HUNTSMAN INTERNATIONAL (INDIA) P.LTD, MUMBAI V. ADDL CIT RG 10(3), MUMBAI

ITA 2161/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1560 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2008-2009
• Appeal Filed On: 13-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Fair market value; Valuation report; Revised return
• Section: 43B; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH I,MUM BAI BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.2161/MUM/2015 FOR (ASSESSMENT YEAR : 2008-09 ) M/S HUNTSMAN INTERNATIONAL (INDIA) PVT. LTD., LIGHTHALL B- WING, HIRANANDANI BUSINESS PARK, SAKI VIHAR ROAD, ANDHERI (EAST), MUMBAI-400072 PAN: AAACH9149J VS. ADDL. CIT, RANGE- (10)(3), (CURRENTLY DY.CIT, RANGE- 15(2)(1), MUMBAI). (APPELLANT) (RESPONDENT) APPELLANT BY : MR. BANDISH SOPARK AR (AR) REVENUE BY : MR. B.C.S. NAIK (C IT-DR) DATE OF HEARING : 05.12.2016 DATE OF PRONOUNCEMENT : 05.12.2016 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THIS APPEAL BY THE ASSESSEE FILED U/S 253 OF THE I NCOME-TAX ACT (ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS) [FOR SHORT THE CIT(A)] 24, MUMBAI DATED 15.01.2015 FOR ASSESSMENT YEAR (AY) 2008-09. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : GROUND NO. 1: DISALLOWANCE OF DEPRECIATION ON INTAN GIBLES 1.1 THE LEARNED CIT(A) ERRED IN DISALLOWING DEPRECI ATION OF RS.9,12,93,750/- CLAIMED BY THE APPELLANT ON THE INTANGIBLE ASSETS VIZ., MAT ERIAL SUPPLY CONTRACTS AND DISTRIBUTION NETWORK UNDER SECTION 32(1)(II) OF THE ACT. 1.2 THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AF OREMENTIONED INTANGIBLE ASSETS VIZ. MATERIAL SUPPLY CONTRACTS AND DISTRIBUTION NETWORK ARE NOT AKIN TO THE INTANGIBLE ASSETS REFERRED TO IN THE PROVISIONS OF SECTION 32(1)(II) OF THE ACT AND HENCE ERRED IN HOLDING THAT SUCH AFOREMENTIONED INTANGIBLES ARE NOT ELIGIB LE FOR DEPRECIATION. GROUND NO. 2: SERVICE TAX 2.1 THE LEARNED CIT(A) ERRED IN DISALLOWING UNPAID SERVICE TAX OF RS.14,742/- UNDER SECTION 43B OF THE ACT. GROUND NO.3: DISALLOW A CE OF FOREIG EXCHANGE LOSSE S 3.1 THE LEARNED CIT(A) ERRED IN DISALLOWING THE FOR EIGN EXCHANGE LOSSES IN THE NATURE OF MARK TO MARKET LOSSES ON THE GROUND THAT SUCH LOSSE S ARE CONTINGENT AND NOTIONAL IN NATURE. 2 ITA NO. 2161/M/2015 M/S. HUNTSMAN INTERNATIONAL (INDIA) PVT. LT D. 3.2 THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATIN G THE PRINCIPLES LAID DOWN BY THE SUPREME COURT IN THE DECISIONS OF CIT V. WOODWARD G OVERNOR INDIA P. LTD (312 ITR 254) AND HONDA SIEL POWER PRODUCTS LTD (295 ITR 466 ). 3.3 THE LEARNED CIT(A) ERRED IN CONCLUDING THAT THE APPELLANT DID NOT ORIGINALLY CLAIM THE AFORESAID FOREIGN EXCHANGE LOSS IN ITS RETURN O F INCOME AND ACCORDINGLY, ERRED IN APPLYING THE RATIO OF THE DECISION OF GOETZ INDIA L TD VS CIT (284 ITR 323). GROUND NO. 4: DISALLOWANCE OF SHARE ISSUE EXPENDITU RE 4.1 THE LEARNED CIT(A) ERRED IN DISALLOWING SHARE I SSUE EXPENDITURE OF RS.24,00,100/- (L/5TH OF RS.1,20,00,500/-) CLAIMED BY THE APPELLAN T UNDER SECTION 35D OF THE ACT. GROUND NO. 5: GENERAL 5.1 THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR SUBSTITUTE ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL AT OR BEFORE THE HEARIN G OF THE APPEAL. 5.2 EACH ONE OF THE ABOVE GROUNDS OF APPEAL IS WITH OUT PREJUDICE TO THE ABOVE. 2. WE HAVE HEARD THE RIVAL CONTENTION OF THE PARTIES A ND PERUSED THE MATERIAL AVAILABLE ON RECORD. FIRST GROUND OF APPEAL RELATES TO THE DISALLOWANCE OF DEPRECIATION OF RS . 9,12,93,750/- ON ACCOUNT OF INTANGIBLE ASSETS. THE LD. AUTHORIZED REPRESENTATIVE (AR) FOR ASSESSEE ARGUED THAT THIS GROUND OF APPEAL IS C OVERED IN HIS FAVOUR BY THE DECISION OF ASSESSEES OWN CASE FOR AY 2007-08, AY 2009-10 & AY 2011-12. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE NOT DI SPUTED THE FACTUAL AND LEGAL POSITION SUBMITTED BEFORE US. 3. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND SEEN THAT THE SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THIS TRIBUNAL IN A SSESSEES OWN CASE FOR AY 2007- 08 VIDE ITA NO. 3916/MUM/2014 AND IN AY 2010-11 VID E ITA NO. 980/MUM/2015. WE HAVE NOTICED THAT THE CO-ORDINATE BENCH OF THIS TRIBUNAL WHILE CONSIDERING THE IDENTICAL GROUNDS OF APPEAL IN ASSESSEES OWN CASE FOR AY 2010-11 IN ITA NO. 980/MUM/2015, CONSIDERING THE DECISION OF ASSESSEE S CASE FOR AY 2007-08 PASSED THE FOLLOWING ORDER: 6.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL DECI SIONS CITED. WE FIND THAT THE VERY SAME ISSUE OF ALLOWABILITY OF THE ASSESEE'S CLAIM O F DEPRECIATION ON INTANGIBLE ASSETS VIZ. MATERIAL SUPPLY CONTRACTS, BRAND USAGE AND DISTRIBUTION NETWORKS WAS CONSIDERED AT LENGTH BY A CO-ORDINATE BENCH OF THIS TRIBUNAL IN ITA NOS. 3916 & 1539/MUM/2014 IN THE ASSESSEE'S OWN CASE FOR A.VS. 2007-08 AND 2009-10, WHEREIN IT HAS BEEN HELD THAT THE ASSESSEE IS ENTIT LED TO CLAIM DEPRECIATION ON INTANGIBLE ASSETS. THE OPERATIVE PART OF THE ORDER OF THE CO-ORDINATE BENCH FOR A.Y- 2007-08 AT PARAS 2.4 AND 2.4.1 WHEREIN THE TRI BUNALS FINDINGS HAVE BEEN RENDERED IS EXTRACTED HEREUNDER: ' 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL BEFORE US. BEFORE PROCEEDING FURTHER, WE WOULD LIKE TO CONSIDE R THE CASES DEALING WITH INTANGIBLE ASSETS AND GAODWILL. IN THE CASE OF SMIF S SECURITIES LTD.(SUPRA)THE HON'BLE SUPREME COURT HAS HELD THAT PROVISIONS OF S EC. 31(2)ARE APPLICABLE TO GOODWILL. IT IS ALSO FOUND THAT BUSINESS RIGHTS,LIS T OF CLIENTS, BRAND EQUITY, NON COMPETE FEE ETC. HAVE BEEN HELD TO BE INTANGIBLE AS SETS BY THE HON'BLE COURT/ITA T, 3 ITA NO. 2161/M/2015 M/S. HUNTSMAN INTERNATIONAL (INDIA) PVT. LT D. WHILE DEALING WITH THE ISSUE OF DEPRECIATION. WE WO ULD LIKE TO REPRODUCE THE RELEVANT PORTIONS OF THE JUDGMENTS DEALING WITH THE ISSUE. THE HON'BLE SUPREME COURT IN THE CASE OF SMIFS SECURITIES (SUPRA) HAS H ELD THAT A READING OF THE WORDS ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE IN CLAUSE (B) OF EXPLANATION 3 TO SECTION 32(1)INDICATES THAT GOODWI LL WOULD FALL UNDER THE EXPRESSION. THE PRINCIPLE OF EJUSDEM GENERIS WOULD STRICTLY APPLY WHILE INTERPRETING THE EXPRESSION WHICH FINDS PLACE IN EX PLANATION 3(B),THAT GOODWILL IS AN ASSET UNDER EXPLANATION 3(B) TO SECTION 32(1) OF THE ACT. IN THE MATTER OF RAVEENDRO PILLAI THE HON'BLE KERAL A HIGH COURT(SUPRA)HAS DELIBERATED UPON THE FACTS OF THE CASE AND ALLOWABI LITY OF DEPRECIATION ON INTANGIBLE ASSETS.LN THAT MATTER THE ASSESSEE HAD PURCHASED A HOSPITAL IN QUILON WITH ITS LAND, BUILDING, EQUIPMENT, STAFF, NAME, TRADE MARK AND GO ODWILL AS A GOING CONCERN UNDER TWO SEPARATE SALE DEEDS. UNDER THE SALE DEED, THE VALUE OF THE GOODWILL WHICH INCLUDED THE NAME OF THE HOSPITAL AND ITS LOGO AND TRADE MARK WAS RS.2 CRORES. THE ASSESSEE WAS ALLOWED DEPRECIATION ON THE GOODWILL. HOWEVER, IN THE SCRUTINY ASSESSMENT, THE AO HELD THAT GOODWILL WAS NOT COVER ED BY SECTION 32(1)(II). THE APPEALS FILED BY THE ASSESSEE BEFORE THE FAA) AND T HE TRIBUNAL WERE UNSUCCESSFUL. THE HON'BLE HIGH COURT DECIDED THE ISSUE AS FOLLOW: ... IN FACT, WITHOUT RESORTING TO THE RESIDUARY ENT RY THE ASSESSEE WAS ENTITLED TO CLAIM DEPRECIATION ON THE NAME, TRADE MARK AND LOGO UNDER THE SPECIFIC HEAD PROVIDED UNDER SECTION 32(1){II} WHICH COVERS TRADE MARK AND FRANCHISE. ADMITTEDLY THE HOSPITAL WAS RUN IN THE SAME BUILDIN G, IN THE SAME TOWN, IN THE SAME NAME FOR SEVERAL YEARS PRIOR TO PURCHASE BY TH E ASSESSEE. BY TRANSFERRING THE RIGHT TO USE THE NAME OF THE HOSPITAL ITSELF, T HE PREVIOUS OWNER HAD TRANSFERRED THE GOODWILL TO THE ASSESSEE AND THE BE NEFIT DERIVED BY THE ASSESSEE WAS RETENTION OF CONTINUED TRUST OF THE PATIENTS WH O WERE PATIENTS OF THE PREVIOUS OWNERS. WHEN THE GOODWILL PAID WAS FOR ENS URING RETENTION AND CONTINUED BUSINESS IN THE HOSPITAL, IT WAS FOR ACQU IRING A BUSINESS AND COMMERCIAL RIGHTS AND IT WAS COMPARABLE WITH TRADE MARK, FRANCHISE, COPYRIGHT ETE., REFERRED TO IN THE FIRST PART OF CLAUSE (II) OF SECTION 32(1) AND SO MUCH SO, GOODWILL WAS COVERED BY THE ABOVE PROVISION OF THE ACT ENTITLING THE ASSESSEE FOR DEPRECIATION GOODWILL IS NOT SPECIFICALLY MENTI ONED IN SECTION 32(1){II} OF THE INCOME-TAX ACT, 1961. DEPRECIATION IS ALLOWABLE NOT ONLY ON TANGIBLE ASSETS COVERED BY CLAUSE (I) OF SECTION 32(1), BUT ON THE INTANGIBLE ASSETS SPECIFICALLY ENUMERATED IN CLAUSE (II) AND SUCH OF THE OTHER BUSINESS OR COMMERCIAL RIGHTS SIMILAR TO THE ITEMS SPECIFICALLY COVERED THEREIN.' THE HON'BLE DELHI HIGH COURT IN THE MATTER OF AREVA T AND D INDIA LTD.(SUPRA}HAS DISCUSSED THE ISSUE OF DEPRECIATION TO BE GRANTED O N INTANGIBLE ASSETS.LT HAS ALSO DISCUSSED THE FACTS OF THE CASE. FOLLOWING ARE THE FINDING OF THE COURT: THE PRINCIPLE OF EJUSDEM GENERIS PROVIDES THAT WHER E THERE ARE GENERAL WORDS FOLLOWING PARTICULAR AND SPECIFIC WORDS, THE MEANIN G OF THE LATTER WORDS SHALL BE CONFINED TO THINGS OF THE SAME KIND. FOR INTERPR ETING THE EXPRESSION 'BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE' S PECIFIED IN SECTION 32(1}{II) OF THE ACT, SUCH RIGHTS NEED NOT ANSWER THE DESCRIP TION OF 'KNOW-HOW, PATENTS, TRADE MARKS, LICENCES OR FRANCHISES' BUT MUST BE OF SIMILAR NATURE AS THE SPECIFIED ASSETS. ON A PERUSAL OF THE MEANING OF TH E CATEGORIES OF SPECIFIC INTANGIBLE ASSETS REFERRED TO IN SECTION 32(1){II} OF THE ACT PRECEDING THE TERM 'BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE', IT IS SEEN THAT THE INTANGIBLE ASSETS ARE NOT OF THE SAME KIND AND ARE CLEARLY DIS TINCT FROM ONE ANOTHER. THE FACT THAT AFTER THE SPECIFIED INTANGIBLE ASSETS THE WORDS 'BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE' HAVE BEEN ADDI TIONALLY USED, CLEARLY DEMONSTRATES THAT THE LEGISLATURE DID NOT INTEND TO PROVIDE FOR DEPRECIATION ONLY IN RESPECT OF THE SPECIFIED INTANGIBLE ASSETS BUT ALSO TO OTHER CATEGORIES OF INTANGIBLE ASSETS, WHICH IT IS NEITHER FEASIBLE NOR POSSIBLE TO EXHAUSTIVELY ENUMERATE. IN THE CIRCUMSTANCES, THE NATURE OF 'BUS INESS OR COMMERCIAL RIGHTS' CANNOT BE RESTRICTED ONLY TO THE SIX CATEGORIES OF ASSETS, VIZ., KNOW-HOW, 4 ITA NO. 2161/M/2015 M/S. HUNTSMAN INTERNATIONAL (INDIA) PVT. LT D. PATENTS, TRADE-MARKS, COPYRIGHTS, LICENCES OR FRANC HISES. THE NATURE OF 'BUSINESS OR COMMERCIAL RIGHTS' CAN BE OF THE SAME GENUS IN WHICH ALL THESE SIX ASSETS FALL. ALL OF THEM FALL IN THE GENUS OF I NTANGIBLE ASSETS THAT FORM PART OF THE TOOL OF TRADE OF AN ASSESSEE FACILITATING SM OOTH CARRYING ON OF THE BUSINESS. ..... IN THE CASE OF THE ASSESSEE, INTANGIBLE ASSET S, VIZ., BUSINESS CLAIMS, BUSINESS INFORMATION, BUSINESS RECORDS, CONTRACTS, SKILLED E MPLOYEES AND KNOW-HOW WERE ALL ASSETS, WHICH WERE INVALUABLE AND RESULTED IN CARRYING ON THE TRANSMISSION AND DISTRIBUTION BUSINESS BY THE ASSES SEE, WHICH WAS HITHERTO BEING CARRIED OUT BY THE TRANSFEROR, WITHOUT ANY IN TERRUPTION. THE INTANGIBLE ASSETS WERE, THEREFORE, COMPARABLE TO A LICENCE TO CARRY OUT THE EXISTING TRANSMISSION AND DISTRIBUTION BUSINESS OF THE TRANS FEROR. IN THE ABSENCE OF THE INTANGIBLE ASSETS, THE ASSESSEE WOULD HAVE HAD TO C OMMENCE BUSINESS FROM SCRATCH AND GO THROUGH THE GESTATION PERIOD WHEREAS BY ACQUIRING THE BUSINESS RIGHTS ALONG WITH THE TANGIBLE ASSETS, THE ASSESSEE GOT AN UP AND RUNNING BUSINESS. THE SPECIFIED INTANGIBLE ASSETS ACQUIRED UNDER THE SLUMP SALE AGREEMENT WERE IN THE NATURE OF 'BUSINESS OR COMMER CIAL RIGHTS OF SIMILAR NATURE' SPECIFIED IN SECTION 32(1){II} OF THE ACT A ND WERE ACCORDINGLY ELIGIBLE FOR DEPRECIATION UNDER THAT SECTION .... THE COMMER CIAL RIGHTS ACQUIRED TO SELL PRODUCTS UNDER THE TRADE NAME AND THROUGH THE NETWO RK CREATED BY THE SELLER FOR SALE IN INDIA WERE ENTITLED TO DEPRECIATION. IN THE CASE OF MANIPAL UNIVERSAL LEARNING PVT. LTD. {SUPRA}THE ASSESSEE HAD AGREED IN THE SALE AGREEMENT TO THE PRICE OF RS. 51.63 CRO RES AS THE VALUE OF THE SMU AGENCY RIGHTS. ON THE VERY NEXT DAY,IT REVALUED SUC H RIGHTS AT RS.98,73,25,000 AND CLAIMED DEPRECIATION ON THE REVALUED RIGHTS. THE AS SESSING AUTHORITY HELD THAT THE EXCESS CONSIDERATION PAID OVER THE VALUE OF THE NET ASSETS WAS IN THE NATURE OF GOODWILL PAID FOR THE FUTURE PROFITS OF THE BUSINES S. THEREFORE, HE ALLOWED DEPRECIATION ONLY ON THE VALUE MENTIONED IN THE AGR EEMENT. THE FAA AFFIRMED THE ORDER OF THE AO. HOWEVER, THE TRIBUNAL ALLOWED DEPR ECIATION ON THE ENTIRE AMOUNT ARRIVED AT ON REVALUATION INCLUDING THE VALUE OF GO ODWILL. ON APPEAL TO THE HON'BLE KARNATAKA HIGH COURT THE COURT HELD THAT EXPLANATIO N 3 TO SECTION 32{1} OF THE ACT, DEFINED THE EXPRESSION 'ASSET' TO INCLUDE INTA NGIBLE ASSETS LIKE GOODWILL. GOODWILL IS AN ASSET UNDER EXPLANATION 3{B} TO SECT ION 32{1}OF THE ACT, THAT DEPRECIATION WAS ALLOWABLE EVEN ON THE GOODWILL, TH AT THAT THE ASSESSEE WOULD BE ENTITLED TO CLAIM DEPRECIATION IN RESPECT OF AN AMO UNT OF RS.98, 73,25,000{INCLUDING GOODWILL} AND NOT THE AMOUNT OF RS.51.63 CRORES AS REFLECTED IN THE SALE AGREEMENT FOR PURCHASE OF THE DISTANCE LEARNING DIVISION. IN THE MATTERS OF SKS MICROSOFT FINANCE LTD. AND WEIAMANN FOREX LT D.(SUPRA}IT HAS BEEN HELD THAT ACQUISITION OF CLIENT BASE/CUSTOMERS' LIST FOR MS PART OF INTANGIBLE ASSETS MENTIONED IN THE SECTION 32{1}OF THE ACT. 2.4.1. WE FIND THAT THE ASSESSEE HAD ACQUIRED TEXTI LE EFFECT(TE) BUSINESS FROM CIBA-INDIA AND DDCL AS A GOING CONCERN ON A LUMP SA LE BASIS, THAT MANUFACTURING FACILITIES OF BOTH THE ENTITIES WERE NOT TRANSFERRED AS PART OF SLUMP SALE, THAT AS A PART OF SLUMP SALE THE ENTIRE DISTR IBUTION CHANNEL WAS HANDED OVER TO THE ASSESSEE INCLUDING THE CUSTOMER, DEALERS, MARKE TING PEOPLE, MARKETING PLANS, LABORATORY, SUPPLY-CHAIN AND THE WAREHOUSES, THAT T HE SERVICES OF TEXTILE EFFECTS EMPLOYEES WAS TRANSFERRED TO THE ASSESSEE, THAT IT HAD ENTERED INTO AGREEMENT WITH CIBA-INDIA AND DDCL FOR MATERIAL SUPPLY AND FOR SUP PLY OF CHEMICAL PRODUCTS TO THE NEWLY ACQUIRED TE BUSINESS, THAT IT REGARDED TH E FIXED ASSETS AND INTANGIBLE ASSETS OF ACQUIRED TE BUSINESS AT FAIR MARKET VALUE AS DETERMINED BY AN INDEPENDENT VALUER. IN CASE OF A SLUMP SALE, GENERALLY NO SEPARATE VALU E IS ASSIGNED TO EACH AND EVERY ASSET BY THE TRANSFEROR AND THE PARTY TAKING OVER T HE ASSETS ASSIGN SPECIFIC VALUES TO THE ACQUIRED ASSETS. IN THE CASE BEFORE US. THE ASS ESSEE HAD OBTAINED A VALUATION REPORT FROM AN EXPERT AND ON THE BASIS OF THAT REPO RT HAD RECORDED THE VALUE OF THE TANGIBLE AND INTANGIBLE ASSETS IN THE BOOKS OF ACCO UNT. WE FIND THAT IN THE VALUATION 5 ITA NO. 2161/M/2015 M/S. HUNTSMAN INTERNATIONAL (INDIA) PVT. LT D. REPORT THE VALUER HAD ASSIGNED VALUE TO MSC,DN AND BRAND USES, THAT THE AO/DRP HAS NOT BROUGHT ANYTHING ON RECORD TO DISPROVE THE CORRECTNESS OF THE VALUER. AS FAR AS THE ENTRIES IN THE BALANCE SHEET OF CIBA-INDIA A ND DDCL IS CONCERNED IN OUR OPINION SAME ARE NOT DECISIVE FACTORS. WHAT HAS TO BE SEEN IN CASE OF A SLUMP SALE IS THE TREATMENT GIVEN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT TO THE ASSETS ACQUIRED AND AS TO WHETHER THE VALUATION IS BASED ON SOME SC IENTIFIC BASIS. THE ASSESSEE HAD ENTERED INTO AGREEMENTS FOR A PERIOD OF FIVE YEARS WITH CIBA INDIA AND DDCL AND BECAUSE OF THE AGREEMENTS THE PRODUCTS MANUFACTURED BY BOTH THE ENTITIES WERE MADE AVAILABLE AT COST TO THE ASSESSEE.THE ASSESSEE WAS GRANTED NON-EXCLUSIVE, IRREVOCABLE, ROYALTY FREE LICENSE TO USE TRADE-MARK S DOMAIN NAMES FOR A PERIOD OF TWO YEARS. NOT ONLY THAT THE ASSESSEE GOT THE DISTR IBUTION NETWORK. IN SHORT THE ASSESSEE GOT VALUABLE BUSINESS/COMMERCIAL RIGHTS. T HEREFORE, WE ARE OF THE OPINION THAT BY ENTERING INTO MCS AND GETTING DISTRIBUTION NETWORK, THE ASSESSEE HAD ACQUIRED BUSINESS/COMMERCIAL RIGHTS THAT WERE OF TH E SIMILAR NATURE AS MENTIONED IN SEC.32(L)(II) OF THE ACT. SAME IS THE CASE ABOUT US E OF BRAND NAME. THE ASSESSEE HAD ASSIGNED VALUE TO VARIOUS ASSETS NAMELY FIXED ASSET S(RS. 6. 68 CRORES), INTANGIBLE ASSETS (RS.54.94 CRORES), GOODWILL(41.87CRORES). WE ARE OF THE OPINION THAT BY RELYING UPON THE VALUATION REPORT OF AN EXPERT THE ASSESSEE HAD NOT CONTRAVENED ANY OF THE PROVISIONS OF THE ACT. WE HAVE ALREADY HELD THAT BUSINESS RIGHT, DISTRIBUTION NETWORK AND BRAND USAGE FALL IN THE SAME CATEGORY O F COMMERCIAL RIGHTS MENTIONED IN SECTION 32 OF THE ACT. THEREFORE, WE HOLD THAT A SSESSEE WAS ENTITLED TO CLAIM DEPRECIATION ON THE INTANGIBLE ASSETS. HERE, WE WOULD LIKE TO REFER TO THE CASE OF KEC INT ERNATIONAL [(2010)- TIOL 478- ITAT-MUM]. IN THAT MATTER, THE TRIBUNAL HAS OBSERVE D THAT IN CASE OF A SLUMP SALE THE VALUE ADOPTED BY THE ASSESSEE ON THE BASIS OF V ALUATION REPORT CAN BE CONSIDERED FOR DEPRECIATION PURPOSE. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF ASWIN VANASPATI INDUSTRIES LTD. (2551TR26) HAS APPROVED T HE PRINCIPLE OF VALUATION OF ACQUIRED ASSET BY A VALUER AND HELD THAT IN ABSENCE OF ADEQUATE MATERIAL ON RECORD IN FORM OF DEPARTMENTAL VALUATION REPORT AND THE OP INION OF THE TECHNICAL EXPERTS COULD NOT BE IGNORED. IN LIGHT OF THE ABOVE DISCUSS ION, GROUND NO.1 IS DECIDED IN FAVOUR OF THE ASSESSEE.' THIS DECISION HAS BEEN FOLLOWED IN THE DECISION OF THE CO-ORDINATE BENCH FOR A.Y. 2009-10 ALSO (SUPRA). 6.3.2 FOLLOWING THE AFORESAID DECISION OF THE CO-OR DINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR A.Y. 2007-08 AND 200 9-10 (SUPRA), WE HOLD THAT SINCE BRAND USAGE, DISTRIBUTION NETWORKS AND BUSINE SS RIGHTS FALL IN THE SAME CATEGORY OF COMMERCIAL RIGHTS MENTIONED IN SECTION 32 OF THE ACT, THE ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION ON THE AFORESAID INT ANGIBLE ASSETS. CONSEQUENTLY, GROUND NO.3 IS DECIDED IN FAVOUR OF THE ASSESSEE. THUS, RESPECTFULLY FOLLOWING THE DECISION OF CO-ORD INATE BENCH IN ASSESSEES OWN CASE FOR AY 2007-08 AND 2010-11, THE ASSESSEE IS ENTITLE D TO CLAIM THE DEPRECIATION ON INTANGIBLE ASSETS, HENCE, THIS GROUND OF APPEAL IS ALLOWED IN FAVOUR OF ASSESSEE. 4. GROUND NO.2 RELATES TO DISALLOWANCE OF UNPAID SERVICE TAX OF RS . 14,742/-. THE LD. AR OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSI NG THIS GROUND RAISED IN THE PRESENT APPEAL. THE LD. DR FOR THE REVENUE HAS NO OBJECTIO N. CONSIDERING THE CONTENTION OF LD. AR OF THE ASSESSEE, THE GROUND NO.2 RAISED IN T HE PRESENT APPEAL IS DISMISSED. 6 ITA NO. 2161/M/2015 M/S. HUNTSMAN INTERNATIONAL (INDIA) PVT. LT D. 5. GROUND NO.3 RELATES TO DISALLOWANCE OF FOREIGN EXCH ANGE LOSSES. THE LD. AR OF THE ASSESSEE ARGUED THAT THIS GROUND OF APPEAL IS ALSO COVERED IN HIS FAVOUR BY THE DECISION OF MUMBAI TRIBUNAL IN INVENTORS KNOWLEDGE SERVICES PVT. LTD. VS. ITO (2016) 65 TAXMAN.COM 92. THE LD. DR FOR THE REVENU E RELIED UPON THE ORDER OF AUTHORITIES BELOW. WE HAVE CONSIDERED THE RIVAL CON TENTION OF THE PARTIES AND GONE THROUGH THE ORDER OF AUTHORITIES BELOW. THE AO WHIL E MAKING ASSESSMENT OBSERVED THAT THE ASSESSEE HAS NOT FILED REVISED RETURN OF I NCOME BEFORE MAKING THIS ADDITIONAL CLAIM AND NOT ALLOWED THE CLAIM OF LOSS ON ACCOUNT FOREIGN EXCHANGE LOSS. THE LD. CIT(A) WHILE CONSIDERING THIS GROUND OF APPEAL HOLD THAT THE ASSESSEE HAD NOT ORIGINALLY CLAIMED THE SAID LOSSES IN THE RETURN O F INCOME. THE CLAIM WAS MADE ONLY BY FILING A LETTER DURING THE ASSESSMENT PROCEEDING AND THE SAME WAS CORRECTLY NOT ENTERTAINED BY AO AND DISMISSED THE SAME. WE HAVE S EEN THE LD CIT(A) HAS NOT CORRECTLY APPRECIATED THE RATIO DECIDENDI BY THE HONBLE APEX COURT IN CASE OF GOETZ INDIA LTD. VS. CIT 284 ITR 323. AS PER THE DE CISION OF HONBLE APEX COURT IN GOTEZ INDIA LTD (SUPRA) THE LD CIT(A) WAS EMPOWERE D TO ADMIT THE ADDITIONAL GROUND WHICH WAS ORIGINALLY RAISED BY THE ASSESSEE. CONSID ERING THE FACTS OF THE CASE, WE ADMIT THIS GROUND OF APPEAL RAISED BY ASSESSEE AND RESTORE THE CASE TO THE FILE OF LD CIT(A) TO CONSIDER THE CLAIM OF ASSESSEE ON MERIT. NEEDLESS TO SAY THAT LD. CIT(A) SHALL GIVE ADEQUATE OPPORTUNITY TO THE ASSESSEE WHI LE DECIDING THE CLAIM OF ASSESSEE IN ACCORDANCE WITH LAW. THUS, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 6. GROUND NO.4 RAISED BEFORE US RELATES TO DISALLOWANC E OF SHARE ISSUE EXPENDITURE. THE LD. AR OF ASSESSEE SUBMITS THAT HE IS NOT PRESSING THE GROUND NO.4 RAISED IN THE PRESENT APPEAL. THE LD. DR FOR REVENUE HAS NO OBJEC TION. CONSIDERING THE SUBMISSION OF LD. AR OF ASSESSEE THIS GROUND OF APPEAL IS DISM ISSED AS NOT PRESSED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DECEMBER, 2016. SD/- SD/- (D.KARUNAKARA RAO) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 05/12/2016 S.K.PS 7 ITA NO. 2161/M/2015 M/S. HUNTSMAN INTERNATIONAL (INDIA) PVT. LT D. COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/