ACIT, CHENNAI V. M/s. Shriram Transport Finance Co. Ltd., CHENNAI

ITA 2007/CHNY/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6535 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2016-2017
• Appeal Filed On: 04-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J.PAVITHRAN KUMAR
• Assessee Lawyers: S.GAUTAM
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 201; 22

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER & S HRI RAMIT KOCHAR , ACCOUNTANT MEMBER ./ I.T.A.NO.2007/CHNY/2019 / ASSESSMENT YEAR : 2016-17 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6 (1), CHENNAI. VS. SHRIRAM TRANSPORT FINANCE CO., LIMITED, MOOKAMBIKA COMPLEX, NO.4, LADY DESIKA ROAD, MYLAPORE, CHENNAI 600 004. PAN: AAACS 7018 R ( / APPELLANT) ( ! /RESPONDENT) ./ I.T.A.NO.2009/CHNY/2019 / ASSESSMENT YEAR : 2016-17 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6 (1), CHENNAI. VS. SHRIRAM CITY UNION FINANCE LIMITED, MOOKAMBIKA COMPLEX, NO.4, LADY DESIKA ROAD, MYLAPORE, CHENNAI 600 004. PAN: AAACS 7703 H ( / APPELLANT) ( ! /RESPONDENT) APPELLANT BY : MR.J.PAVITHRAN KUMAR,JCIT,D.R RESPONDENT BY : MR.S.GAUTAM,ADVO CATE ! / DATE OF HEARING : 22 - 10 - 201 9 ! / DATE OF PRONOUNCEMENT : 22 - 10 - 201 9 ITA NOS.2007,2009 /CHNY/19 :- 2 -: / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER ITA NO.2007/CHNY/2019 IS AN APPEAL FILED BY THE REVENUE, NAMELY, SHRIRAM TRANSPORT FINANCE CO., LIMITED, AGA INST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-15, CHE NNAI, IN ITA NO.200/2018-19/C.I.T(A)-15 DATED 24.04.209 FOR ASS ESSMENT YEAR 2016-17, ITA NO.2009/CHNY/2019 IS AN APPEAL FILED BY THE REVENUE, NAMELY, SHRIRAM CITY UNION FINANCE LIMITED , AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1 5, CHENNAI, IN ITA NO.176/2018-19/C.I.T(A)-15 DATED 29.04.209 F OR ASSESSMENT YEAR 2016-17. 2. AS THE ISSUES IN ALL THESE APPEALS OF THE REVEN UE ARE IDENTICAL, ALL THESE APPEALS ARE DISPOSED OF BY THI S COMMON ORDER. 3. MR.J.PAVITHRAN KUMAR REPRESENTED ON BEHALF OF THE REVENUE AND MR.S.GAUTAM REPRESENTED ON BEHALF OF THE ASSESSEE. 4. THE SOLE ISSUE RAISED IN THE APPEALS OF REVENUE IN ITA NO.2007/CHNY/2019 & ITA NO.2009/CHNY/2019 IS AGAINS T THE ACTION OF THE LD.CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN RESPECT OF ROYALTY PAYMENTS BY RELYING UPON THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSES SEES OWN CASE. ITA NOS.2007,2009 /CHNY/19 :- 3 -: 5. IT WAS SUBMITTED BY LD.DR THAT THE ISSUE OF ROY ALTY, THOUGH DECIDED IN FAVOUR OF ASSESSEES IN THEIR RESPECTIVE CASE BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL, HOWEVER, THE RE VENUE HAS NOT ACCEPTED THE DECISIONS OF THE TRIBUNAL AND THE ORDE R OF THE LD. CIT(A) IS LIABLE TO BE REVERSED AS THE ORDER OF THE TRIBUN AL IN EACH OF ASSESSEES OWN CASE HAS BEEN CHALLENGED BEFORE THE HONBLE JURISDICTIONAL HIGH COURT U/S.260A OF THE ACT. 6. IN REPLY, IT WAS SUBMITTED BY LD.AR THAT LD.CIT( A) HAD FOLLOWED THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBU NAL IN ASSESSEES OWN CASE IN THEIR RESPECTIVE CASE. THE LD.AR PLACED BEFORE US A COPY OF THE ORDER OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT VS. M/S.SHRIRAM TRANSPORT FINANCE CO. LTD., FOR ASSESS MENT YEAR 2014-15 IN ITA NO.2572/MDS/2017 DATED 24.05.2018, WHEREIN T HE TRIBUNAL HAS HELD AS UNDER:- 4. WE HEARD SHRI SAILENDRA MAMIDI, THE LD.DEPARTM ENTAL REPRESENTATIVE AND SHRI R.SIVARAMAN, THE LD.COUNSEL FOR THE ASSESSEE. IT WAS BROUGHT TO THE NOTICE OF THE BENCH THAT A SIMILAR ROYALTY PAID BY THE ASSESSEE WAS CONSIDERED BY THIS TRIBUNAL FOR ASSESSMENT YEAR 2012-13 IN ITA NO.728/MDS./2016, A COPY OF WHICH IS AVAILABLE AT PAGE 32 OF THE PAPER-BOOK AND FOUND THAT THE PAYMENT WAS MADE FOR THE RIGHT TO USE THE LOGO, HEN CE IT HAS TO BE ALLOWED AS REVENUE EXPENDITURE. IN VIEW OF THE ORDE R OF THIS ITA NOS.2007,2009 /CHNY/19 :- 4 -: TRIBUNAL FOR ASSESSMENT YEAR 2012-13 IN THE ASSESSE ES OWN CASE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CON FIRMED. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE ORDER OF THE TRIBUNAL DATED 24.05.2018 REFERRED TO SUPRA SHOWS THAT THE TRIBUNA L HAS FOLLOWED THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL I N ITA NO.728/MDS./2016 FOR ASSESSMENT YEAR 2012-13. THE R ELEVANT PORTION OF REVENUES APPEAL IN ITA NO.728/MDS/2016 DATED 24.08.2016 FOR ASSESSMENT YEAR 2012-13 IN THE CASE OF M/S SHRIRAM TRANSPORT FINANCE CO. LTD., IS EXTRACTED AS UNDER:- 26. THE NEXT GROUND OF APPEAL IS WITH REGARD TO AD DITION MADE ON ACCOUNT OF ROYALTY TO THE EXTENT OF RS.13,75,69, 684/-. 27. DR. U. ANJANEYALU, THE LD. DEPARTMENTAL REPRESE NTATIVE, SUBMITTED THAT THE ASSESSING OFFICER MADE AN ADDITI ON OF RS.15,72,22,496/- PAID TO SHRIRAM OWNERSHIP TRUST. THE ASSESSING OFFICER TREATED THE SAME AS CAPITAL EXPENDITURE AND ALLOWED DEPRECIATION AT THE RATE OF 12.5%. ACCORDING TO THE LD. D.R., THE PAYMENT MADE TO SHRIRAM OWNERSHIP TRUST TOWARDS ROY ALTY IS NOTHING BUT A CAPITAL EXPENDITURE, THEREFORE, THE A SSESSING OFFICER HAS RIGHTLY ALLOWED DEPRECIATION. HENCE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) IS NOT JUSTIFIED IN DELETING THE A DDITION MADE BY THE ASSESSING OFFICER. 28. ON THE CONTRARY, SHRI R. SIVARAMAN, THE LD.COUN SEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE-TRUST WAS USI NG LOGO OF ITA NOS.2007,2009 /CHNY/19 :- 5 -: SHRIRAM OWNERSHIP TRUST FOR ITS BUSINESS AND PAID R OYALTY. ACCORDING TO THE LD. COUNSEL, SHRIRAM OWNERSHIP TRUST IS A SE PARATE ENTITY. FOR USING ITS LOGO IN THE BUSINESS OF THE ASSESSEE, A P AYMENT NEEDS TO BE MADE AND THE ASSESSEE IS NOT PURCHASING THE LOGO . WHAT WAS OBTAINED BY THE ASSESSEE IS ONLY THE RIGHT TO USE L OGO. THEREFORE, ACCORDING TO THE LD. COUNSEL, IT CANNOT BE TREATED AS CAPITAL EXPENDITURE. 29. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WHAT WAS PAID BY THE ASSESSEE IS FOR THE RIGHT TO USE THE LOGO BELON GING TO SHRIRAM OWNERSHIP TRUST. WHEN THE ASSESSEE MADE PAYMENT FOR USE OF RIGHT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE SAME CANNOT BE TREATED AS CAPITAL EXPENDITURE. THEREFORE, THE CIT( APPEALS) HAS RIGHTLY FOUND THAT THE PAYMENT MADE BY THE ASSESSEE IS IN THE REVENUE FIELD. IN FACT, SIMILAR ADDITION MADE BY TH E ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2002-03 WAS DELETED BY THIS TRIBUNAL. THE CIT(APPEALS) BY PLACING RELIANCE ON THE ORDER OF TH IS TRIBUNAL IN SHRIRAM TAMIL NADU PVT. LTD., ALLOWED THE CLAIM OF THE ASSESSEE. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SA ME IS CONFIRMED. AS IT IS NOTICED THAT THE ISSUE IN THE REVENUES AP PEALS IS NOW SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE EARLIER ASSESSMENT YEARS, RESPECTIVELY FOLLOWING TH E DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL, THE FINDINGS OF THE LD.CIT(A) ON THIS ISSUE IS CONFIRMED. ITA NOS.2007,2009 /CHNY/19 :- 6 -: 10. IN THE RESULT, BOTH THE APPEALS OF REVENUE IN ITA NOS.2007 & 2009/CHNY/2019 STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 22 ND OCTOBER, 2019, AT CHENNAI. SD/- SD/- ( ) ( ) (RAMIT KOCHAR) ' /ACCOUNTANT MEMBER (GEORGE MATHAN) ( ' / JUDICIAL MEMBER / CHENNAI % / DATED: 22 ND OCTOBER, 2019. K S SUNDARAM '() *) / COPY TO: 1 . , / APPELLANT 3. - () / CIT(A) 5. ) '2 / DR 2. '3, / RESPONDENT 4. - / CIT 6. / GF