In Techno shares & Stocks Ltd & Ors V. CIT (2010)44 DTR (SC)65 the apex court held that stock exchange membership card is a commercial or business right covered by Explanation 3 to sec.32(1)(ii) of the Act.
The court held that the right of membership vests with the exchange only when a member defaults and otherwise a member would continue to be a member with all rights therein. As per rule 5 of BSE Rules, membership is a permission from the exchange which is like licence enabling the member to exploit the rights and enjoy the privileges attached to it.The membership is akin to licence which falls within the coverage of items mentioned by sec.32(1)(ii).
Thus it was held that the stock exchange membership is an asset eligible for depreciation under sec.32 of the Act.
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