DISH TV INDIA LTD ( FORMELRY KNOWN AS ASC ENTERPRISES LTD), MUMBAI V. ACIT CIR 6(1), MUMBAI

ITA 2382/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62678 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 25-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: SANJIV M SHAH
• Keywords: Business income; Depreciation; Rectification of order
• Section: 14A; 154

Judgement Text

ITA NO.2382 OF 2011 DISH TV INDIA LTD MUMBAI D BENC H PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO.2382/MUM/2011 (ASSESSMENT YEAR: 2006-07) DISH TV INDIA LTD (FORMERLY KNOWN AS ASC ENTERPRISES LTD), 135 CONTINENTAL BUILDING, DR. A.B. ROAD, WORLI, MUMBAI 400018 PAN NO.AAACA 5478 M (APPELLANT) VS. ACIT CIRCLE 6(1), AAYAKAR BHAVAN, MUMBAI 400020 (RESPONDENT) ASSESSEE BY: SHRI SANJIV M. SHAH, DEPARTMENT BY: SHRI C.G.K. NAIR, DR DATE OF HEARING: 17/07/2012 DATE OF PRONOUNCEMENT: 20/07/2012 O R D E R PER AMIT SHUKLA, J.M. THIS APPEAL IS FILED BY ASSESSEE AGAINST THE ORDER DATED 3.1.2011 PASSED BY THE CIT (A) FOR THE ASSESSMENT Y EAR 2006-07 IN RELATION TO ORDER PASSED UNDER SECTION 154. THE ONL Y GRIEVANCE OF ASSESSEE, AS RAISED IN THE GROUNDS OF APPEAL, IS TH E DISALLOWANCE OF CLAIM OF DEPRECIATION OF ` .81.00 LAKHS AS INTANGIBLE ASSET MADE BY AO UNDER SECTION 154. 2. BRIEF FACTS RELEVANT FOR THE ISSUE INVOLVED IS THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING DIRECT TO HOME SERVICES (DTH), TELEPORT SERVICES AND TRADING IN ELECTRONIC DEVICES (CPE) FOR DTH BUSINESS. THE RETURN OF INCOME WAS FILED ON 30.11.2 006 DECLARING LOSS OF ` .93,02,70,845/-. THE ASSESSMENT UNDER SECTION 143(3 ) WAS COMPLETED VIDE ORDER DATED 18.12.2008 ASSESSING TOT AL LOSS AT ` .92,04,46,912/- AFTER MAKING DISALLOWANCE UNDER SEC TION 14A OF THE ACT. ITA NO.2382 OF 2011 DISH TV INDIA LTD MUMBAI D BENC H PAGE 2 OF 4 3. DURING THE PENDENCY OF THE APPEAL BEFORE THE CIT (A ), AO ISSUED NOTICE UNDER SECTION 154, DATED 28.07.2009 F OR RECTIFYING THE INCORRECT COMPUTATION OF INCOME. AO WHILE PASSING T HE ORDER UNDER SECTION 154 OBSERVED THAT, FROM THE PERUSAL OF THE RECORD, IT IS FOUND THAT DEPRECIATION OF ` .1 CRORE AND RS.81 LAKHS CLAIMED ON AMORTIZATION OF LICENSE FEES AND NON-REFUNDABLE ENT RY FEE RESPECTIVELY WAS ALLOWED IN THE ASSESSMENT ORDER WH ICH IS OTHERWISE NOT ALLOWABLE AS PER THE PROVISIONS OF THE I.T. ACT . BESIDES LONG TERM CAPITAL LOSS OF ` .3,26,07,422/-, WAS TREATED AS BUSINESS LOSS. ASSESSEE ADMITTED THAT DEPRECIATION OF ` .1.00 CRORE ON AMORTIZATION OF LICENSE FEE WAS NOT ADDED BACK IN COMPUTATION OF INCOME AND ALSO LOSS UNDER THE HEAD CAPITAL GAIN WAS WRONGLY I NCLUDED IN THE BUSINESS INCOME. HOWEVER, REGARDING THE DISALLOWANC E OF DEPRECIATION OF ` .81 LAKHS ON NON REFUNDABLE ENTRY FEES, NO OBJECTION WAS MADE. ACCORDINGLY AO ADDED DEPRECIATI ON OF ` .81 LAKHS ALONG WITH OTHER AMOUNT OF ` .1.00 CRORES. 4. BEFORE THE CIT (A) IT WAS CONTENDED THAT ASSESSEES CLAIM OF DEPRECIATION HAS BEEN ALLOWED IN THE EARLIER YEARS ON THE SAME ASSET AND DURING THIS YEAR DEPRECIATION HAS BEEN CLAIMED ONLY ON OPENING WDV. THERE IS NO NEW ADDITION TO THE ASSET DURING T HE YEAR. IT WAS ALSO SUBMITTED THAT ASSESSEE HAS CAPITALIZED THE AS SET IN THE ASSESSMENT YEAR 2004-05 AND DEPRECIATION CLAIM WAS DULY ALLOWED AS DETAILS GIVEN UNDER: AMOUNT CAPITALIZED IN ASSESSMENT YEAR 2004-05 RS.1, 000 LACS LESS: DEPRECIATION CLAIMED FOR ASSESSMENT YEAR 2004-05 RS.100 LACS CLOSING WDV AS ON 31.03.2004 RS.900 LACS OPENING WDV AS ON 1.4.2004 RS.900 LACS LESS: DEPRECIATION CLAIMED FOR ASSESSMENT YEAR 2005-06 RS.90 LACS ITA NO.2382 OF 2011 DISH TV INDIA LTD MUMBAI D BENC H PAGE 3 OF 4 CLOSING WDV AS ON 31.03.2005 RS.810 LACS OPENING WDV AS ON 1.4.2005 RS.810 LACS LESS: DEPRECIATION CLAIMED FOR ASSESSMENT YEAR 2006-07 RS.81 LACS CLOSING WDV AS ON 31.03.2006 RS.729 LACS 5. BESIDES THIS VARIOUS SUBMISSIONS WERE MADE ON THE ALLOWABILITY OF THE DEPRECIATION. THE LEARNED CIT ( A) REJECTED THE CONTENTION OF ASSESSEE SOLELY ON THE GROUND THAT AS SESSEE HAS FAILED TO SUBMIT ANY REPLY REGARDING THE ALLOWABILITY OF T HE DEPRECIATION OF ` .81 LAKHS AND ACCORDINGLY CONFIRMED AOS ACTION. 6. LEARNED COUNSEL ON BEHALF OF ASSESSEE SUBMITTED THA T DEPRECIATION OF INTANGIBLE ASSET WHICH ARE FORMING PART OF THE BLOCK OF ASSET HAS BEEN ALLOWED IN THE EARLIER YEARS AND IN SUPPORT OF THIS CLAIM HE REFERRED TO THE AUDITED AUDIT REPORT FOR T HE YEAR ENDING 31.03.2004 TO 31.03.2006. HE ALSO POINTED OUT THAT IN THE ASSESSMENT YEAR 2004-05 DEPRECIATION ON LICENSE FEE S WAS DISALLOWED BY AO, THE SAME STANDS ALLOWED BY THE CI T (A) WHICH HAS ATTAINED FINALITY. FURTHER HE REFERRED TO ASSESSMEN T YEAR 2005-06 WHEREIN THE DEPRECIATION CLAIMED BY ASSESSEE STANDS ALLOWED. THUS, DISALLOWANCE OF DEPRECIATION ON WDV IN THIS YEAR IS NOT JUSTIFIED AND IS BEYOND THE SCOPE OF SECTION 154 PROCEEDINGS. ON THE OTHER HAND THE LEARNED DR RELIED UPON THE FINDINGS OF THE CIT (A) AS WELL AS AO. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL ON RECORD. IT IS AN ADMITTED F ACT THAT THE DEPRECIATION ON THE INTANGIBLE ASSET WHICH IS FORMI NG PART OF THE BLOCK OF ASSETS HAS BEEN CAPITALIZED AND ALLOWED IN THE ASSESSMENT YEAR 2004-05 AND FURTHER ALLOWED IN ASSESSMENT YEAR 2005-06. THE DEPRECIATION OF ` .81 LAKHS WAS CLAIMED ON THE WDV AS ON 1.4.2005 AND THE SAME STOOD ALLOWED BY AO UNDER SECTION 143( 3). SUCH A DISALLOWANCE ON DEPRECIATION UNDER SECTION 154 PROC EEDINGS IS ITA NO.2382 OF 2011 DISH TV INDIA LTD MUMBAI D BENC H PAGE 4 OF 4 BEYOND THE SCOPE OF RECTIFICATION BEING MISTAKE APP ARENT FROM RECORD. FURTHER, FROM THE PERUSAL OF THE SCHEDULE 6 OF THE BALANCE SHEET, IT IS SEEN THAT ON THIS ASSETS RIGHT FROM TH E ASSESSMENT YEAR 2004-05 TO THE ASSESSMENT YEAR 2006-07, ASSESSEE HA S BEEN CONSTANTLY BEING ALLOWED DEPRECIATION ON INTANGIBLE ASSETS BY THE DEPARTMENT. UNDER THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT AO IS NOT JUSTIFIED IN DISALLOWING DEPRECIATION OF ` .81 LAKHS UNDER SECTION 154 PROCEEDING AS THE SAME IS BEYOND THE SC OPE OF RECTIFICATION OF MISTAKE APPARENT FROM THE RECORD A ND SUCH A DISALLOWANCE CANNOT BE MADE IN THIS YEAR ON WDV. AC CORDINGLY THE GROUND RAISED BY ASSESSEE IS ALLOWED. 8. IN THE RESULT THE APPEAL FILED BY ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2012. SD/- SD/- (B. RAMAKOTAIAH) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 20 TH JULY, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI