Alex George, Alappuzha V. ITO, Alappuzha

CO 8/COCH/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 6828 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 05-01-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 10-05-2010
• Court: TRIBUNAL
• Department Lawyers: VENKITACHALAM
• Assessee Lawyers: S VIJAYAPRABHA
• Keywords: Depreciation; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 71/COCH/2010 ASSESSMENT YEAR : 2003-04 I.T.O., WARD-1, ALAPPUZHA. VS. SHRI ALEX GEORGE, M/S. LIZLEO INDANE SERVICES, EDATHUA-689 573, DT. ALAPPUZHA. [PAN:ACOPG 1594M]. (REVENUE-APPELLANT) (ASSESSEE - RESPONDENT) C.O. NO. 08/COCH/2010 (ARSG. OUT OF I.T.A. NO. 71/COCH/2010) ASSESSMENT YEAR : 2003-04 SHRI ALEX GEORGE, M/S. LIZLEO INDANE SERVICES, EDATHUA-689 573, DT. ALAPPUZHA. [PAN:ACOPG 1594M]. VS. I.T.O., WARD-1, ALAPPUZHA. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY MS. S.VIJAYAPRABHA, JR. DR REVENUE BY SHRI M.S.VENKITACHALAM, CA DATE OF HEARING 05/01/2012 DATE OF PRONOUNCEMENT 6/01/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 20-11-2009 PASSED BY LD CIT (A)-IV, KOCHI AND THEY RELATE TO THE ASSESSMENT YEAR 2003-04. THE CROSS OBJECTION FILE D BY THE ASSESSEE IS BARRED BY LIMITATION BY 45 DAYS. THE ASSESSEE HAS MOVED A PE TITION FOR CONDONING THE DELAY. I.T.A. NO. 71/COCH/2009 & C.O. NO. 08/COCH/2010 2 HAVING REGARD TO THE SUBMISSIONS MADE IN THE PETITI ON, WE CONDONE THE DELAY AND ADMIT THE SAME. 2. THE SOLITARY ISSUE URGED BY THE DEPARTMENT I S WHETHER THE LD CIT(A) IS JUSTIFIED IN DIRECTING THE AO TO ALLOW DEPRECIATION ON THE AMOUN T PAID FOR ACQUIRING DISTRIBUTORSHIP RIGHTS OF LPG CYLINDERS. 3. THE FACTS RELATING TO THE ISSUE ARE STATED I N BRIEF. THE ASSESSEE GOT DISTRIBUTORSHIP IN AN AUCTION CONDUCTED BY M/S INDIAN OIL CORPORATION BY PAYING THE BID AMOUNT OF RS.54,76,000/-. THE ASSESSEE CLAIMED THE SAME AS RE VENUE EXPENDITURE. HOWEVER, THE ASSESSING OFFICER DISALLOWED THE SAID CLAIM BY TREA TING THE SAME AS CAPITAL EXPENDITURE. IN THE APPEAL FILED BY THE ASSESSEE, THE LD CIT(A) CONFIRMED THE VIEW OF THE ASSESSING OFFICER. HOWEVER, THE LD CIT(A) OPINED THAT THE DI STRIBUTORSHIP RIGHT IS AN INTANGIBLE ASSET ON WHICH DEPRECIATION IS ALLOWABLE. ACCORDIN GLY, HE DIRECTED THE AO TO ALLOW DEPRECIATION ON THE SAID AMOUNT @ 25%. THE REVENUE IS AGGRIEVED BY THE SAID DIRECTION GIVEN BY THE LD CIT(A). 4. BEFORE US, THE LD JR. D.R PLACED RELIANCE ON THE DECISION DATED 11-09-2009 OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. M/S TECHNO SHARES & STOCKS LTD IN APPEAL NO.971 OF 2006 TO CONTEND THAT THE DISTRIBUTORSHIP RIGHTS WOULD NOT FALL IN THE CATEGORY OF INTANGIBLE ASSETS, WHICH ARE ELIGIBLE FOR DEPRECI ATION. HOWEVER, THE LD A.R SUBMITTED THAT THE SAID DECISION OF HONBLE BOMBAY HIGH COUR T HAS SINCE BEEN REVERSED BY THE HONBLE SUPREME COURT AND FURNISHED A COPY OF THE O RDER OF APEX COURT REPORTED IN (2010)(327 ITR 323). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. T HE HONBLE SUPREME COURT IN THE CASE OF M/S TECHNO SHARES & STOCKS LTD, SUPRA HAS HELD T HAT THE STOCK EXCHANGE MEMBERSHIP CARD, WHICH ALLOWS RIGHT TO THE NON-DEF AULTING MEMBER TO PARTICIPATE IN THE TRADING SESSION ON THE FLOOR OF THE STOCK EXCHANGE IS A BUSINESS OR COMMERCIAL RIGHT AND ACCORDINGLY THE SAID MEMBERSHIP CARD IS A LICE NCE OR AKIN TO LICENCE, WHICH IS ONE I.T.A. NO. 71/COCH/2009 & C.O. NO. 08/COCH/2010 3 OF THE ITEMS FALLING IN SEC. 32(1)(II). IN THE INS TANT CASE ALSO, THE ASSESSEE COULD NOT HAVE CARRIED ON THE BUSINESS OF DISTRIBUTION OF LPG CYLI NDERS, BUT FOR THE DISTRIBUTORSHIP RIGHT GRANTED TO HIM BY M/S INDIAN OIL CORPORATION LTD. H ENCE, AS HELD BY HONBLE SUPREME COURT IN THE CASE CITED ABOVE, IN OUR VIEW, THE SAI D DISTRIBUTORSHIP RIGHT IS A LICENCE OR AKIN TO LICENCE. ACCORDINGLY, WE DO NOT FIND ANY I NFIRMITY IN THE DECISION OF LD CIT(A) ON THIS ISSUE. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE CROSS OBJECTION HAS BEEN FILED ONLY IN SUPPORT OF THE ORDER OF LD CIT(A) AND ACCORDINGLY HE DID NOT PRESS OTHER SPECIFIC GROUNDS RAISED THEREIN. SINCE THE APPEAL OF THE DEPARTMENT IS DISMISSED, THE CROSS OBJECTION FILED BY THE ASSESSEE IN SUPPORT OF THE O RDER OF LD CIT(A) DOES NOT REQUIRE ANY ADJUDICATION. 7. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. PRONOUNCED ACCORDINGLY ON 6.1.12 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 6TH JANUARY, 2012 GJ COPY TO: 1. SHRI ALEX GEORGE, M/S. LIZLEO INDANE SERVICES, E DATHUA-689 573, DT. ALAPPUZHA. 2. THE INCOME TAX OFFICER, WARD-1, ALAPPUZHA. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .