M/S GEOJIT SECURITIES LIMITED (GEOJIT FINANCIAL SERVICES LTD.) v. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1(2), ERNAKULAM

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: The Hon. Justice K. Vinod Chandran
The Hon. Justice Ashok Menon
Judgment Date: 2019-01-22
Court Decision / Holding: ITA Nos.421, 423 and 424 of 2010 are allowed. The orders of the lower authorities are set aside to the extent of the membership depreciation issue, and the assessee’s claim for depreciation on the BSE membership as an intangible asset under Section 32(1)(ii) is allowed. The parties shall bear their own costs.
Final Disposition: Appeals allowed

Parties to the Case

Appellants / Petitioners

M/S GEOJIT SECURITIES LTD. (GEOJIT FINANCIAL SERVICES LTD.)

Respondents

The Asst. Commissioner of Income Tax, Circle 1(2), Ernakulam

Legal Representation & Advocates

Counsels for Petitioners

• Sri.E.K.Nandakumar (Sr.)
• Smt.Preetha S. Nair
• Sri.K.John Mathai
• Sri.P.Benny Thomas
• Sri.P.Gopinath (Sr.)

Counsels for Respondents

• Sri.Jose Joseph, SC, for Income Tax
• Sri.P.K.Ravindranathan Menon, Sr. Counsel, GOI (Taxes)

Case Synopsis & Summary

The assessee, GEOJIT Securities Ltd., had claimed depreciation under Section 32(1)(ii) of the Income Tax Act, 1961 for membership in the Bombay Stock Exchange (BSE). The lower authorities repeatedly disallowed the claim for three assessment years. The Kerala High Court, relying on a binding Supreme Court declaration in Techno Shares and Stocks Ltd. v. Commissioner of Income Tax (2010) 327 ITR 323, held that the BSE membership card constitutes an intangible asset and depreciation can be claimed thereon. Consequently, the court answered the question in favour of the assessee, set aside the orders of the lower authorities on this aspect, and allowed the ITA petitions (421/2010, 423/2010, 424/2010), with the parties bearing their respective costs. The decision explicitly aligns with the Supreme Court’s view that membership in a recognized stock exchange can be treated as an intangible asset for purposes of depreciation, thereby enabling relief to the taxpayer for these years. The matter underscores the continued relevance of Techno Shares in determining the nature of exchange memberships for tax depreciation purposes.

Provisions of Law Cited

Section 32(1)(ii) of the Income Tax Act, 1961Section 154 of the Income Tax Act, 1961Section 143(3) of the Income Tax Act, 1961

Submissions & Arguments

Contentions of Appellants / Petitioners

The assessee contends that its BSE membership is an intangible asset eligible for depreciation under Section 32(1)(ii) of the Income Tax Act, 1961. Relying on the Supreme Court's Techno Shares and Stocks Ltd. ruling, which qualifies BSE membership as an intangible asset, the lower authorities’ disallowance is erroneous and must be set aside. The position taken is that the asset’s intangible nature warrants depreciation treatment, aligning with judicial precedent and the statute.

Contentions of Respondents

The revenue argues that the BSE membership does not represent a depreciable intangible asset, and thus depreciation cannot be claimed under Section 32(1)(ii). It defended the lower authorities’ consistent disallowance of the claim for the three years. (Note: the judgment primarily emphasizes the subsequent Techno Shares decision as binding and favorable to the assessee.)

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Techno Shares and Stocks Ltd. v. Commissioner of Income Tax	327 ITR 323 (SC)	Positive	Supreme Court held the BSE membership card is an intangible asset, allowing depreciation under Section 32(1)(ii); Kerala HC relies on this binding authority to decide in favor of the assessee.

Extracted Judgment Text

Exact text extracted from official judgment records.

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE ASHOK MENON** **TUESDAY ,THE 22ND DAY OF JANUARY 2019 / 2ND MAGHA, 1940** **ITA.No. 421 of 2010** **AGAINST THE ORDER/JUDGMENT IN ITA 294/(COCH)2006 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 25-03-2009** ## **APPELLANT/S:/APPELLANT/ASSESSEE:** **M/S GEOJIT SECURITIES LIMITED, (GEOJIT FINANCIAL SERVICES LTD.), 5TH FLOOR, FINANCE TOWERS,KALOOR,KOCHI-17.** **BY ADVS. SRI.E.K.NANDAKUMAR (SR.) SMT.PREETHA S.NAIR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.P.GOPINATH (SR.)** ## **RESPONDENT/S:/RESPONDENT/REVENUE:** **THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1(2), ERNAKULAM.** **BY ADVS. SRI.JOSE JOSEPH, SC, FOR INCOME TAX SRI.P.K.RAVINDRANATHA MENON, SR. COUNSEL, GOI (TAXES)** **THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 22.01.2019, ALONG WITH ITA.423/2010 AND ITA.424/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE ASHOK MENON** **TUESDAY ,THE 22ND DAY OF JANUARY 2019 / 2ND MAGHA, 1940** **ITA.No. 423 of 2010** **AGAINST THE ORDER/JUDGMENT IN ITA 296(COCH)/2006 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 25-03-2009** ## **APPELLANT/S:/APPELLANT/ASSESSEE:** **M/S. GEOJIT SECURITIES LTD. (GEOJIT FINANCIAL SERVICES LTD.) 5TH FLOOR,, FINANCE TOWERS, KALOOR, KOCHI-17.** **BY ADVS. SRI.E.K.NANDAKUMAR (SR.) SMT.PREETHA S.NAIR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.P.GOPINATH (SR.)** ## **RESPONDENT/S:/RESPONDENT/REVENUE:** **THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1 (2), ERNAKULAM.** **BY ADVS. SRI.P.K.RAVINDRANATHA MENON, SR.COUNSEL, GOI (TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX** **THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 22.01.2019, ALONG WITH ITA.421/2010 AND ITA.424/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** # **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **&** **THE HONOURABLE MR. JUSTICE ASHOK MENON** **TUESDAY ,THE 22ND DAY OF JANUARY 2019 / 2ND MAGHA, 1940** **ITA.No. 424 of 2010** **AGAINST THE ORDER/JUDGMENT IN ITA 295(COCH)/2006 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 25.3.2009** ## **APPELLANT/S:/APPELLANT/ASSESSEE:** **M/S.GEOJIT SECURITIES LIMITED, (GEOJIT FINANCIAL SERVICES LTD) 5TH FLOOR, FINANCE, TOWERS, KALOOR, KOCHI-17.** **BY ADVS. SRI.E.K.NANDAKUMAR (SR.) SMT.PREETHA S.NAIR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.P.GOPINATH (SR.)** **RESPONDENT/S:/RESPONDENT/REVENUE:** **THE ASST.COMMISSIONER OF INCOME TAX, CIRCLE 1(2), ERNAKULAM.** **BY ADVS. SRI.JOSE JOSEPH, SC, FOR INCOME TAX SRI.P.K.RAVINDRANATHA MENON, SR.COUNSEL, GOI (TAXES)** **THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 22.01.2019, ALONG WITH ITA.421/2010 AND ITA.423/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **K.VINOD CHANDRAN & ASHOK MENON, JJ.** ------------------------------------------ITA Nos.421, 423 and 424 of 2010 ------------------------------------------Dated this the 22[nd] day of January, 2019 ## J U D G M E N T ## Vinod Chandran, J. The assessee is a Company incorporated, inter alia, with the object of dealing in stocks and securities. The assessee had taken membership in the Bombay Stock Exchange (BSE). The membership fees was sought to be claimed as deduction under Section 32(1) (ii) of the Income Tax Act, 1961 as depreciation. The lower authorities consistently disallowed the claim for all the three assessment years. As of now, the finding of the lower authorities stands vitiated by the reason of the binding declaration made by the Honourable Supreme Court in (2010) 327 ITR 323 (SC) [Techno Shares and Stocks Ltd. v. Commissioner of Income Tax] . The Honourable Supreme Court had held that the membership card of the BSE is an intangible asset and depreciation can be claimed thereon. The issue raised in the above cases is also with respect to the membership taken in the BSE. Hence, the question of ITAs421,423&424/10 -5- law has to be answered in favour of the assessee and against the Revenue. The orders of the lower authorities for all the assessment years would stand set aside on that aspect. In view of the above, these ITAs would stand allowed leaving the parties to suffer their respective costs. **Sd/-** **K.VINOD CHANDRAN JUDGE** **Sd/ASHOK MENON JUDGE** ITAs421,423&424/10 -6- ## **APPENDIX OF ITA 421/2010** ## **APPELLANT'S/S EXHIBITS:** ## **ANNEXURE-A** **TRUE COPY OF THE ORDER FOR THE YEAR 2001-02 UNDER SECTION 154 DATED 7/9/2005 ISSUED BY THE RESPONDENT TO THE APPELLANT.** ## **ANNEXURE-B** **TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 23/2/2006 ISSUED TO THE APPELLANT.** ## **ANNEXURE-C** **TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 25/3/2009 ISSUED TO THE APPELLANT.** ## **ANNEXURE-D** **TRUE COPY OF THE ORDER IN MISCELLANEOUS PETITION DATED 9/9/2009** [True Copy] jg ITAs421,423&424/10 -7- ## **APPENDIX OF ITA 423/2010** **APPELLANT'S/S EXHIBITS:** **ANNEXURE-A** **TRUE COPY OF THE ORDER FOR THE YEAR 2003-04 UNDER SECTION 143(3) DATED 26/8/2005 ISSUED BY THE RESPONDENT TO THE APPELLANT** ## **ANNEXURE-B** **TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 23/2/2006 ISSUED TO THE APPELLANT.** ## **ANNEXURE-C** **TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 25/3/2009 ISSUED TO THE APPELLANT.** ## **ANNEXURE-D** **TRUE COY OF THE ORDER IN MISCELLANEOUS PETITION DATED 9/9/2009** [True Copy] jg ITAs421,423&424/10 -8- ## **APPENDIX OF ITA 424/2010** ## **APPELLANT'S/S EXHIBITS:** ## **ANNEXURE-A** **TRUE COPY OF THE ORDER FOR THE YEAR 2002-03 UNDER SECTION 154 DATED 20/9/2005 ISSUED BY THE RESPONDENT TO THE APPELLANT.** ## **ANNEXURE-B** **TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 23/2/2006 ISSUED TO THE APPELLANT.** ## **ANNEXURE-C** **TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 25/3/2009 ISSUED TO THE APPELLANT.** ## **ANNEXURE-D** **TRUE COPY OF THE ORDER IN MISCELLANEOUS PETITION DATED 9/9/2009** [True Copy] jg