DISH TV INDIA LTD ( FORMERLY KNOWN AS ASC ENTERPRISES LTD), MUMBAI V. ASST CIT CIR 6(1), MUMBAI

ITA 1257/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3639 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 23-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Assessee Lawyers: RAJESH CHAMARIA
• Keywords: Depreciation; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI B RAMAKOTAIAH, ACCOUNTANT MEMBER & SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO: 1257/MUM/2012 ASSESSMENT YEAR: 2007-08 DISH TV INDIA LTD., VS. THE ACIT CIR. 6(1), (FORMERLY KNOWN AS ASC MUMBAI ENTERPRISES LTD.), 135, CONTINENTAL BLDG., DR. A.B.ROAD, WORLI, MUMBAI- 400 018 PAN: AAACA5478M (APPELLANT) (RESPONDENT) APPELLANT BY : MR. RAJESH CHAMARIA RESPONDENT BY : MR. A K KARDAM DATE OF HEARING : 27.02.2013 DATE OF PRONOUNCEMENT : 19.04.2013 ORDER PER SANJAY GARG, JM : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE CIT(A) DATED 28.12.2011 PERTAINING TO A.Y. 2007-08. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) ERRED IN UPHOLDING DISALLOWANCE OF THE AMORTIZATION /DEPR ECIATION OF RS.72,90,000 ON LICENSE (INTANGIBLE ASSET). THE RE ASONS GIVEN BY HIM FOR DOING SO ARE WRONG, CONTRARY TO THE FATS OF THE CASE AND AGAINST THE PROVISIONS OF LAW. ITA NO. 1257/MUM/2012 AY: 2007-08 2 2. THE LD. CIT(A) OUGHT TO HAVE ALLOWED DEPRECIATIO N OF INTANGIBLE ASSETS @25% OR AMORTIZATION OF LICENSE FEES OVER TH E LICENSE PERIOD ON STRAIGHT LINE BASIS IN THE FACTS AND CIRC UMSTANCES OF THE CASE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY HAS BEEN ENGAGED IN THE BUSINESS OF DIRECT TO HOME (DTH) SATELLITE T ELEVISION SERVICE AND TELEPORT SERVICES INCLUDING PLACEMENT AND ACTIVE SERVICE. T HE ASSESSEE COMPANY FILED A REVISED RETURN OF INCOME DECLARING LOSS AT RS.2,40, 89,52,584. THE RETURN WAS ASSESSED U/S. 143(3) OF THE I.T ACT. THE AO MADE A DISALLOWANCE OF RS.72,90,000 CLAIMED BY THE ASSESSEE ON LICENSE FEES. THE ASSES SEE HAS CLAIMED THAT IT PAID LICENSE FEES AMOUNTING TO RS.10 CRORES FOR 10 YEARS TO OPERATE DTH. THE ASSESSEE CAPITALIZED NON-REFUNDABLE LICENSE FEE AND CLAIMED DEPRECIATION /AMORTIZATION OF THE SAME IN THE BOOKS AS INTANGIBLE ASSET OVER THE PERI OD OF LICENSE. THE AO DISALLOWED THE DEPRECIATION OF RS.72,90,000 BEING AMORTIZATION ON NON-REFUNDABLE LICENSE FEES ON THE GROUND THAT THE DESCRIPTION OF THE ASSET IS FOUND TO BE NOT IN THE NATURE OF INTANGIBLE ASSETS. THE LEARNED CIT(A) CONFIRMED TH E SAID DISALLOWANCE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE ASSESSEE HAS FURTHER CLAIMED THAT THOUGH IN THE RETURN OF INCOME IT HAS CLAIMED 10% OF DEPRECIATION ON THE WDV, HOWEVER, IT IS ENTITLED TO 25% ON THE WDV AS PER THE PROVISIONS OF THE I.T. ACT. 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES FOR BO TH THE PARTIES AND HAVE ALSO GONE THROUGH THE RECORD. UNDER SECTION 32(1) OF TH E I.T ACT, THE WORD LICENSE HAS BEEN SPECIFICALLY INCLUDED IN THE LIST OF INTANGIBL E ASSETS UPON WHICH DEPRECIATION HAS BEEN MADE ALLOWABLE AS MAY BE PRESCRIBED. IN APPEN DIX 1 TO THE IT RULES, 1962, THE ALLOWABLE DEPRECIATION ON LICENSE HAS BEEN MENT IONED AS 25% OF THE WDV. UNDER EXPLANATION 5 TO SECTION 32(1), IT HAS BEEN ME NTIONED THAT THE PROVISIONS OF SUBSECTION SHALL APPLY WHETHER OR NOT THE ASSESSEE HAS CLAIMED THE DEDUCTION IN RESPECT OF DEPRECIATION IN COMPUTATION OF TOTAL INC OME. SO THE PROVISIONS OF THE ACT ITA NO. 1257/MUM/2012 AY: 2007-08 3 ARE CLEAR ENOUGH TO SAY THAT ON LICENSE, DEPRECIATI ON OF 25% IS ALLOWABLE WHETHER OR NOT THE ASSESSEE HAS CLAIMED THE SAME IN HIS RETURN OF INCOME. IT MAY ALSO BE OBSERVED THAT THE ASSESSEE COMPANY HAS BEEN ALLOWED DEPRECIATION ON THE LICENSE FEES IN EARLIER ASSESSMENT YEARS ALSO. ACCORDINGLY, IN THE CASE IN HAND THE ASSESSEE IS EN TITLED TO DEPRECIATION @25% OF THE WDV ON THE LICENSE FEES AS PER THE PROVISION S OF THE ACT. ACCORDINGLY, WE DIRECT THE AO TO ALLOW DEPRECIATION @ 25% ON THE WD V OF THE LICENSE FEES AS PER LAW. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 19 TH APRIL 2013. SD/- SD/- (B RAMAKOTAIAH) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 19 TH APRIL, 2013 SA COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. CONCERNED MUMBAI 4. CIT (A) CONCERNED MUMBAI 5. THE DR, D - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI