The ACIT, Circle-1, Ahmedabad V. Arvind Fashion Ltd., Ahmedabad

ITA 232/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72924 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 28-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: P M MEHTA
• Keywords: Capital expenditure

Judgement Text

, , , , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ I.T.A. NO.232/AHD/2011 ( & '& & '& & '& & '& / / / / ASSESSMENT YEAR : 2006-07) THE ACIT CIRCLE-1 AHMEDABAD / VS. M/S.ARVIND FASHIONS LTD. (NOW MERGED WITH ARVIND LTD.) ARVIND MILLS PREMISES NARODA ROAD, AHMEDABAD ( !./)* !./ PAN/GIR NO. : AABCA 2402 L ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY : SHRI O.P.BATHEJA, SR.D.R. ,-(+ / . / RESPONDENT BY : SHRI P.M. MEHTA, A.R. ' 0 / $1 / / / / DATE OF HEARING : 28/1/2014 23' / $1 / DATE OF PRONOUNCEMENT : 30/01/2014 4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VI, AHMEDABA D (CIT(A) FOR SHORT) DATED 16/11/2010 PERTAINING TO ASSESSME NT YEAR (AY) 2006- 07. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ROYALTY PAID OF RS.1,29,13,000/-. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) ITA NO.232/AHD/ 2011 ACIT VS. M/S.ARVIND FASHIONS LTD. ASST.YEAR 2006-07 - 2 - OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OF FICER TO HE EXTENT MENTIONED ABOVE, SINCE THE ASSESSEE HAS FAILED TO D ISCLOSE HIS TRUE INCOME. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. THE APPE LLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE A SSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 31/12/2008, THEREBY THE ASSESSING OFFICER(AO) TREATED THE ROYAL TY PAYMENT AS CAPITAL EXPENDITURE AND MADE ADDITION OF RS.1,29,13,000/- THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT( A), WHO AFTER CONSIDERING THE SUBMISSIONS, DELETED THE ADDITION. 3. THE LD.SR.DR SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITIO N. 3.1. ON THE CONTRARY, THE LD.COUNSEL FOR THE ASSESS EE SUPPORTED THE ORDER OF THE LD.CIT(A). HE SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION(S) OF ITAT B BENCH AHMEDABAD IN ITA NO.1 037/AHD/2005 (ASSESSEES OWN CASE) & ITA NO.1304/AHD/2005 (REVEN UES CROSS- APPEAL) FOR AY 2001-02, DATED 18/12/2009 AND OF ITA T D BENCH AHMEDABAD IN ITA NO.3074/AHD/2010 (REVENUES APPEAL IN ASSESSEES OWN CASE) FOR AY 2005-06, DATED 29/07/2011. HE SU BMITTED THAT IN AY 2004-2005 THE ISSUE HAS BEEN DECIDED BY THE ITAT D BENCH AHMEDABAD IN FAVOUR OF THE ASSESSEE IN ITA NO.2334/ AHD/2007, DATED 26/04/2010. ITA NO.232/AHD/ 2011 ACIT VS. M/S.ARVIND FASHIONS LTD. ASST.YEAR 2006-07 - 3 - 3. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE DECISIONS CITED ABOVE. WE FIND THAT THE LD.CIT(A) HAS DECIDED THIS ISSUE IN PARA-3.3 OF HIS ORDER, BY OBS ERVING AS UNDER:- 3.3. I HAVE CONSIDERED THE FACTS OF THE CASE, ASSE SSMENT ORDER AND APPELLANTS SUBMISSION. ISSUE HAS BEEN DECIDED BY ITAT, AHMEDABAD BY ORDER DATED DECEMBER 18,2009. IN PARA -21 OF THE SAID ORDER, ITAT HELD AS UNDER- IN THE ABOVE FACTS AND CIRCUMSTANCES, IT IS NOT PO SSIBLE TO AGREE WITH THE VIEW OF THE REVENUE THAT BY VIRTUE O F UTILIZING THE FACILITIES AS PER THE TECHNICAL AGREEMENT FOR A PERIOD OF FOUR YEARS, THE ASSESSEE COMPANY HAS ACQUIRED A BEN EFIT OF ENDURING NATURE. THE ASSESSEE HAS NOT BUILT UP ANY TECHNICAL BASE OR ACQUIRED ANY INTANGIBLE ASSET FOR PERPETUAL USE. THEREFORE WE AGREE WITH THE CIT(A) THAT THERE WAS NO JUSTIFICATION FOR TREATING ONE FOURTH OF THE ROYALTY PAYMENT AS CAPITAL EXPENDITURE. THE C.I.T. (A) IS JUSTIFIED IN DELETING THE SAID PARTIAL DISALLOWANCE . SINCE, THE JURISDICTIONAL TRIBUNAL IN THE APPELLANT S OWN CASE HAS DECIDED THE ISSUE IN APPELLANTS FAVOR, THE BASIS O N WHICH ASSESSING OFFICER MADE THE DISALLOWANCE DOES NOT REMAIN. RES PECTFULLY FOLLOWING THE DECISION OF HONORABLE ITAT AHMEDABAD, THE ADDITION MADE BY THE AO IS DELETED. 3.1. WE ALSO FIND THAT THE LD.CIT(A) HAS FOLLOWED T HE EARLIER DECISION OF THE HONBLE COORDINATE BENCH AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. SINCE THE FACTS ARE IDENTICAL AS WERE I N THE EARLIER ASSESSEES OWN CASES AND THE REVENUE HAS NOT PLACED ANYTHING CONTRARY ON RECORD, ITA NO.232/AHD/ 2011 ACIT VS. M/S.ARVIND FASHIONS LTD. ASST.YEAR 2006-07 - 4 - WE RESPECTFULLY FOLLOWING THE HONBLE COORDINATE BE NCH DECISIONS, THIS GROUND OF REVENUES APPEAL IS REJECTED. 4. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30/ 01 /2014 71.., .../ T.C. NAIR, SR. PS 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. !! $ ': / CONCERNED CIT 4. ':() / THE CIT(A)-VI, AHMEDABAD 5. 8 #; ,$ , , / DR, ITAT, AHMEDABAD 6. ;<& =0 / GUARD FILE. 4' 4' 4' 4' / BY ORDER, -8$ ,$ //TRUE COPY// > >> >/ // / !) !) !) !) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION ..28.1.14 DICTATION-PAD 4-PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29.1.14 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.30.1.14 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.1.14 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER .