PIEM HOTELS LTD, MUMBAI V. DCIT RG 3(2), MUMBAI

ITA 1592/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8821 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 02-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIV DUTT
• Keywords: Depreciation; Scheme of amalgamation; Prejudicial to interest; Revenue expenditure
• Section: 143(3); 32; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 1592/MUM/2010 (ASSESSMENT YEAR: 2005-06) M/S. PIEM HOTELS LIMITED DCIT, RANGE - 3(2) TAJ PRESIDENT, 90,CUFFE PARADE MUMBAI COLABA, MUMBAI 400005 VS. PAN - AAACP 8367 M APPELLANT RESPONDENT APPELLANT BY: SHRI TEJVEER SINGH RESPONDENT BY: SHRI SANJIV DUTT O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT-II UNDER SECTION 263 DATED 12.08.2009. 2. THE ISSUE IN THIS APPEAL IS WITH REFERENCE TO THE O RDER PASSED UNDER SECTION 263 AFTER THE ASSESSMENT UNDER SECTION 143( 3) WAS COMPLETED BY THE A.O. ON 28.12.2007 AT ` 36,10,60,730/- AND DEPRECIATION ON GOODWILL AT ` 3,69,84,311/- WHICH WAS CLAIMED UNDER SECTION 32(1) (III) OF THE I.T. ACT WAS ALLOWED. THIS CLAIM WAS CONSIDERED IN A.Y. 2004-05 BY THE A.O. AND CONSEQUENT TO THE DECISION IN A.Y. 2004-05 DURING W HICH HE ENQUIRED ABOUT THE ISSUE OF GOODWILL, THE DEPRECIATION FOR THIS YE AR WAS ALSO ALLOWED. THE CIT HAS INVOKED THE POWERS U/S 263 AND SET ASIDE THE PR OCEEDINGS FOR BOTH THE ASSESSMENT YEARS 2004-05 AND 2005-06 ON THE ISSUE O F NON-EXAMINATION OF ISSUE GOODWILL FOR THE PURPOSE OF DEPRECIATION AND ACCORDINGLY, THE MATTER WAS SET ASIDE TO BE MADE AFRESH. 3. WHEN THIS CASE IS TAKEN UP THE ASSESSEE COMPANY INF ORMED BY THEIR LETTER DATED 03.01.2011 THAT THE A.O. HAS DROPPED T HE PROCEEDINGS UNDER SECTION 143(3) VIDE HER ORDER DATED 22.11.2010 AND PLACED COPY OF THE ORDER ON RECORD. 4. THE LEARNED D.R., HOWEVER, PLACED ON RECORD THE ORD ER OF THE ITAT IN A.Y. 2004-05 IN ITA NO. 523/MUM/2009 WHEREIN THE OR DER OF THE CIT ITA NO. 1592/MUM/2010 M/S. PIEM HOTELS LIMITED 2 PASSED FOR THAT ASSESSMENT YEAR U/S 263 WAS QUASHED AND ASSESSEES APPEAL WAS, THEREFORE, ALLOWED AND FAIRLY ADMITTED THAT FACTS IN THIS YEAR ARE SIMILAR. 5. WE HAVE CONSIDERED THE ISSUE. THE ITAT IN EARLIER Y EAR CONSIDERED THE ISSUE OF JURISDICTION OF CIT U/S 263 AS UNDER: 12. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS O F THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 13. SECTION 32(1) READS AS UNDER : 32. DEPRECIATION.--(1) IN RESPECT OF DEPRECIATION OF-- (I) BUILDINGS, MACHINERY, PLANT OR FURNITURE BEING TANGIBLE ASSETS ; (II) KNOW-HOW, PATENTS, COPYRIGHTS, TRADE MARKS, L ICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMIL AR 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 DEDUCTI ONS SHALL BE ALLOWED THE TWO REQUISITES FOR DEPRECIATION ALLOWANCE ARE ( I) THAT THE DEPRECIABLE ASSET IS OWNED WHOLLY OR PARTLY BY THE ASSESSEE AND (II) THAT IT IS USED FOR THE PURPOSE OF ASSESSEE'S BUSIN ESS OR PROFESSION, SUBJECT, HOWEVER, TO THE PROVISIONS OF SEC.34. FOR AND FROM ASSESSMENT YEAR 1999-2000, DEPRECIATION IS ALLOWABLE ON BOTH T ANGIBLE AND INTANGIBLE ASSETS AS REFERRED TO IN SEC.32(1). THE RELEVANT AMENDMENT HAS BEEN EXPLAINED IN A BOARD CIRCULAR NO.772 DATED 23.12.1998 AS UNDER :- 15. DEPRECIATION TO BE ALLOWED ON TANGIBLE ASSETS 15.1 UNDER THE EXISTING PROVISIONS OF SECTION 32 OF THE INCOME TAX ACT, DEPRECIATION IS ALLOWABLE ONLY ON TANGIBLE ASSETS, BEING BUILDINGS, MACHINERY, PLANT OR FURNITURE. THE ACT AMENDS THIS SECTION TO WIDEN IT S SCOPE BY PROVIDING THAT DEPRECIATION WILL ALSO BE ALLOWABLE IN RESPECT OF INTANGIBLE ASSETS, BEING KNOW-HOW, PATENTS, COPYRIGHTS, TRADE MARKS, L ICENCES OR FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMIL AR NATURE, ACQUIRED ON OR AFTER THE 1 ST DAY OF APRIL, 1998. THE ACT ALSO AMENDS THE DEFIN ITION OF THE TERM BLOCK OF ASSETS SO AS TO INCLUDE THESE I NTANGIBLE ASSETS WITHIN THE MEANING OF BLOCK OF ASSETS. THE RATE OF DEPREC IATION IN RESPECT OF THESE INTANGIBLE ASSETS HAS SINCE BEEN PRESCRIBED A T 25 PERCENT VIDE NOTIFICATION S.O. NO. 781(E), DATED SEPTEMBER 4, 19 98. 14. IN MALABAR INDUSTRIAL CO. LTD. VS CIT (2000)24 3 ITR 83 (SC) THEIR LORDSHIPS UNDER PARA 10 OF THE JUDGMENT HAVE TAKEN THE VIEW THAT THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE HAS TO BE READ IN CONJUNCTION WITH THE EXPRESSION ERRONEOUS ORDE R PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONS EQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED A PREJUD ICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCOME TAX OF FICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULT ED IN LOSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE , IT CANNOT BE ITA NO. 1592/MUM/2010 M/S. PIEM HOTELS LIMITED 3 TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE IN TERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME TAX OF FICER IS UNSUSTAINABLE IN LAW. 15. KEEPING IN MIND THE INTERPRETATION OF THE HONB LE APEX COURT (SUPRA), IT IS NECESSARY TO GO INTO THE FACTUAL ASP ECTS OF THE MATTER. WE ARE REPRODUCING THE ORDER PASSED BY THE REVISIONAL AUTHORITY, THE RELEVANT PARA IS AS UNDER :- 5. THE EXPLANATION FILED BY THE REPRESENTATIVE OF THE ASSESSEE WAS CAREFULLY CONSIDERED. ON PERUSAL OF THE LIST OF TH ESE ASSETS WHICH WERE TREATED AS GOODWILL BY THE ASSESSEE ON WHICH DEPREC IATION WAS CLAIMED IT IS SEEN THAT THESE ARE OF THE NATURE OF THE APPROVA LS TAKEN FROM THE GOVERNMENT BODIES WHICH ARE REGISTRATION OF EMPLOYE ES UNDER PF ACT, FAMILY PENSION, STATE INSURANCE ACT, PAYMENT OF WAG ES ACT, BONUS ACT, CONTRACT & LABOUR ACT, INDUSTRIAL & EMPLOYMENT ACT ETC. IT ALSO INCLUDES APPROVAL FOR LIFT LICENCE, CALIBRATION OF WEIGHTS & MEASURES, NOC FROM PWD, LIQUOR ETC. FOR SERVICE TAX, TAN REGISTRATION ETC. ON PERUSAL OF THESE LISTS IT IS SEEN THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND WHETHER THESE LICENSES/ APPROVALS BRING INTO EXISTENCE OF A NY NEW ASSET OR NOT. MOREOVER THE DETAILS OF NATURE LICENCES/APPROVALS G RANTED AND ITS ITEM WISE VALUATION WAS NOT VERIFIED BY HIM AND THE SAME WAS ALSO NOT SUBMITTED BEFORE THE ASSESSING OFFICER. THEREFORE, THE ISSUE AS TO WHETHER THESE APPROVALS/REGISTRATIONS ETC. AMOUNTS TO INTAN GIBLE ASSETS WAS NOT EXAMINED BY THE ASSESSING OFFICER. THUS, THE ASSES SING OFFICER HAS NOT APPLIED HIS MIND WITH RESPECT TO THE EXAMINATION AN D VERIFICATION REGARDING ALLOWABILITY OF DEPRECIATION OF ASSETS CL AIMED AS INTANGIBLE ASSETS. THUS, THE ASSESSING OFFICER HAS COMMITTED A MISTAKE OF LAPSE IN THIS REGARD. HENCE, THE ORDER PASSED BY THE ASSESS ING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. 16. HERE IT IS ALSO NECESSARY TO TAKE NOTE OF THE T RIBUNAL DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE. 17. IN DCIT VS. HINDUSTAN COCA COLA BEVERAGES (P.) LTD. SUPRA IT HAS BEEN HELD (HEADNOTE): THE FACT THAT THERE ARE NO ELABORATE DISCUSSIONS A BOUT A CLAIM OF DEDUCTION CANNOT, IN THE LIGHT OF THE DECISION OF A CO-ORDINATE BENCH IN THE CASE OF MRS. KHATIZA S. OOMERBHOY VS. ITO (2006) 10 1 TTJ (MUMBAI) 1095: (2006) 100 ITD 173 (MUMBAI), BE A GOOD GROUND FOR ASSUMING JURISDICTION UNDER S. 263. IN THESE CIRCUMSTANCES, FROM THE FACT THAT THE AO HAS NOT DISCUSSED THE CLAIM OF DEPRECATION ON GO ODWILL IN THE ASSESSMENT ORDER EVEN THOUGH THE SAME CLAIM WAS ALL OWED IN THE EARLIER YEARS AND EVEN THOUGH THE AO HAD BEFORE HIM DETAILE D EXPLANATION IN SUPPORT OF LEGAL CLAIM, IT CANNOT BE INFERRED THAT THE AO DID NOT APPLY HIS MIND TO THE MATTER. HIS DECISION TO ACCEPT THE SUB MISSION OF THE ASSESSEE MAY HAVE BEEN INCORRECT, BUT RIGHT NOW THAT IS NOT THE ISSUE BEFORE US. THE AO DECIDED NOT TO REJECT THE CLAIM, ADMITTEDLY AFTER HAVING HAD AN OPPORTUNITY TO PERUSE THE DETAILED SUBMISSIONS, AND THIS STAND BY ITSELF CANNOT IMPLY THAT THERE WAS NO APPLICATION OF MIND. IT IS WELL-SETTLED IN LAW THAT WHEN AO TAKES A POSSIBLE VIEW OF THE MATTE R ON MERITS, HIS ORDER CANNOT BE SUBJECTED TO REVIEW MERELY BECAUSE OTHER VIEW IS POSSIBLE. WE ARE IN CONSIDERED AGREEMENT WITH THE VIEW OF THE CO-ORDINATE BENCH. AS FOR LEARNED DEPARTMENTAL REPRESENTATIVES CONTEN TION THAT THE CIT CANNOT BE A SILENT SPECTATOR TO SUCH A WRONG GRANT OF DEPRECIATION AND THAT THE CIT MUST SAFEGUARD THE INTEREST OF THE REV ENUE, ALL WE CAN SAY IS ITA NO. 1592/MUM/2010 M/S. PIEM HOTELS LIMITED 4 THAT, ON THE FACTS OF THE PRESENT CASE AND PARTICUL ARLY WHEN THE CIT HAS WITHDRAWN DEPRECIATION ON GOODWILL ON THE GROUND TH AT SUCH A CLAIM IS PATENTLY INADMISSIBLE, WE ARE UNABLE TO APPROVE HIS STAND ON MERITS AND WE MUST ALSO FOLLOW THE CO-ORDINATE BENCHES WHICH H AVE DECIDED THE SAME ISSUE, ON MATERIALLY IDENTICAL FACTS, IN FAVOU R OF THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSIONS, AND FOR THE DETAILED REASONS SET OUT ABOVE, CIT INDEED ERRED IN INVOKING JURISDICTION UNDER S. 263. THE IMPUGNED ORDER IS, THEREFORE, SET ASIDE. 18. IN THE A.P. PAPER MILLS LTD. SUPRA, IT HAS B EEN OBSERVED AND HELD AS UNDER :- AS PER SCHEME OF AMALGAMATION ASSESSEE COMPANY HAS TAKEN OVER THE ASSETS OF CLP AT RS.10,488.95 LACS AND LIABILITY OF RS.9,772 LACS FOR WHICH ASSESSEE PAID CONSIDERATION OF RS.2,590.92 LACS. T HOUGH THE ASSESSEE HAS TAKEN THE NET ASSETS AT RS. 716.95 LACS, IT HAS PAID RS.2,590.92 LACS. THIS DIFFERENCE I.E. EXCESS CONSIDERATION REPRESENT S THE GOODWILL AT RS.1,933.97 LACS AS PER ARGUMENT OF THE ASSESSEES COUNSEL.. FURTHER, THE ASSESSEE GOT VARIOUS INFRASTRUCTURAL ADVANTAGES LIKE CPL HAS ALMOST ALL INFRASTRUCTURE CAPABILITY LIKE CAPTIVE POWER PL ANT OF 5.74 MW, COAL FIRED BOILER, DM PLANT, EFFLUENT TREATMENT PLANT, AND ALS O BENEFIT OF SALES-TAX DEFERMENT LOAN FOR 14 YEARS UPTO 30 TH JUNE, 2013. FURTHER, THE ASSESSEE ACQUIRED ON OPERATING MILL, NO GESTATION/STABILIZAT ION PERIOD WAS REQUIRED WHEN COMPARED TO NEW GREEN FIELD OR BROWN FIELD VEN TURE. THE ABOVE ADVANTAGES WHICH ACCRUED TO THE ASSESSEE ARE NOTHIN G BUT VARIOUS INTANGIBLE ASSETS AND BUSINESS ADVANTAGES. THIS IS NOTHING BUT INTANGIBLE ASSET AS ENUMERATED IN S. 32. ALL THE RIGHTS ARE SIMILAR TO THE RIGHTS MENTIONED IN S.32. THUS GOODWILL IS A BUSINESS O R COMMERCIAL RIGHT OF SIMILAR NATURE AND THE ASSESSEE IS BENEFITED BY AMA LGAMATION BY ACQUIRING THAT COMMERCIAL VALUE BEING INTANGIBLE AS SETS WHICH THE ASSESSEE HAS PAID ON AMALGAMATION I.E. EXCESS CONSI DERATION OVER AND ABOVE THE EXCESS OF ASSETS OVER LIABILITIES IS A GO ODWILL WHICH IS AN ASSET ENTITLED FOR DEPRECIATION UNDER S. 32. AS SUCH, AO IS JUSTIFIED IN GRANTING THE DEPRECIATION ON GOODWILL WHILE COMPLETING THE A SSESSMENT UNDER S. 143(3) AND CIT IS NOT JUSTIFIED IN INVOKING OF PROV ISIONS OF S. 263 ON THIS ISSUE. FURTHER, THE PROVISION OF S. 263 COULD BE I NVOKED BY THE CIT IF THE CIRCUMSTANCES SPECIFIED THEREIN VIZ. (1) THE ORDER IS ERRONEOUS (2) BY VIRTUE OF THE ORDER BEING ERRONEOUS, PREJUDICE HAS BEEN CA USED TO THE INTEREST OF THE REVENUE, EXIST. FOR INVOKING THE PROVISION S. 263, BOTH THE CONDITIONS PRECEDENT FOR EXERCISING THE JURISDICTION ARE CONJU NCTIVE OR NOT DISJUNCTIVE. IN THE INSTANT CASE, THE AO FOLLOWED ONE COURSE OF ACTION WHICH IS PERMITTED BY LAW AND THAT RESULTED IN LOSS TO THE REVENUE, THAT CANNOT BE SAID ERRONEOUS SO FAR AS PREJUDICIAL INTEREST OF TH E REVENUE.. 19. IN M/S. CLC GLOBAL LTD. SUPRA, IT HAS BEEN HELD AS UNDER :- 6. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. THE ISSUE IS AS TO WHETHER THE DEPRECIATION CLAIMED ON GOODWILL HAS RIGHTLY BEEN ALLOWED BY THE LEARNED CIT(A). THE LEARNED CI T(A), WHILE ALLOWING THE CLAIM OF DEPRECIATION, HELD THAT THE AO, AFTER HAVING ALLOWED THE CLAIM OF DEPRECIATION IN THE ASSESSMENT YEAR 2002-03, COU LD NOT HAVE TAKEN A DIFFERENT STAND IN THE SUCCEEDING ASSESSMENT YEAR. IT WAS OBSERVED THAT IN THE PRECEDING ASSESSMENT YEAR, THE AO HAD ACCEPT ED THE GOODWILL PER SE AS A BLOCK OF ASSETS, ON WHICH, DEPRECIATION WA S ALLOWED AT RS.1,87,50,000/- AND THAT THUS, THE WRITTEN DOWN VA LUE OF THE ASSETS AT THE BEGINNING OF THE YEAR UNDER CONSIDERATION WAS R S.5,62,50,000/-. IT WAS ALSO OBSERVED THAT THE ASSESSEE HAD ACQUIRED LI CENCE, GOODWILL, ITA NO. 1592/MUM/2010 M/S. PIEM HOTELS LIMITED 5 CONTRACTS, STOCK, AS A RESULT OF DEMERGER OF THE TE XTILE DIVISION OF M/S. CLC & SONS (P) LTD. WITH APRO BIOCHEM & ENGG. LTD., AS THE ASSETS AND LIABILITIES OF M/S. CLC & SONS TAKEN OVER BY THE AS SESSEE COMPANY. 7. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A). FIRSTLY, IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, I.E. A.Y. 20 02-03, THE ASSESSEE CLAIMED DEPRECIATION ON GOODWILL ACQUIRED BY THE AS SESSEE COMPANY AS A RESULT OF DEMERGER OF THE TEXTILE DIVISION OF M/S. CLC & SONS (P) LTD. THIS CLAIM OF RS.1,87,50,000/- WAS ALLOWED. AS A RESULT, THE NET BLOCK OF GOODWILL AT THE END OF 2002-03 BECAME RS.5,62,50,00 0/-, ON REDUCING THE DEPRECIATION CLAIM OF RS.1,87,50,000/- FROM GOODWIL L OF RS.7,50,00,000/-. IT WAS, THEREFORE, THAT IN THE YEAR UNDER CONSIDERA TION, THE ASSESSEE CLAIMED DEPRECIATION ON THE WRITTEN DOWN VALUE OF R S. 5,62,50,000/-, EQUIVALENT TO RS.14,06,25,000/-. ONCE THE AO, ON E XACTLY SIMILAR FACTS, HAD ALLOWED DEPRECIATION IN THE IMMEDIATELY PRECEDI NG YEAR, THERE WAS NO REASON TO TAKE A DIFFERENT STAND FOR THE YEAR UNDER CONSIDERATION AND TO DISALLOW THE DEPRECIATION CLAIMED. 8. FURTHER, THE OTHER CONTENTION OF THE ASSESSEE H AS ALSO BEEN CORRECTLY APPRECIATED BY THE CIT(A) TO THE EFFECT THAT WHAT T HE ASSESSEE ACQUIRED WAS LICENCE, CONTINUANCE OF AGREEMENT WITH MILLS, C ONTRACTS, ETC. THESE ASSETS, EVEN THOUGH THEY ARE TERMED AS GOODWILL C ANNOT BE SAID NOT TO BE INTANGIBLE ASSETS AS SPECIFIED IN SECTION 32(1)(II) OF THE ACT. IT WAS ALSO SO OPINED BY THE REPORT PREPARED BY M/S. SUNIL JAIN & CO. THE AO DID NOT BRING ANY MATERIAL ON RECORD TO THE CONTRARY. THE ASSETS ACQUIRED BY THE ASSESSEE COMPANY WERE THUS BUSINESS AND COMMERCIAL RIGHTS IN ACCORDANCE WITH SECTION 32(1) OF THE ACT. THESE AR E DEFINITELY DEPRECIABLE ASSETS AND DEPRECIATION HAS TO BE ALLOWED THEREON. 20. BEARING IN MIND THE PROVISIONS OF SECTION 263 R EAD WITH SECTION 32(1) OF THE ACT IN THE LIGHT OF THE INTERPRETATION OF THE HON'BLE APEX COURT AND THE DECISIONS OF THE TRIBUNAL SUPRA, IF O NE TURNS TO THE ORDER OF THE LD. CIT, PASSED U/S.263 OF THE ACT, IT WOULD BE CLEAR THAT NO FINDING IS RECORDED BY THE REVISIONAL AUTHORITY TO SHOW AS TO HOW THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. MERELY BECAUSE ACCORDING TO THE REVISIONAL AUTHORITY THE APPROVALS / REGISTRATI ONS ETC. AMOUNTS TO INTANGIBLE ASSETS WAS NOT EXAMINED BY THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND WITH RES PECT TO THE EXAMINATION AND VERIFICATION REGARDING ALLOWABILITY OF DEPRECIATION OF ASSETS CLAIMED AS INTANGIBLE ASSETS DOES NOT MEAN T HAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PR EJUDICIAL TO THE INTERESTS OF THE REVENUE. IT IS NOT THE CASE OF THE REVISIONAL AUTHORITY THAT NO DEPRECIATION IS ALLOWABLE ON SUCH ITEMS OF INTANGIBLE ASSETS OR THE DEPRECIATION ALLOWED BY THE ASSESSING OFFICER O N SUCH ASSETS IS NOT PERMISSIBLE UNDER THE LAW OR SUCH ITEMS DO NOT FALL EITHER UNDER THE CATEGORY OF REVENUE EXPENDITURE OR CAPITAL EXPENDIT URE. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE SAID ITEMS ARE PER SONAL IN NATURE. FURTHER, IN THE CASE OF M/S. CLC GLOBAL LTD. SUPRA, IT HAS ALSO BEEN OBSERVED AND HELD BY THE TRIBUNAL IN THAT CASE THAT WHAT THE ASSESSEE ACQUIRED WAS LICENCE, CONTINUATION OF AGREEMENT WIT H MILLS, CONTRACT ETC. THESE ASSETS, EVENTHOUGH THEY ARE TERMED AS GOODWILL CANNOT BE SAID NOT TO BE INTANGIBLE ASSETS AS SPECIFIED IN SE C.32(1)(II) OF THE ACT. THIS BEING SO WE ARE OF THE VIEW THAT THE APPROVALS /REGISTRATIONS ETC. ITA NO. 1592/MUM/2010 M/S. PIEM HOTELS LIMITED 6 AMOUNT TO INTANGIBLE ASSETS ENTITLED FOR DEPRECIATI ON U/S.32(1) (II) OF THE ACT. 21. IN THIS CONNECTION, IT IS USEFUL TO THE ANALOGO US PROVISION CONTAINED IN THE CENTRAL EXCISE AND SALT ACT (1 OF 1944). TH E HONBLE SUPREME COURT WHILE CONSIDERING THE ABOVE SAID PROVISION HE LD THAT THE AUTHORITY WHILE EXERCISING SUCH POWER CANNOT DIRECT THE LOWER AUTHORITY TO COMPLETE THE ASSESSMENT IN PARTICULAR MANNER. T HE OBSERVATION OF THE HONBLE APEX COURT IN THE CASE OF UNION OF INDI A VS. TATA ENGINEERING AND LOCOMOTIVES CO. LTD. REPORTED IN AI R 1998 SC 287 IS AS FOLLOWS (PAGE 288) : 4. IN OUR VIEW, THIS WRIT PETITION SHOULD NOT HAV E BEEN ENTERTAINED BY THE HIGH COURT AT ALL. THE ASSISTANT COLLECTOR IS ENTI TLED TO COMPLETE THE ASSESSMENT AS HE THINKS FIT IN EXERCISE OF THE JUDG MENT AND ACCORDING TO HIS UNDERSTANDING OF THE LAW AND FACTS. FOR THIS P URPOSE, HE CAN CALL FOR AND EXAMINE WHATEVER DOCUMENTS HE CONSIDERS RELEVAN T. IF THE ASSISTANT COLLECTOR FAILS TO FOLLOW ANY JUDGMENT OF THE HIGH COURT OR THIS COURT, THE ASSESSEE HAD ADEQUATE STATUTORY REMEDIES BY WAY OF AN APPEAL AND REVISION AGAINST THE ASSESSMENT ORDER. THE COURT S HOULD NOT TRY TO CONTROL THE MODE AND MANNER IN WHICH AN ASSESSMENT SHOULD B E MADE. IF THE ASSISSTANT COLLECTOR IS OF THE VIEW THAT ENQUIRIES ARE NECESSARY TO BE MADE AS TO THE PRICE AT WHICH TRUCKS WERE SOLD AT THE RE GIONAL SALES OFFICES, THE COURT CANNOT STOP HIM FROM MAKING SUCH ENQUIRIES. 22. A READING OF THE ABOVE SAID JUDGMENT WOULD CLEA RLY SHOW THAT WHILE REMANDING THE MATTER, THE COMMISSIONER OF INC OME TAX OUGHT NOT TO HAVE GIVEN A SPECIFIC DIRECTION TO COMPLETE THE ASSESSMENT IN A PARTICULAR MANNER. 23. IN THIS VIEW OF THE MATTER WE ARE OF THE OPINIO N THAT THE VIEW TAKEN BY THE ASSESSING OFFICER WAS A POSSIBLE VIEW IN ALL OWING DEPRECIATION AND THE LD. CIT WAS NOT JUSTIFIED IN SETTING ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER. ACCORDINGLY WE UPHOLD THE O RDER PASSED BY THE ASSESSING OFFICER AND QUASH THE ORDER PASSED BY THE LD. CIT. THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, ALLOW ED. 6. IN VIEW OF THE COORDINATE BENCH DECISION GIVEN ON S IMILAR FACTS FOR A.Y. 2004-05, THE ORDER OF THE CIT IS SET ASIDE AND THAT OF THE A.O. U/S 143(3) IS RESTORED. IN VIEW OF THIS ASSESSEES APPEAL IS ALLO WED. 7. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JANUARY 2011. SD/- SD/- (D.K. AGARWAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 19 TH JANUARY 2011 ITA NO. 1592/MUM/2010 M/S. PIEM HOTELS LIMITED 7 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) , MUMBAI 4. THE CIT III, MUMBAI CITY 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.