DCIT 1(3), MUMBAI V. WORLDWIDE MEDIA P.LTD, MUMBAI

ITA 1814/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83514 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 21-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 06-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARMINDER
• Keywords: Depreciation
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . . , . . , ! '# $ BEFORE SHRI H.L.KARWA, PRESIDENT AND SHRI N.K.BILLA IYA, AM ./ I.T.A. NO. 1814/MUM/2013 ( %& ' / ASSESSMENT YEAR: 2008-09) DCIT 1(3), ROOM NO.540, 5 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 & / VS. M/S WORLDWIDE MEDIA PVT. LTD. 4 TH FLOOR, THE TIMES OF INDIA BLDG. DR.D.N. ROAD, FORT, MUMBAI-400001 ./ PAN : AADCM7563Q ( REVENUE / ) .. ( ASSESSEE / ' ) ./ C.O. NO. 113/MUM/2014 ARISING OUT OF ITA NO.1814/MUM/2013 ( %& ' / ASSESSMENT YEAR: 2008-09) M/S WORLDWIDE MEDIA PVT. LTD. 4 TH FLOOR, THE TIMES OF INDIA BLDG. DR.D.N. ROAD, FORT, MUMBAI-400001 & / VS. DCIT 1(3), ROOM NO.540, 5 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 ./ PAN : AADCM7563Q ( ASSESSEE / ' ) .. ( REVENUE / ) ( ) / REVENUE BY: SMT. PARMINDER ' ( ) / ASSESSEE BY : SHRI NIRAJ SHETH * + ( ,- / DATE OF HEARING : 21/08/2014 ./01 ( ,- / DATE OF PRONOUNCEMENT : 21/08/2014 23 / O R D E R PER N.K.BILLAIYA, AM: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A)-7, MUM BAI DATED 22/10/2012 PERTAINING TO ASSESSMENT YEAR 2008-09.AS THE APPEAL AND THE CROSS OBJECTION WERE HEARD TOGETHER THEY ARE DISPOSED OFF BY THIS COMMON ORDER. ITA NO.1814/MUM/2012 & C.O. NO.113/MUM/2014 2 ITA NO.1814/MUM/2013 (REVENUES APPEAL) 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE RE VENUE IS THAT THE CIT(A) ERRED IN HOLDING THAT EXPLANATION-3 TO SECTI ON 43(1) IS NOT APPLICABLE WITH REGARD TO CLAIM OF DEPRECIATION AND FURTHER ER RED IN DIRECTING THE AO TO ALLOW DEPRECIATION AT THE RATE OF 25% ON THE ACT UAL COST OF THE COPY RIGHTS AND TRADEMARKS. 3. AT THE OUTSET, THE COUNSEL FOR THE ASSESSEE STAT ED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE O RDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2005-06, 2006-07 AND 2 007-08 IN ITA NO.4573/MUM/2009, 5757/MUM/2009 AND 3572/MUM/2011. THE LD. DR FAIRLY CONCEDED TO THIS. 4. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW AND THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE ( SUPRA), THE TRIBUNAL AT PARA 12 OF ITS ORDER HAS HELD AS UNDER; NOW, THE ISSUE WHETHER THE DEPRECIATION CAN BE ALLO WED ON SUCH INTANGIBLE ASSET IN THE FORM OF GOODWILL ALSO OR NOT IS NO LONGER RES I NTEGRA, AS THE HON'BLE SUPREME COURT IN SNIFFS SECURITIES LTD. (SUPRA) BESIDES VAR IOUS OTHER HIGH COURTS ALSO, HAVE HELD THAT THE DEPRECIATION IS TO BE ALLOWED ON SUCH INTANGIBLE ASSETS WHICH CONSTITUTE GOODWILL. ONCE THE DEPRECIATION ALLOWABL E ON GOODWILL AT THE SAME RATE ON WHICH THE ASSESSEE HAS CLAIMED DEPRECIATION ON T RADE MARK AND COPY RIGHT, THEN IT IS IMMATERIAL TO DISALLOW THE ENTIRE CLAIM OF DE PRECIATION MADE BY THE ASSESSEE ON INTANGIBLE ASSETS. THE REASON BEING THAT, THE AGGRE GATE VALUE OF ALL THE INTANGIBLE ASSETS IS ` .80 CRORES AND DEPRECIATION IS TO BE ALLOWED AT 25% ON THIS COST, THEN IT DOES NOT MAKE ANY DIFFERENCE WHETHER PART OF THE DE PRECIATION IS TO BE ASCRIBED FOR GOODWILL OR NOT, BECAUSE RESULTANTLY, THERE WOULD B E NO EFFECT ON ASSESSEE'S QUANTUM OF CLAIM OF DEPRECIATION. THE VERY PREMISE OF THE A SSESSING OFFICER TO INVOKE THE PROVISIONS OF EXPLANATION 3 TO SECTION 43(1) AND TO ASCRIBE THE VALUE OF GOODWILL GETS VITIATED WHEN THE LAW HAS BEEN SETTLED BY THE HON'BLE SUPREME COURT THAT THE DEPRECIATION IS TO BE ALLOWED ON GOODWILL ALSO AS A NY OTHER INTANGIBLE ASSET. THUS, IT WILL NOT MAKE ANY DIFFERENCE IN THE PRESENT CASE TO SEGREGATE THE VARIOUS INTANGIBLE ASSETS FOR THE PURPOSE OR MAKING ANY DISALLOWANCE O N ACCOUNT OF DEPRECIATION. THUS, THE GROUNDS RAISED BY THE REVENUE ARE TREATED AS DISMISSED FOR THE REASONS GIVEN ABOVE. ITA NO.1814/MUM/2012 & C.O. NO.113/MUM/2014 3 5. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-OR DINATE BENCH, APPEAL FILED BY THE REVENUE IS DISMISSED. C.O. NO.113/MUM/2014 6. THE FIRST GROUND OF CROSS OBJECTION BECOMES OTIOSE-QUA, THE FINDINGS IN REVENUES APPEAL IN ITA NO.1814/MUM/2013. 7. THE SECOND GROUND RELATES TO THE DISALLOWANCE OF EXPENDITURE U/S 14A OF THE ACT. IT IS THE SAY OF THE COUNSEL THAT THE CLAIM OF LOSSES HAVE SINCE LAPSED, THEREFORE GROUND NO.2 OF THE CROSS OB JECTION BECOMES INFRUCTUOUS. ON THAT STATEMENT GROUND NO.2 IS DISMI SSED. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED AND CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/08/2014 23 ( ./01 * 4 5 6 72 21 /08/2014 , / ( 8+ 9 SD/- (H.L.KARWA) SD/- (N.K.BILLAIYA) HONBLE PRESIDENT ACCOUNTANT MEMBER 5 * + MUMBAI; 72 /DATED : 21 ST AUGUST, 2014. F{X~{TA F{X~{TA F{X~{TA F{X~{TA P.S. P.S. P.S. P.S. ' ( ) *%+,- . -'+ / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. :; ' / THE RESPONDENT. 3. * <, ( ) / THE CIT- , MUMBAI. 4. * <, / CIT(A)- , MUMBAI 5. =>8 :?,?@A , - @A1 , 5 * + / DR, ITAT, MUMBAI 6. 8B C+ / GUARD FILE. ' (& / BY ORDER, ; =, :?, //TRUE COPY// / / 0 1 (DY./ASSTT. REGISTRAR) , 5 * + / ITAT, MUMBAI