V.C. Daga and J.P. Devadhar, JJ
11 September 2009
Vimal Gupta, Suresh Kumar, Padma Divekar, R.B. Upadhyay, P.S. Sahadevan, Devki Iyer for the Appellant
F.V. Irani, K. Shivram with A.R. Singh and P.S. Savla with P.C. Tripathi and Vandana Rawale, Balasaheb Yewale i/b. Rajesh Shah and Co., A.K. Jasani, Pallavi Divekar, P.C. Tripathi and Vandana Rawale, Denzil D'mello for the Respondent
JUDGEMENT
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 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 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 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 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, 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 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 day of 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, such percentage 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/ intangible 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 interest 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 and Regulation) Act, 1951, licence is mandatory for establishing any of the industries enumerated under the First Schedule to the said Act. If the goods manufactured by the industries enumerated in the First Schedule to the Industries (Development and 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 and 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 and 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 patentee 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 connote more substantial rights, whereas the term 'license' connotes lesser rights. Thus, the rights necessary for public utility companies to carry on their operations are generally designated 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 generally referred 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 are area.
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 facility identified 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.
25. 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 and 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, eating 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 nurse or attendant. But, in our opinion, in the matter of construing the language of Section 2(4) of the Act we must adopt the principle of noscitur 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 restricted to 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 and 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:-
"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: Could there 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 any reason 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 thought of 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 their widest latitude. But when four of them - undoubtedly, at least three of them - can be brought under an intelligible classification and it is also conceivable 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 limitation prescribed 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 sense consistent 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 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. This thought is further highlighted by the last category in Section 3(1)(b). Private limited companies and public limited companies having a paidup 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 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 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 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 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.
