ERNST & YOUNG MERCHANT BANKING SERVICES (P) LTD FORMALLY KNOWN AS IND GLOBAL CORPORATE FINANCE LTD, MUMBAI V. ITO CIR 3(2)(1), MUMBAI

ITA 2571/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4043 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 29-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 01-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Principle of natural justice; Question of law; Revenue expenditure
• Section: 143(3)

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI , ! '# $ $ $ $ %%, & '# ' BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NOS.2570 & 2571/M/2011 ( &* + &* + &* + &* + / ASSESSMENT YEARS: 2004-05 & 2006-07) M/S. ERNST & YOUNG MERCHANT BANKING SERVICE (P) LTD., (FORMALLY KNOWN AS IND GLOBAL CORPORATE FINANCE LTD.), 14 TH FLOOR, THE RUBY, 29 SENAPATI BAPAT MARG, DADAR (W), MUMBAI 400 028 PAN: AAAC1813Q * * * * / VS. INCOME TAX OFFICER, CIRCLE 3(2)(1), MUMBAI 20 ( ,- / APPELLANT) ( ./,- /RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NIKHIL TIWARI, A.R. REVENUE BY : SHRI B.S.N. RAJU, D.R. * 0 1! / DATE OF HEARING : 12.11.2015 23+ 0 1! / DATE OF PRONOUNCEMENT : 03.02.2016 '4 / O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE TITLED TWO APPEALS HAVE BEEN PREFERRED B Y THE ASSESSEE AGAINST TWO SEPARATE ORDERS BOTH DATED 04.01.2011 OF THE CO MMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEARS 2004-05 & 2006-07. SINCE THE FACTS AND ISSUES INVO LVED THEREIN ARE IDENTICAL IN NATURE, HENCE THE SAME ARE TAKEN TOGETHER FOR DI SPOSAL BY THIS COMMON ORDER. 2. THE ASSESSEE IN THE APPEAL FOR A.Y. 2004-05 BEAR ING ITA NO.2570/M/2011 AND IN THE APPEAL FOR A.Y. 2006-07 B EARING ITA NO.2571/M/2011 HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL: ITA NOS.2570 & 2571/M/2011 M/S. ERNST & YOUNG MERCHANT BANKING SERVICE (P) LTD ., FORMALLY KNOWN AS IND GLOBAL CORPORATE FINANCE LTD .) 2 GROUNDS OF APPEAL IN ITA NO. 2570/M/2011 FOR A.Y. 2 004-05 : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ['CIT(A)' FOR SHORT] HAS ERRED ON THE FACTS AND IN LAW IN HOLDING THAT THE A SSET REQUIRED IN THE FORM OF TECHNICAL KNOW-HOW IN AY 2001-02 BY THE APPELLANT W AS NOT ENTITLE TO DEPRECIATION AMOUNTING TO RS.3,07,6 17 IN THE PRESE NT ASSESSMENT YEAR. 2. WITHOUT PREJUDICE TO THE ALLOWABILITY OF ENTIRE AMOUNT OF RS.1,70,00,000 IN AY 2001 - 02 AS REVENUE EXPENDITURE, THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THAT THE SUM OF RS. 1,70,00,000 PAID IN ASSESSMENT YEAR FOR AY 2001-02 AND TREATED AS PAYMENT TOWARDS ACQUISITION OF INTANGIBLE ASSET IN THE ASSESSMENT YEAR FOR THAT YEAR IS NOT ENTITLED TO DE PRECIATION IN THE PRESENT ASSESSMENT YEAR. 3. WITHOUT PREJUDICE TO THE ALLOWABILITY OF ENTIRE AMOUNT OF RS. 5,00,000 IN AY 2001-02 AS REVENUE EXPENDITURE, THE LEARNED CIT( A) HAS ERRD ON FACTS AND IN LAW IN UPHOLDING THAT THE APPELLANT WAS NOT ENTITLE D TO CLAIM PROPORTIONATE CHARGES RELATING TO THIS YEAR ON ACCOUNT OF SEBI RE GISTRATION FEES HELD TO BE DEFERRED REVENUE EXPENSES IN THE ASSESSMENT ORDER P ASSED UNDER SECTION 143(3) FOR A.Y. 2001-02. 4. THE ORDER OF THE LEARNED CIT(A) TO THE EXTENT IN DICATED ABOVE IS CONTRARY TO FACTS, LAW AND THE PRINCIPLES OF NATURAL JUSTICE. 5. THE ABOVE GROUNDS ARE MUTUALLY EXCLUSIVE AND WIT HOUT PREJUDICE TO EACH OTHER. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND OR MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT ANY TIME OF HEARING. GROUNDS OF APPEAL IN ITA NO. 2570/M/2011 FOR A.Y. 2 006-07 : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ['CIT(A)' FOR SHORT] HAS ERRED ON THE FACTS AND IN LAW IN HOLDING THAT THE A SSET REQUIRED IN THE FORM OF TECHNICAL KNOW- HOW IN 2001-02 BY THE APPELLANT WAS NOT ENTITLE TO DEPRECIATION AMOUNTING TO RS. 1,73,035 IN THE PRESENT ASSESSMENT YEAR. 2. WITHOUT PREJUDICE TO THE ALLOWABILITY OF ENTIRE AMOUNT OF RS. 1,70,00,000 IN AY 2001- 02 AS REVENUE EXPENDITURE, THE LEARNED CIT (A) HAS ERRED IN NOT DIRECTING THAT THE SUM OF RS. 1,70,00,000 PAID IN ASSESSMENT YEAR FOR AY 2001-02 AND TREATED AS PAYMENT TOWARDS ACQUISITION OF INTANGIBLE ASSET IN THE ASSESSMENT YEAR FOR THAT YEAR IS NOT ENTITLED TO DEPRECIATION IN THE PRESENT ASSESSMENT YEAR. 3. THE ORDER OF THE LEARNED CIT(A) TO THE EXTENT IN DICATED ABOVE IS CONTRARY TO FACTS, LAW AND THE PRINCIPLES OF NATURAL JUSTICE. 4. THE ABOVE GROUNDS ARE MUTUALLY EXCLUSIVE AND WIT HOUT PREJUDICE TO EACH OTHER. ITA NOS.2570 & 2571/M/2011 M/S. ERNST & YOUNG MERCHANT BANKING SERVICE (P) LTD ., FORMALLY KNOWN AS IND GLOBAL CORPORATE FINANCE LTD .) 3 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND OR MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT ANY TIME OF HEARING. 3. A PERUSAL OF ABOVE GROUNDS OF APPEAL TAKEN FOR B OTH THE ASSESSMENT YEARS UNDER CONSIDERATION REVEALS THAT GROUND NOS.1 & 2 RESPECTIVELY IN BOTH THE APPEALS ARE IDENTICAL IN NATURE. THE LD. A.R. OF THE ASSESSEE HAS BROUGHT OUR ATTENTION TO THE APPLICATIONS MOVED BY THE ASSE SSEE U/S. 158A BOTH DATED 01.07.2013 MOVED IN RELATION TO GROUND NOS.1 & 2 IN BOTH THE APPEALS, WHEREIN IT HAS BEEN STATED THAT THE ISSUE INVOLVED IN THE P RESENT APPEALS TAKEN VIDE GROUND NOS.1 & 2 ARE REPETITIVE IN NATURE AND ARE P RESENTLY PENDING BEFORE THE HONBLE BOMBAY HIGH COURT IN CROSS APPEALS, ONE FIL ED BY THE ASSESSEE AND THE OTHER BY THE REVENUE AGAINST THE FINDING OF TRIBUNA L ON THE SAME ISSUES IN THE EARLIER ASSESSMENT YEAR 2001-02. ON THE APPLICATIO N OF THE ASSESSEE, A REPORT FROM THE A.O. U/S. 158A(2) WAS CALLED UPON. THE A. O. HAS SENT HIS REPORT DATED 06.05.2015 ADDRESSED TO THE PR. CIT (THROUGH PROPER CHANNEL) WHICH HAS BEEN FURTHER PLACED ON RECORD BY THE LD. D.R. WE HAVE PERUSED THE REPORT OF THE A.O. WHEREIN THE A.O. HAS STATED THAT THE IS SUES TAKEN VIDE GROUNDS NOS.1 & 2 IN BOTH THE ASSESSEES APPEALS BEFORE US FOR A.Y. 2004-05 & 2006- 07 ARE IDENTICAL TO THE ISSUES INVOLVED IN THE APPE ALS OF THE ASSESSEE BEARING ITA NO.179 OF 2013 AS WELL OF THE REVENUES APPEAL BEARING ITA (COD) NO.255 OF 2013 BEFORE THE HONBLE HIGH COURT IN REL ATION TO A.Y. 2001-02. 4. IN VIEW OF ABOVE REPORT OF A.O. AND HAVING REGA RD TO THE FACTS AND CIRCUMSTANCE OF THE CASE, THE APPLICATION OF THE AS SESSEE U/S.158A IS ACCEPTED AND THE GROUND NOS.1 & 2 IN BOTH THE APPEALS OF THE ASSESSEE ARE DISPOSED OFF WITH THE OBSERVATION THAT WHEN THE DECISION ON THE ISSUES/QUESTION OF LAW FRAMED ON THESE ISSUES IN THE OTHER CASE OF THE ASS ESSEE FOR A.Y. 2001-02 BECOME FINAL, IT SHALL BE APPLIED TO THE APPEALS O F THE ASSESSEE FOR THE YEARS UNDER CONSIDERATION AND IF SO REQUIRED, THE ASSESSE E WILL BE AT LIBERTY TO MOVE AN APPLICATION BEFORE THE APPROPRIATE AUTHORITY IN THIS RESPECT. THE ASSESSEE SHALL NOT BE ENTITLED TO FURTHER RAISE THESE QUESTI ONS IN APPEAL OR OTHERWISE ITA NOS.2570 & 2571/M/2011 M/S. ERNST & YOUNG MERCHANT BANKING SERVICE (P) LTD ., FORMALLY KNOWN AS IND GLOBAL CORPORATE FINANCE LTD .) 4 BEFORE ANY HIGHER APPELLATE AUTHORITY I.E. HONBLE HIGH COURT OR HONBLE SUPREME COURT. AS ON TODAY, THE ISSUE TAKEN VIDE GR OUND NO.1 IN THE BOTH THE APPEALS IS COVERED AGAINST ASSESSEE AND ISSUE RAISE D VIDE GROUND NO.2 RELATING TO ALLOWABILITY OF DEPRECIATION ON NON COMPETE FEES IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR A.Y. 2001-02 VIDE ORDER DATED 31.08.2012. WITH THE ABOVE OBSERVATIONS GROUND NOS.1 & 2 IN BOTH THE APPEALS ARE DISPOSED O F ACCORDINGLY. 5. GROUND NO.3 IN ITA NO.2570 FOR A.Y. 2004-05 IS R ELATING TO DISALLOWANCE OF PROPORTIONATE CHARGES ON ACCOUNT OF SEBI REGISTRATION FEES. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE HAS STATED THAT THE TRIBUNAL HAS ALLOWED THE ENTIRE EXPENDITURE FOR A.Y. 2001-02. ACCORDING LY, THIS GROUND HAS BECOME INFRUCTUOUS, SO FAR AS THE YEAR UNDER CONSIDERATION IS CONCERNED. IN VIEW OF THE ABOVE SUBMISSIONS OF THE LD. A.R., GROUND NO.3 IN A SSESSEES APPEAL BEARING ITA NO.2570/M/2011 FOR A.Y. 2004-05 IS DISMISSED HA VING BECOME INFRUCTUOUS. 6. THE OTHER GROUNDS TAKEN IN BOTH THE APPEALS ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 7. IN VIEW OF OUR FINDINGS GIVEN ABOVE, BOTH THE AP PEALS ARE DISPOSED OF ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 03.02.2016. '4 0 23+ ! 5 6'*7 03.02.2016 3 0 % SD/- SD/- ( / RAJENDRA) ( %% / SANJAY GARG) ! '# / ACCOUNTANT MEMBER & '# / JUDICIAL MEMBER /MUMBAI ; 6'* / DATED 03.02.2016 * KISHORE ITA NOS.2570 & 2571/M/2011 M/S. ERNST & YOUNG MERCHANT BANKING SERVICE (P) LTD ., FORMALLY KNOWN AS IND GLOBAL CORPORATE FINANCE LTD .) 5 '4 0 .&1HI JI+1 '4 0 .&1HI JI+1 '4 0 .&1HI JI+1 '4 0 .&1HI JI+1/COPY OF THE ORDER FORWARDED COPY OF THE ORDER FORWARDED COPY OF THE ORDER FORWARDED COPY OF THE ORDER FORWARDED TO TOTO TO : :: : 1. ,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. [1 () / THE CIT(A)- 4. [1 / CIT 5. IB% .&1&* , , / THE DR CONCERNED BENCH, 6. %E F / GUARD FILE. '4* '4* '4* '4* / // / BY ORDER, /I1 .&1 //TRUE COPY// J JJ J/ // /K K K K ( DY./ASSTT. 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