‘licences’ enumerated under section 32(1)(ii) of the Act ?
18. The expression ‘licences’ is not defined under the Act. The
expression `licence’ is however, defined under section 52 of the Indian
Easements Act, 1882 to mean a right to do or continue to do, in or upon the
immovable property of the grantor, something which would, in the absence of
such right, be unlawful and such right does not amount to an easement or an
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33interest in the property. Such a right under a licence to do or continue to do
something which is lawful, in or upon the immovable property of the grantor
can be acquired under oral contract or under a written contract. In either
case, enforcement of the rights and obligations flowing therefrom, would be
subject to the provisions of the Indian Contract Act, 1872.
19. The expression ‘licences’ in common parlance means
permission to carry on trade, business, profession, etc. The expression
‘trade’ is not defined under the Act. Ordinarily, the expression ‘trade’ means
the exchanging of goods for goods or goods for money. The expression
‘business’ is defined under section 2(13) of the Act to include any trade,
commerce or manufacture or any adventure or concern in the nature of trade,
commerce or manufacture. The expression ‘profession’ is defined under
section 2(36) of the Act to include vocation. Thus, the activity or transaction
of buying and selling at profit is ordinarily a case of ‘trade’. If such
transactions are on a large scale, it is called commerce and continuous
repetition of such transaction would constitute business. The expression
‘profession’ involves the idea of an occupation requiring purely intellectual
skill or manual skill controlled by the intellectual skill of the operator as
distinguished from an occupation or business which is substantially the
production or sale or arrangements for the production or sale of commodities.
20. To ensure orderly growth of trade, business, profession, etc.
various legislations have been enacted with provisions relating to licensing.
For example, under section 11 of the Industries (Development & Regulation)
Act, 1951, licence is mandatory for establishing any of the industries
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34enumerated under the First Schedule to the said Act. If the goods
manufactured by the industries enumerated in the First Schedule to the
Industries (Development & Regulation) Act, 1951 are excisable, then, licence
by way of registration under section 6 of the Central Excise Act, 1944 is also
mandatory. The Export-Import Policy framed by the Government from time to
time requires the importer to obtain licence before importing certain goods.
To deal in securities, licence under section 17 of the Securities Contracts
(Regulation) Act, 1956 is mandatory. To carry on banking business, licence is
mandatory under section 22 of the Banking Regulation Act, 1949. Under the
Cantonments Act, 2006, licence is mandatory for establishment of a private
market or slaughter house in the cantonment area. To carry on food
business licence under section 31 of the Food Safety & Standards Act, 2006
is mandatory. To manufacture, sale and distribution of insecticides, licence is
mandatory under section 13 of the Insecticides Act, 1968. To explore
minerals, licence is necessary under the Off-shore Areas Mineral
(Development & Regulation) Act, 2002. To manufacture, sale, purchase,
possession, consumption or use of intoxicant for bonafide medicinal,
scientific, industrial or educational purposes, obtaining licence is mandatory
under section 31 of the Bombay Prohibition Act, 1949.
21. Similarly, in relation to the intellectual property rights, such
as patents and copyrights, the legislature has enacted the Patents Act,
1970 and Copyrights Act, 1957 containing licencing provisions. Under
the Patents Act, a patent grant gives the patentee exclusive right to
make or use the patented article or use the patented process. A
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35patentee has power to assign or grant licence to deal with the patent for
any consideration. If the patent is not worked so as to satisfy the
reasonable requirements of the public at a reasonable price, the
appropriate authority under the Act is empowered to grant compulsory
licences to any applicant to work the patent. Even under the Copyrights
Act, a copyright can be transferred by assignment and interest in a
copyright can also be transferred by way of a licence. Similarly, under
the Trade Marks Act 1999, the proprietary right of a trader to use a mark
for his goods is protected by registration and such a right can be
transmitted either by assignment or by issuing a licence.
22. The expression ‘knowhow’ is defined under Explanation 4 to
Section 32 (1) of the Act to mean any industrial information or technique
which is likely to assist in the manufacture or processing of goods or in the
working of a mine, oil-well or other sources of mineral deposits (including
searching for discovery or testing of deposits for the winning of access
thereto). Right to use know-how can be acquired either absolutely or
conditionally under a licence.
23. The expression ‘Franchises’ is neither defined in the Act nor
there is any specific legislation in India relating to franchises. As per
Black’s Law Dictionary, 8th Edition, the expression franchise denotes:-
“1. ……
When referring to government grants (other than patents,
trademarks, and copyrights), the term ‘franchise’ is often used to::: Downloaded on – 09/06/2013 15:03:14 :::
36connote more substantial rights, whereas the term ‘license’
connotes lesser rights. Thus, the rights necessary for public
utility companies to carry on their operations are generallydesignated as franchise rights. On the other hand, the rights to
construct or to repair, the rights to practice certain professions
and the rights to use or to operate automobiles are generallyreferred to as licenses….”
3. The sole right granted by the owner of a trademark or tradename
to engage in business or to sell a good or service in a certain arearea. 4. The business or territory controlled by the person or
entry that has been granted such a right.commercial franchise. A franchise using local capital and
management by contracting with third parties to operate a facilityidentified as offering a particular brand of goods or services.
sports franchise. 1. A franchise granted by a professional sports
league to field a team in that league. 2. The team itself.trial franchise. A franchise having an initial term of limited duration,
such as one year.franchise, vb. To grant (to another) the sole right of engaging in a
certain business or in a business using a particular trademark in a
certain area. ”Thus, franchising is a kind of business where franchisor
grants a licence to the franshisee to use franchisor’s intellectual property
rights such as knowhow, patents, trademarks, brand name, etc. to
market the franchisor’s products or services for consideration.
24. From the above, it is clear that the expression ‘licences’ is a
very wide term and it would embrace within its sweep not only the
permission to use immovable property for lawful purposes but also
permission to carry on any trade, business, profession, etc. including the
right to acquire the intellectual property rights.
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3725. The question, therefore to be considered is, whether the
expression ‘licences’ in section 32(1)(ii) of the Act is used in a wider
sense so as to cover all types of licences or is it used in a restricted
sense so as to cover the class of assets enumerated in the section ?
26. As noticed earlier, depreciation under Section 32 of the Act
is restricted to a class of tangible / intangible assets specifically
enumerated therein. All the intangible assets specifically enumerated in
section 32(1)(ii) of the Act (except the expression `licences’) belong to
the class of intellectual properties. As the expression `licences’ in
section 32(1)(ii) of the Act is preceded by the expressions know-how,
patents, copyrights, trade marks and succeeded by the expression
`franchises’ which are all relatable to intellectual property rights, the
question to be considered is, whether the expression `licences’ in
Section 32(1)(ii) of the Act is intended to be used widely or restrictively ?
27. The Apex Court in the case of Dr.Devendra M. Surti V/s. State of
Gujarat reported in AIR 1969 S.C. 63 was called upon to consider the scope
of the word ‘commercial establishment’ defined in Section 2(4) of the Bombay
Shops & Establishments Act 1948 which read thus :
” ‘Commercial establishment’ means an establishment which carries
on, any business, trade or profession or any work in connection with,
or incidental or ancillary to, any business, trade or profession and
includes a society registered under the Societies Registration Act,
1860, and a charitable or other trust, whether registered or not, which
carries on whether for purposes of gain or not, any business, trade or
profession or work in connection with or incidental or ancillary thereto
but does not include a factory, shop, residential hotel, restaurant,::: Downloaded on – 09/06/2013 15:03:14 :::
38eating house, theatre or other place of public amusement or
entertainment.”(emphasis supplied)
The question before the Apex Court was, whether a private
dispensary of a doctor is covered under the above definition. After
considering the case on merits, the Apex Court held thus :
“——–It is true that Section 2(4) of the Act has used words of very
wide import and grammatically it may include even a Consulting room
where a doctor examines his patients with the help of a solitary nurseor attendant. But, in our opinion, in the matter of construing the
language of Section 2(4) of the Act we must adopt the principle ofnoscitur a sociis. This rule means that, when two or more words which
are susceptible of analogous meaning are coupled together they are
understood to be used in their cognate sense. The words take as it
were their colour from each other that is, the more general is restrictedto a sense analogous to a less general. “Associated words take their
meaning from one another under the doctrine of a noscitur a sociis the
philosophy of which is that the meaning of a doubtful word may be
ascertained by reference to the meaning of words associated with it;such doctrine is broader than the maxim Ejusdem Generis.”
28. Similarly, the Apex Court, in the case of Rohit Pulp & Paper Mills Ltd.
V/s. Collector of Central Excise reported in (1990) 3 SCC 447 was called
upon to consider the scope of word ‘Coated Paper’ in the second proviso to
Notification No.25 of 1984 issued under the Central Excise Rules 1944,
which read thus :-
“Provided further that the exemption contained in this notification shall
not apply to cigarette tissue, glassine paper, grease proof paper,
coated paper (including waxed paper) and paper of a substance not
exceeding 25 grammes per square metre.”After considering the entire case law and the rules of
interpretation, the Apex Court held thus :-
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39“In this case, the aim and object of the notification is to grant a
concession to small scale factories which manufacture paper with
unconventional raw materials. The question naturally arises: Couldthere have been any particular object intended to be achieved by
introducing the exceptions set out in the proviso ? Instead of
proceeding on the premise that it is not necessary to look for anyreason in a taxing stature, it is necessary to have a closer look at the
wording of the proviso. If the proviso had referred only to ‘coated
paper’, no special object or purpose would have been discernible and
perhaps there would have been no justification to look beyond it and
enter into a speculation as to why the notification should have thoughtof exempting only ‘coated paper’ manufactured by these factories from
the purview of the exemption. But the notification excepts not one but
a group of items. If the items mentioned in the group were totally
dissimilar and it were impossible to see any common thread running
through them, again, it may be permissible to give the exceptions theirwidest latitude. But when four of them – undoubtedly, at least three of
them – can be brought under an intelligible classification and it is alsoconceivable that the government might well have thought that these
small scale factories should not be eligible for the concession
contemplated by the notification where they manufacture paper
catering to industrial purposes, there is a purpose in the limitationprescribed and there is no reason why the rationally logical restriction
should not be placed on the proviso based on this classification. In
our view, the only reasonable way of interpreting the proviso is by
understanding the words ‘coated paper’ in a narrower senseconsistent with the other expressions used therein. ”
29. In the case of Godfrey Phillips India Limited V/s. State of U.P.
reported in (2005) 2 SCC 515, the Apex Court held thus :
“75. Where two or more words susceptible of analogous
meaning are clubbed together, they are understood to be used in their
cognate sense. They take, as it were, their colour from and are
qualified by each other, the meaning of the general word being
restricted to a sense analogous to that of the less general. As said in
Maxwell on the Interpretation of Statutes, 12th Edn., p.289 :
“Words, and particularly general words, cannot be read in
isolation; their colour and their content are derived from their context.”
30. More recently, the Apex Court in the case of Leelabai V/s.
Oriental Insurance Co. Limited reported in (2008) 9 SCC 720, while
construing the expressions `Public Sector Undertakings’ in Section 3(1)(b) of
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40
the Maharashtra Rent Control Act 1999, held thus :-
“74. Thirdly, we are of the view that, in this case, the principle
of noscitur a sociis is clearly applicable. According to this principle,
when two or more words which are susceptible to analogous meanings
are coupled together, the words can take their colour from each other.
Applying this test, we hold that Section 3(1)(b) clearly applies to
different categories of tenants, all of whom are capable of paying rent
at market rates. Multinational companies, international agencies,
statutory corporations, government companies, public sector
companies can certainly afford to pay rent at the market rates. Thisthought is further highlighted by the last category in Section 3(1)(b).
Private limited companies and public limited companies having a paid-
up share capital of more than Rs.1,00,00,000 are excluded from the
protection of the Rent Act. This further supports the view which we
have taken that each and every entity mentioned in Section 3(1)(b)can afford to pay rent at the market rates.”
31.
Applying the ratio laid down by the Apex Court in the aforesaid
cases to the facts of the present case, in our opinion, the expression
`licences’ in Section 32(1)(ii) of the Act has to be construed restrictively so as
to apply to licences relating to acquisition / user of intellectual property rights,
because, firstly, plain reading of Section 32 of the Act makes it clear that the
depreciation is restricted to the categories of intangible assets specifically
enumerated therein and not to all intangible assets. In such a case,
construing the expression ‘licences’ widely so as to cover all types of
intangible assets acquired under a licence would amount to enlarging the
scope of depreciation. Secondly, the categories of intangible assets
specifically enumerated in Section 32(1)(ii) of the Act (barring the expression
‘licences’) are all relatable to intellectual properties. Since the common thread
in almost all the expressions used in section 32(1)(ii) of the Act relate to the
class of intellectual property rights, it is reasonable to construe that the
expression ‘licences’ in section 32(1)(ii) of the Act relates to the class of
intellectual property rights. Thirdly, the rule of Noscitur a Sociis would apply
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41
to the facts of the present case, because, the expression ‘licences’ in section
32(1))(ii) of the Act is preceded and succeeded by the expressions which are
all relatable to intellectual properties and therefore, the expression ‘licences’
in section 32(1)(ii) of the Act would take colour from those expressions and
accordingly apply only to licences relating to intellectual properties.
32. Construing the expression ‘licences’ in section 32(1)(ii) of the
Act widely so as to apply to all types of licences relating to intangible assets
would defeat the object of the Act, because, depreciation under section 32 of
the Act is intended to a limited category of intangible assets and not to a
wider category of intangible assets. Therefore, it is reasonable to construe
that the expression ‘licences’ is used in section 32(1)(ii) of the Act to apply to
licences relatable to intellectual properties only and not to all licences.
33. The above reasoning of ours is further fortified by the
expression ‘any other business or commercial rights of similar nature’ used in
section 32(1)(ii) of the Act. The said expression clearly postulates that the
business or commercial rights which are not similar to the categories
specified in section 32(1)(ii) of the Act are not entitled to depreciation. In
other words, the expression ‘business or commercial rights of similar nature’
clearly shows that all business or commercial rights are not entitled to
depreciation. Therefore, construing the expression ‘licences’ widely so as to
apply to all licences / permissions and all business or commercial rights
would be ex-facie contrary to express intention of the legislature.
Accordingly, the alternative argument of the assessees that the BSE card is a
business or commercial right and therefore entitled to depreciation is liable to
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42
be rejected, because, what section 32(1)(ii) of the Act contemplates is the
business or commercial rights relating to intellectual properties and not all
categories of business or commercial rights. Since the BSE card is not a
business or commercial right relating to intellectual property rights
depreciation cannot be allowed on the BSE card.
34. Strong reliance was placed by the counsel for the assessees on
the decision of the Apex Court in the case of Scientific Engineering House(P)
Ltd. V/s. CIT reported in 157 ITR 86 (S.C.) in support of their contention that
wider meaning should be given to the expression ‘licences’ in section 32 (1)
(ii) of the Act. There is no merit in the above contention because, firstly, the
expressions ‘buildings, machinery, plant or furniture’ used in section 32(1) of
the Act as it stood prior to 1/4/1998 did not form a class by themselves and
each expressions used in section 32(1) of the Act had to be construed
independently and, therefore, wider meaning had to be given to each of the
expressions used in section 32(1) of the Act. Whereas, the intangible assets
enumerated in section 32(1)(ii) of the Act form a class of intellectual property
and since the common thread flowing in almost all the said expressions is the
intellectual property rights, the expression ‘licences’ would take colour from
other expressions which are all referable to intellectual property rights. Thus,
the decision of the Apex Court in the case of Scientific Engineering House (P)
Ltd. (supra) does not support the case of the assessees.
35. The argument of the assessees that the expression ‘licences’ in
section 32(1)(ii) of the Act must be construed widely and at the same time
conceding that the expression ‘licences’ in section 32(1)(ii) of the Act would
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43
not cover personal licences is mutually contradictory. Either the expression
‘licences’ has to be construed widely as it is understood in common parlance
or construed restrictively in the light of associate words used in the section.
There is no other way of interpreting the said expression. As noted earlier,
the expression ‘licences’ in section 32(1)(ii) of the Act cannot be construed
widely, because, the expression `any other business or commercial rights of
similar nature’ in Section 32(1)(ii) of the Act makes it abundantly clear that
the legislature intended to give narrower or restricted meaning to the
expressions used in the Section. Therefore, while rejecting the contention of
the assessees, we have no hesitation in holding that the expression ‘licences’
in section 32(1)(ii) of the Act must be construed restrictively so as to apply to
licences relating to acquisition / user of intellectual property rights.
36. The argument advanced by the counsel for the assessees that
since the BSE card is a capital asset and is liable for capital gains tax when
sold at a profit, depreciation must be allowed on the BSE card acquired after
1/4/1998 is also without any merit, because, under section 32 of the Act
depreciation is not allowed on all capital assets but is allowable on capital
assets which fall in any of the categories enumerated in the Section. As we
have held that the BSE card does not fall in any of the categories specified in
section 32(1)(ii) of the Act, depreciation cannot be allowed on the BSE card.
37. For all the aforesaid reasons, we hold that the Tribunal was not
justified in allowing depreciation on the BSE card acquired by the assessees.
38. Accordingly, the substantial question of law framed is answered
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44
in the negative i.e. in favour of the revenue and against the assessees. All
the appeals are disposed of accordingly with no order as to costs.
(V. C. DAGA, J.)
(J. P. DEVADHAR, J.)
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