By TIOL News Service

AHEMDABAD, DEC 21, 2016: THE ISSUE IS - Whether the "Stock Exchange Card" of the Ahmedabad Stock Exchange held by a non-defaulting member is an "Asset" in the hands of the Assessee and hence exigible to wealth tax. YES IS THE VERDICT.

Facts of the case:

The assessee is a share broker and is a member of Ahmedabad Stock Exchange. The Stock Exchange had given him Card called as "Stock Exchange Card". For the AY 1991-92, the assessee submitted Wealth Tax Return, however treating the said "Stock Exchange Card" not an "asset". According to the assessee no tax was payable in respect of said Card. Assessing Officer held that the "Stock Exchange Card" is liable to Wealth Tax. On appeal, both CIT(A) & ITAT agreed with the views of AO.

On appeal, the HC held that,

++ On analysis of the Rules of the Stock Exchange, it is observed and held by the Hon'ble Supreme Court that right of the Membership with includs the right of nomination vests in the Exchange only when a Member commits default. Otherwise, he continues to participate in the trading session on the floor of the Exchange; that he continues to deal with other members of the Exchange and even has the right to nominate subject to compliance of the Rules;

++ In the present case, the assessee continues to hold the Card and is a non defaulting Member. Therefore, so long as assessee holds Membership Card and is non defaulting Member such a Membership Card can be said to be an "assets" within the definition of Section 2(e) of the Act, 1957 and on the same the assessee is liable to pay Wealth Tax.

(See 2016-TIOL-3070-HC-AHM-WT)