OCV Reinforcements Limited, Hyderabad V. ACIT, Hyderabad

ITA 1678/HYD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3215 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 27-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B V PRASAD REDDY
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.1678/HYD/2010 : ASSESSMENT YE AR 2006-07 M/S. OCV REINFORCEMENTS MANUFACTURING LTD., HYDERABAD (FORMERLY M/S. SAINT GOBAIN VETROTEX INDIA LTD.) (PAN AAACV 9858 N ) VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE-16(3) HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.VIJAYA RAGHAVAN RESPONDENT BY : SHRI B.V.PRASAD REDDY O R D E R PER G.C.GUPTA, VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YE AR 2006-07 IS DIRECTED AGAINST THE ORDER OF THE DISPUTE RESOLU TION PANEL.. 2. THE ONLY EFFECTIVE GROUND OF APPEAL OF THE ASSE SSEE IS GROUND OF APPEAL NO.2, WHICH IS REPRODUCED HEREUNDER- 2. DISALLOWANCE OF CLAIM OF DEPRECIATION ON NON-CO MPETING FEES AND MARKETING NETWORK RIGHTS. 2.1. THAT THE LEARNED ASSESSING OFFICER ERRED IN ERRED IN MAKING AN ADJUSTMENT OF RS.41,52,832 BY NOT ALLOWIN G DEPRECIATION ON INTANGIBLE ASSETS VIZ. NON-COMPETIN G FEES AND MARKETING NET WORK RIGHTS ACQUIRED BY THE APPEL LANT FROM FGP LIMITED. 2.2. THE LEARNED ASSESSING OFFICER FAILED TO APPRE CIATE THE FACT THAT THE HONBLE INCOME TAX APPELLATE TRIBUNAL IN THE APPELLANTS ITA NO.1678/H/2010 M/S. OCV REINFORCEMENTS MANUFACTURING LTD., HYD 2 OWN CASE FOR AY 2000-01 IN ITA NO.439/HYD/04 HELD T HAT THE PAYMENT TOWARDS NON-COMPETING FEES AND MARKETIN G NETWORK RIGHTS FALLS WITHIN THE AMBIT OF INTANGIBL E ASSETS AS PER SECTION 32(1)(II) OF THE ACT AND HENCE, THE APPELLANT IS ENTITLED TO DEPRECIATION ON SUCH ASSETS. . 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTE D THAT THE ISSUE INVOLVED IN THE GROUND OF APPEAL NO.2 OF THE ASSESS EE IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE TRIBUNAL D ATED 29.5.2009 IN ITA NO.439/HYD/2004, IN ASSESSEES OWN CASE FOR THE ASS ESSMENT YEAR 2000- 01, WHEREIN IDENTICAL ISSUE WAS DECIDED IN FAVOUR O F THE ASSESSEE. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD INTO CONT ROVERT THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THE ISSUE OF ALLOWANCE OF DEPRECIATION ON NON-COMPETING FEE AND MARKETING NETWORK RIGHT ACQUIRED BY THE ASSESSEE IS COVERED I N FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HYDERABAD BENCH O F THE TRIBUNAL IN ASSESSEES OWN CASE, CITED SUPRA, WHEREIN DEPRECIAT ION ON THE INTANGIBLE ASSETS, VIZ. NON-COMPETING FEE AND PAYMENT MADE FO R ACQUIRING RIGHT OVER MARKETING NET WORK WAS ALLOWED BY THE TRIBUNAL . WE, BEING IN AGREEMENT, WITH THE DECISION OF THE COORDINATE BENC H OF THE HYDERABAD TRIBUNAL IN ASSESSEES OWN CASE, CITED ABOVE, AND T HE ISSUE BEFORE THE TRIBUNAL IN THAT CASE BEING IDENTICAL WITH THE ISSU E BEFORE US IN THE PRESENT APPEAL, DECIDE THE ISSUE IN FAVOUR OF THE A SSESSEE AND THE GROUND OF APPEAL NO.2 OF THE ASSESSEE IS ALLOWED. 5. NO ARGUMENTS WERE ADDRESSED ON THE ISSUE OF CR EDIT OF TAX PAYMENT AND INTEREST UNDER S.234B OF THE ACT RAISED IN GROUND OF APPEAL ITA NO.1678/H/2010 M/S. OCV REINFORCEMENTS MANUFACTURING LTD., HYD 3 NO.3 BY THE ASSESSEE BEFORE US. ACCORDINGLY, GROUND OF APPEAL NO.3 OF THE ASSESSEE IS REJECTED. 6. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE COURT ON 8.7.2011 SD/- SD/- (CHANDRA POOJARI) (G.C. GUPTA) A CCOUNTANT MEMBER V ICE PRESIDENT DATED THE 8 TH JULY, 2011 COPY FORWARDED TO: 1. M/S. OCV REINFORCEMENTS MANUFACTURING LTD., (FORMERLY M/S. SAINT GOBAIN VETROTEX INDIA LTD.), 1 3-6-437/2C KHADERBAGH, HYD 500 028. 2. ASST. COMMISSIONER OF INCOME - TAX, CIRCLE - 16(3) , HYDERABAD 3. DISPUTE RESOLUTION PANE L, HYDERABAD 4. THE D.R., ITAT, HYDERABAD. B.V.S