INCOME TAX ACT, 1961

Business expenditure - Allowability -Payment of membership fees to stock exchange

Assessee was engaged in business of investment, finance and broking activities, it paid membership fees to National Stock Exchange and Vadodara Stock Exchange. It also placed with said stock exchanges in non-adjustable deposits and in interest-free deposits and claimed said payments as revenue expenditure. AO disallowed on ground of capital expenditure. Held: Membership card of a stock exchange was a capital asset and, therefore, any expenditure incurred to acquire said card was capital in nature and, hence, not allowed under section 37(1).

Income-tax Act, 1961, Section 37(1), read with sections 2(14) and 47

A.Y. : 1995-96
Decision: In favour of revenue.

INCOME TAX ACT, 1961

Capital or revenue expenditure - Membership card -Revenue expenditure vis--vis capital asset

Held: As per provisions of Section 37(1), read with sections 2(14) and 47, membership card of a stock exchange was a capital asset and, therefore, any expenditure incurred to acquire said card was capital expenditure and hence, not allowable under section 37(1)

Income-tax Act, 1961, Section 37(1)

A.Y. : 1995-96
Decision: In favour of revenue.

INCOME TAX ACT, 1961

Business expenditure - Allowability -Refundable deposits

The issue arose as to whether expenditure incurred to acquire membership of a stock exchange was revenue expenditure. Held:Refundable deposits placed by an assessee with stock exchange did not term as expenditure, therefore, such deposits cannot be allowed as deduction under section 37(1).