RAJESH RAJKUMAR NAGPAL, Mumbai V. ACIT WARD 18(3), Mumbai

ITA 261/MUM/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7636 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 18-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Depreciation
• Section: 143(3); 32; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER M.A. NO. 261/MUM./2019 ( ARISING OUT OF ITA NO. 631 / MUM . /201 1 ) ( ASSESSMENT YEAR : 20 05 06 ) WNS GLOBAL SERVICES PVT. LTD. PLAN NO.10, GODREJ & BOYCE COMPLEX PHIROJSHANAGAR, VIKHROLI (WEST) MUMBAI 400 079 PAN AAACW2598L . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CIRCLE 10(2), MUMBAI . RESPONDENT ASSESS EE BY : SHRI PORUS KAKA A/W SHRI MANISH KANTI REVENUE BY : SHRI CHAITANYA ANJARIA DATE OF HEARING 07 .0 6 .2019 DATE OF ORDER 17.07.2019 O R D E R PER SAKTIJIT DEY. J.M. BY WAY OF THIS APPLICATION THE ASSESSEE SEEKS RECTIFICATION OF CERTAIN MISTAKES WHICH HAVE CREPT INTO THE ORDER DATED 16 TH JANUARY 2019, PASSED IN ITA NO.631/MUM./2011. 2 . SHRI PORUS KAKA, THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , CERTAIN FACTUAL MISTAKES HAVE CREPT INTO THE ORDER OF THE TRIBUNAL. IN THIS CONTEXT, DRAWING OUR ATTENT ION TO THE PARA 36 OF THE 2 WNS GLOBAL SERVICES PVT. LTD. ORDER, HE SUBMITTED , BY VIRTUE OF THE AGREEMENT DATED 13 TH JANUARY 2004, WITH WNS, U.K., THE ASSESSEE HAS NOT ACQUIRED TOWN AND COUNTRY ASSISTANCE LTD., BUT HAS ONLY ACQUIRED CUSTOMER CONTRACTS. THUS, HE SUBMITTED , THE SAID MISTAK E HAS TO BE RECTIFIED. FURTHER, HE SUBMITTED , IN PARA 40 OF THE APPEAL ORDER, THERE IS SOME FACTUAL MISTAKE WHILE REFERRING TO THE ORDER PASSED BY THE LEARNED COMMISSIONER UNDER SECTION 263 OF THE ACT. THUS, HE SUBMITTED , SUCH MISTAKES BEING IN THE NATURE OF MISTAKE APPARENT ON THE FACE OF RECORD SHOULD BE RECTIFIED. 3 . THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT OPPOSE THE SUBMISSIONS OF THE LEARNED SR. COUNSEL FOR THE ASSESSEE. 4 . HAVING CONSIDERED THE SUBMISSIONS OF THE PARTIES IN THE CONTEXT OF THE FACT S AND MATERIAL ON RECORD, WE ARE OF THE VIEW THAT CERTAIN FACTUAL MISTAKES HAVE CREPT INTO THE ORDER OF THE TRIBUNAL AS REFERRED TO HEREIN BEFORE . S INCE , SUCH MISTAKES ARE APPARENT FROM RECORD , AS ENVISAGED UNDER SECTION 254(2) OF THE ACT, WE PROCEED TO REC TIFY THEM BY SUBSTITUTING PARA 36 AND 40 OF THE APPEAL ORDER WITH THE FOLLOWING PARAGRAPH 36 AND 40, WHICH SHOULD FORM PART OF THE APPEAL ORDER. 36. BRIEF FACTS ARE, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER WHILE EXAMINING ASSESSEES CLAIM OF DEPRECIATION NOTICED THAT THE ASSESSEE BY VIRTUE OF AN AGREEMENT EXECUTED ON 13 TH JANUARY 2004, WITH WNS U.K., HAS ACQUIRED CUSTOMER CONTRACTS FROM A COMPANY, FORMERLY CALLED M/S. TOWN AND COUNTRY ASSISTANCE LTD., NOW CALLED 3 WNS GLOBAL SERVICES PVT. LTD. WNS U.K. FOR A CONSIDE RATION OF 17,50,000 POUND. HE ALSO NOTICED THAT BY ACQUIRING THE BUSINESS CONTRACTS, THE ASSESSEE ALSO ACQUIRED VARIOUS CONTRACTS OF THE SAID COMPANY WITH THIRD PARTIES. HE FURTHER NOTICED THAT THE AMOUNT PAID BY THE ASSESSEE FOR ACQUIRING THE AFORESAID BU SINESS CONTRACTS FROM WNS U.K. WAS CAPITALISED IN THE BOOKS OF ACCOUNT AND THE ASSESSEE TREATED IT AS AN INTANGIBLE ASSET AND ALSO CLAIMED DEPRECIATION @ 25% ON SUCH ASSET WHICH WORKED OUT TO Z 2,77,76,245. AFTER CALLING UPON THE ASSESSEE TO JUSTIFY THE CL AIM OF DEPRECIATION AND EXAMINING ASSESSEE'S SUBMISSIONS THE ASSESSING OFFICER ULTIMATELY DISALLOWED ASSESSEE'S CLAIM OF DEPRECIATION BY HOLDING THAT THE RIGHT ACQUIRED BY THE ASSESSEE IS NOT IN THE NATURE OF COMMERCIAL RIGHT AS MENTIONED IN EXPLANATION 3 TO SECTION 32 OF THE ACT TO TREAT IT AS AN INTANGIBLE ASSET. BEING AGGRIEVED WITH THE AFORESAID DECISION OF THE ASSESSING OFFICER THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 40. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. INSOFAR AS FACTUAL ASPECT OF THE ISSUE IS CONCERNED, THERE IS NO DISPUTE THAT BY VIRTUE OF ACQUISITION OF CUSTOMER CONTRACTS, VARIOUS CONTRACTS EXECUTED BY THE SAID CONCERN WITH THI RD PARTY CLIENTS WERE ASSIGNED TO THE ASSESSEE. IT IS ALSO A FACT THAT SUCH ACQUISITION TOOK PLACE BY VIRTUE OF AN AGREEMENT EXECUTED ON 13TH JANUARY 2004. IT IS ALSO A FACT ON RECORD THAT IN ASSESSMENT YEAR 2004 - 05, THE ASSESSEE FOR THE FIRST TIME CLAIMED DEPRECIATION BY TREATING THE CAPITALIZED VALUE OF THE AMOUNT PAID TOWARDS ACQUIRING CUSTOMER CONTRACTS OF M/S. TOWN AND COUNTRY ASSISTANCE LTD., AS AN INTANGIBLE ASSET AND CLAIMED DEPRECIATION @ 25%. NOTABLY, THE ASSESSING OFFICER WHILE COMPLETING ASSESSM ENT UNDER SECTION 143(3) OF THE ACT ALSO ALLOWED ASSESSEE'S CLAIM OF DEPRECIATION. HOWEVER, LEARNED COMMISSIONER OF INCOME TAX REVISED THE ASSESSMENT ORDER UNDER SECTION 263 OF THE ACT. SUBSEQUENTLY, WHILE DECIDING ASSESSEES APPEAL AGAINST THE SAID ORDER THE TRIBUNAL QUASHED THE ORDER PASSED UNDER SECTION 263 OF THE ACT AND RESTORED THE ASSESSMENT ORDER. THUS, IN EFFECT, ASSESSEE'S CLAIM OF DEPRECIATION IN RESPECT OF INTANGIBLE ASSET BECAME FINAL. IN ANY CASE OF THE MATTER, THERE IS NO DISPUTE THAT B Y ACQUISITION OF CUSTOMER CONTRACTS, THE ASSESSEE HAS ALSO ACQUIRED CONTRACTUAL RIGHTS WHICH, NO DOUBT, IS A VALUABLE COMMERCIAL RIGHT. THEREFORE, IT COMES WITHIN THE MEANING OF INTANGIBLE ASSET AS PER SECTION 32(1)(II) R/ W EXPLANATION 3(B) OF THE ACT. HEN CE, DEPRECIATION CLAIMED BY THE ASSESSEE IS ALLOWABLE. THE DECISIONS RELIED UPON BY THE LEARNED SR. COUNSEL FOR THE ASSESSEE ALSO SUPPORTS OUR AFORESAID VIEW. ACCORDINGLY, WE UPHOLD THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) BY DISMISSING THE GROUNDS RAISED. 4 WNS GLOBAL SERVICES PVT. LTD. 5 . AT THIS STAGE, WE MUST MAKE IT CLEAR, THE RECTIFICATION CARRIED OUT BY US WILL NOT HAVE ANY IMPACT ON THE DECISION TAKEN BY US ON THE ISSUE OF CLAIM OF DEPRECIATION. 6 . IN THE RESULT, MISC. APPLICATION IS ALLOWED TO THE EXTENT INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN C OURT ON 17.07.2019 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 17.07.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI