DCIT, New Delhi V. Spectris Technologies (P) Ltd, New Delhi

ITA 1892/DEL/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9709 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 01-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: TARANDIP SINGH
• Keywords: Depreciation
• Section: 32; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES G , NEW DELHI BEFORE SH. AMIT SHUKLA , JUDICIAL MEMBER DR. B. R. R. KUMAR , ACCOUNTANT MEMBER ITA NO. 1892/DEL/2015 : ASSTT. YEAR : 2005 - 06 DCIT, CIRCLE - 24(1), NEW DELHI VS SPECTRIS TECHNOLOGIES (P) LTD., 611, 6 TH FLOOR, AMBADEEP BUILDING, K.G. MARG, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A GCS6645R ASSESSEE BY : SH. TARANDIP SINGH, ADV. REVENUE BY : SH. N. K. BANSAL, SR. DR DATE OF HEAR ING: 18 . 09 .201 9 DATE OF PRONOUNCEMENT: 18.09 .201 9 ORDER PER AMIT SHUKLA, JUDICIAL M EMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) - 8 , NEW DELHI DATED 27.01.2015 . 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE: 1. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE AO HAS WRONGLY ASSUMED JURISDICTION TO REOPEN THE CASE U/S 147 OF THE I.T. ACT, NEW DELHI. 2. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON GOODWILL AND NON - COMPETING FEE AMOUNTING TO RS.2,19,90,102/ - . 3. THE CASE HAS BEEN REOPENED U/S 147 OF THE INCOME TAX ACT, 1961 TO TAX THE DEPRECIATION CLAIMED BY THE ASSESSEE ON THE GOODWILL AND NON - COMPETE FEE. THE ASSESSING OFFICER HELD THAT SECTION 32 OF THE ACT PROVIDES THAT FROM 1 ST APRIL 1999 ITA NO .1892 /DEL /2015 SPECTRIS TECHNOLOGIES P. LTD. 2 DEPRECIATION WOULD ALLOWED ON INTANGIBLE ASSET WHICH INCLUDE C OPY RIGHT, PATENTS, TECHNICAL K NOW - HOW, FRANCHISE CHARGES AND ANY OTHER COMMERCIAL RIGHTS. INTANGIBLE ASSETS, THEREFORE, CANNOT INCLUDE GOODWILL, STOCK EXCHANGE MEMBERSHIP FEES, INTELLECTUAL PROPERTY RIGHTS OR INVESTMENT IN SHARES. THE ASSESSING OFFICER HE LD THAT A S PER ACCOUNTING STANDARDS - 26, GOODWILL CANNOT BE CONSIDERED AS AN INTANGIBLE ASSET FOR THE PURPOSE OF AMORTIZATION. THE ASSESSING OFFICER FURTHER HELD THAT THOUGH ACQUISITION OF THE BUSINESS IS CAPITAL IN NATURE, THE PAYMENT FOR GOODWILL AND NON - COMPETE FEE DOES NOT RESULT IN THE ACQUISITION OF ANY PATENTS, COPYRIGHTS, TRADE MARK ARE KNOW - HOW AND HENCE, MADE ADDITION OF RS.2.19 CRORES. 4. THE LD. CIT (A) DELETED THE ADDITION BASED ON THE JUDGMENT OF HON BLE SUPREME COURT IN THE CASE OF CIT VS SMI FS SECURITIES LTD. 348 ITR 302. SINCE, THE ORDER OF THE LD. CIT (A) IS BASED ON THE JUDGMENT OF THE APEX COURT, WE HEREBY DECLINE TO INTERFERE WITH THE ORDER OF THE LD. CIT (A). 5 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . (ORDER PRO N OUNC ED IN THE OPEN COURT ON 18 /0 9 /2019). SD/ - SD/ - ( DR. B. R. R. KUMAR ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18 /0 9 /2019 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR