ACIT, New Delhi V. M/s Daikin Air- Conditioning India Pvt. Ltd., New Delhi

ITA 2922/DEL/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6957 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I1
• Next Hearing Date: 11-01-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 03-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH CHANDRA DANDAY
• Keywords: Business income; Depreciation; Transfer pricing; Business expenditure; Opportunity of being heard; International transaction; Revenue expenditure
• Section: 143(3); 32; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-1 NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA: JUDICIAL MEMBER ITA NO. 5293/DEL/2011 ASSTT. YR: 2003-04 DAIKIN AIR CONDITIONING VS. DCIT, CIRCLE 10(1), INDIA PVT. 12 TH FLOOR, NEW DELHI. SURYA KIRAN BUILDING, 19, K.G. MARG, NEW DELHI-110001. PAN: AABCD 0971 F AND ITA NO. 2922/DEL/2011 ASSTT. YR: 2003-04 DCIT, CIRCLE 10(1), VS. DAIKIN AIR CONDITIONING NEW DELHI. INDIA PVT. 12 TH FLOOR, SURYA KIRAN BUILDING, 19, K.G. MARG, NEW DELHI-110001. ( APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI VISHAL KALRA ADV. REVENUE BY : SHRI RAMESH CHANDRA DANDAY SR. DR DATE OF HEARING : 11/01/2016. DATE OF ORDER : 12/02/2016. O R D E R PER S.V. MEHROTRA, A.M: THESE ARE CROSS APPEALS, PREFERRED BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE ORDER DATED 29.3.2011 PASSED BY THE LD. CIT(A)-XX, NEW DELHI IN APPEAL NO. 111/2007-08, RELATING TO A .Y. 2003-04. 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, I N THE RELEVANT ASSESSMENT YEAR, WAS ENGAGED IN THE BUSINESS OF MANUFACTURE, EXPORT, ASSEMBLY, SUPPLY, DISTRIBUTION AND IMPORT OF ALL TYPES OF REFRIGERATI ON EQUIPMENTS AND ACCESSORIES. IT IS AN 80 : 20 JOINT VENTURE OF DAIK IN JAPAN AND SHRIRAM INDUSTRIAL ENTERPRISES LTD. DURING THE YEAR UNDER C ONSIDERATION THE ASSESSEE COMPANY HAD ENTERED INTO FOLLOWING INTERNATIONAL TR ANSACTIONS: S. NO. DESCRIPTION OF TRANSACTION METHOD VALUE (IN RS.) 1. IMPORT OF FINISHED GOODS CPM 21,47,37,577/- 2. IMPORT OF SKD/ CKDS CPM 60781404/- 53125477/- 3. PURCHASE CAPITAL GOODS CPM 9,20,663/- 4. ROYALTY CUP 16,46,156/- 5. COMMISSION RECEIVED TNMM 14,11,595/- 6. COST RECHARGE - 40,940/- 7. REIMBURSEMENT OF EXPENSES BY AE TO DAIKIN FOR PUBLICITY AND SERVICE WARRANTY - 82,89,550/- 3. THE ASSESSEE COMPANY WAS SELLING PRODUCTS LIKE W ATER COOLER AND AIR- CONDITIONERS. OUT OF THE TOTAL REVENUE, SALE OF AI R-CONDITIONERS WAS 86.24% AND 13.72% FROM WATER COOLERS AS PER THE SEGMENTAL ACCOUNT PREPARED BY ASSESSEE. THE ASSESSEE COMPANY MANUFACTURED AS WELL AS TRADED IN THESE PRODUCTS. LD. TPO HAS NOTICED THAT THE IMPORTS OF M ATERIAL WAS RESTRICTED PRIMARILY TO AIR-CONDITIONER SEGMENT. HE FURTHER NO TED THAT IN THE TOTAL ACTIVITY OF ASSESSEE COMPANY 63% WAS IMPORT CONTRIB UTION AND REMAINING 37% WAS INDIGENOUS. THE ASSESSEE COMPANY, DURING TH E YEAR, HAD IMPORTED 3 BOTH RAW-MATERIAL IN THE NATURE OF COMPRESSOR, SKD UNITS AS WELL AS FINISHED GOODS. LD. TPO EXAMINED THE P&L A/C OF THE ASSESSEE COMPANY FROM WHICH IT TRANSPIRED THAT THERE WAS AN INCREASE IN THE RA TIO OF COST OF MATERIAL UPON TOTAL SALES AS COMPARED TO LAST YEAR. THE COMPARATI VE ANALYSIS OF TWO YEARS WAS AS UNDER: YEAR ENDING MARCH 03 MAR 02 SALES 960586354 838784851 ACCRETION (DEPLETION) IN INVENTORIES 31280270 3517 0191 COST OF MATERIAL 674639391 471386713 TOTAL COST 705919661 506556904 PERCENTAGE OF COST UPON SALES 73.49 60.39 4. FROM THE ABOVE DETAILS, THE TPO NOTICED THAT AFT ER TAKING NET EFFECT OF ACCRETION OF INVENTORIES DURING THE YEAR, THE COST OF MATERIAL HAD INCREASED FROM 60.39% TO 73.49% SALES OF WHICH WAS UNUSUAL IN AN INDUSTRY LIKE MANUFACTURING/ TRADING OF AIR-CONDITIONERS, PARTICU LARLY WHEN OTHER EXPENSES REMAINED COMPARABLE WITH LAST YEAR. IN THE BACKDROP OF THIS VARIATION, LD. TPO EXAMINED THE BENCHMARKING ANALYSIS OF ASSESSEE IN REGARD TO IMPORT OF RAW-MATERIAL AND NOTED THAT ASSESSEE HAD USED COST PLUS METHOD TAKING ASSOCIATED ENTERPRISES (SUPPLIERS) AS TESTED PARTY. HE NOTED THAT ASSESSEE HAD COMPARED THE MARK UP CHARGED BY RESPECTIVE AES FRO M ASSESSEE WITH MARK UP CHARGED BY SIMILAR COMPANIES OPERATING IN ASIA P ACIFIC REGION. HE FURTHER NOTED THAT USING ONE SOURCE DATABASE ASSESSEE HAD C ONCLUDED THAT COMPARABLE COMPANIES WERE CHARGING MARK UP OF 30.48 %, WHEREAS THE AES 4 WERE CHARGING LESS THAN THIS ON ITS COST AND, THUS, THE ASSESSEES TRANSACTIONS OF IMPORT OF RAW-MATERIAL WERE AT ARMS LENGTH. LD. TPO DID NOT ACCEPT THE ASSESSEES APPROACH IN CONSIDERING FOREIGN AE AS TE STED PARTY BECAUSE ASSESSEE FAILED TO DEMONSTRATE THAT FOREIGN AE WAS LESS COMPLEX AND ITS ACCOUNTS WERE AVAILABLE AND ACCESSIBLE FOR VERIFICA TION. 5. AS REGARDS THE SECOND ARGUMENT OF ASSESSEE THAT RESALE PRICE METHOD COULD NOT BE APPLIED BECAUSE OF INSUFFICIENCY OF DA TA, HE POINTED OUT THAT THE SAME WAS ACCEPTABLE TO THE EXTENT THAT IF ASSESSEE COMPANY TOOK ITSELF AS TESTED PARTY AND COMPARABLES OF SAME AND SIMILAR TR ADE WERE NOT AVAILABLE, RESALE PRICE METHOD COULD NOT BE APPLIED. HOWEVER, ON THIS BASIS TAKING OF FOREIGN AE AS TESTED PARTY WAS NOT JUSTIFIABLE. LD. TPO APPLIED THE TNM METHOD AND OBSERVED IN PARA 4.4 AS UNDER: IN THESE CIRCUMSTANCES, TO ARRIVE AT METHOD WHICH IS MOST APPROPRIATE IN THIS CASE FOR BENCHMARKING INTERNATI ONAL TRANSACTION, THE FUNCTIONAL, ASSET & RISK ANALYSIS SUBMITTED AS TRANSFER PRICING REPORT WAS PERUSED. THE APPLICABIL ITY OF CUP IS RULED OUT BECAUSE OF THE FACT THAT ASSESSEE COMP ANY DOES NOT PURCHASE SIMILAR GOODS/ SERVICES FROM UNRELATED PAR TY. THE ASSOCIATED ENTERPRISES ALSO SAID TO BE NOT SELLING THESE GOODS/ SERVICES TO UNRELATED PARTIES. APPLICABILITY OF RES ALE PRICE METHOD AND COST PLUS METHOD HAS ELABORATELY BEEN DI SCUSSED ABOVE, THUS, TNMM IS MOST APPROPRIATE METHOD WHICH CAN BE SUED TO BENCHMARK INTERNATIONAL TRANSACTION. 6. PLI WAS TAKEN AS OP/OR. LD. TPO CARRIED OUT SEAR CH AND SELECTED FOLLOWING COMPARABLES: 5 - BLUE STAR LTD.; - VIDEOCON INTERNATIONAL LTD.; - VOLTAS LTD.; AND - WHIRLPOOL INDIA. 7. HE NOTED THAT THESE COMPARABLES WERE EARNING MAR GIN OF 4.09% WHEREAS ASSESSEE WAS INCURRING LOSS AND, THEREFORE, HE DETERMINED THE REQUIRED ADJUSTMENT AT RS. 141268918/- OBSERVING AS UNDER: IT IS SEEN FROM THE ABOVE THAT THE COMPARABLES ARE EARNING A MARGIN OF 4.09% UPON THEIR TOTAL REVENUE IN THE BUS INESS LINE OF THE ASSESSEE COMPANY. IN ORDER TO BENCHMARK INTERNA TIONAL TRANSACTIONS ENTERED BY THE ASSESSEE TRANSACTIONAL NET MARGIN METHOD WAS HELD TO BE MOST APPROPRIATE METHOD. APPL YING THE MARGIN OF COMPARABLES ON TOTAL REVENUE OF THE ASSES SEE AS CALCULATED IN PARA 5.0 ABOVE AT RS. 880,885,953 THE ASSESSEE MUST EARN PROFIT @ 4.09%. THUS IN ARMS LENGTH CIRC UMSTANCES THE ASSESSEE COMPANY WOULD HAVE EARNED A PROFIT F R S. 3,60,28,644/- (I.E. 4.09% OF 880,895,953) WHEREAS A S PER PARA 5.0 ABOVE THE ASSESSEE IS MAKING AN OPERATING LOSS OF RS. 10,52,40,274/-. IN ORDER TO BRING THE ASSESSEE COMP ANY TO ARMS LENGTH THE PRICE OF INTERNATIONAL TRANSACTIONS IS T O BE ADJUSTED BY RS. 14,12,68,918/- (TOTAL OF RS. 3,60,28,644 AND 10,52,40,274). 8. AO PASSED THE ASSESSMENT ORDER AS PER THE TPOS OBSERVATIONS. 9. BEING AGGRIEVED WITH THE ASSESSMENT ORDER THE AS SESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). BEFORE LD. CIT(A) THE ASSESSEE PRESENTED AN ALTERNATIVE ANALYSIS VIDE SUBMISSIONS DATED 11.3.20 11 AND 24.11.2011 AND POINTED OUT THAT GROSS LEVEL ANALYSIS SHOULD BE CAR RIED OUT TO JUSTIFY THE ARMS LENGTH NATURE OF INTERNATIONAL TRANSACTIONS. IT WAS FURTHER SUBMITTED THAT BENCH MARKING ANALYSIS SHOULD BE DONE BASED ON THE SEGMENTATION INTO 6 MANUFACTURING AND TRADING FUNCTIONS AND THE GROSS M ARGIN OF THE RESPECTIVE SEGMENT BE COMPARED WITH THE GROSS MARGIN EARNED BY THE COMPARABLES SELECTED BY THE TPO. LD. CIT(A), HOWEVER, DID NOT A CCEPT THE ASSESSEES CONTENTION AND OBSERVED THAT PRIMARY BENCHMARKING A NALYSIS CANNOT BE SUBSTITUTED BY ANOTHER BENCHMARKING ANALYSIS. A SE CONDARY BENCHMARKING ANALYSIS MAY BE CONDUCTED TO SUPPORT THE PRIMARY BE NCHMARKING ANALYSIS AND NOT TO SUBSTITUTE THE PRIMARY BENCHMARKING ANAL YSIS. THEREFORE, THE GROSS LEVEL ANALYSIS PRESENTED BY THE ASSESSEE COUL D NOT BE ACCEPTED AS A SUBSTITUTE FOR THE BENCHMARKING ANALYSIS. HE, ACCOR DINGLY, UPHELD THE TPOS ORDER. AGGRIEVED, THE ASSESSEE IN APPEAL BEFORE TH E TRIBUNAL. GROUNDS TAKEN BY THE ASSESSEE IN ITS APPEAL ARE AS UNDER: DISALLOWANCE ON ACCOUNT OF ARM'S LENGTH PRICE - RS. 141.268,918 IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - XX (HEREINAFTER REFERRED TO AS 'LEARNED OT (AN, HAS GR OSSLY ERRED IN CONFIRMING THE ENTIRE ADDITION OF RS. 141,268,918 A S 'ARMS LENGTH PRICE ('ALP') ADJUSTMENT' MADE BY THE LEARNE D AO/TPO IN THE ASSESSMENT UNDER SECTION 143(3) OF THE INCOM E TAX ACT, 1961 (LITHE ACT'). IN THIS REGARD, THE LEARNED CIT (A) ERRED BY: 1 REJECTING THE COMPARABILITY ANALYSIS, DONE BY TH E APPELLANT TO DETERMINE THE ARM'S LENGTH PRICE; 2 SELECTING THE APPELLANT AS A TESTED. PARTY INSTEA D OF DAIKIN INDUSTRIES LIMITED, JAPAN; 7 3 REJECTING THE CERTIFIED COST SHEETS SUBMITTED BY THE APPELLANT IN SUPPORT OF TRANSFER PRICE OF IMPORTS; 4 CONFIRMING THE COMPARABILITY ANALYSIS CARRIED OU T BY THE LEARNED TPO, IN PARTICULAR THE INCLUSION OF COMPANI ES WHICH HAVE SUBSTANTIAL DIFFERENCE IN THE FUNCTIONS, ASSET S AND RISK ANALYSIS AS COMPARED TO THE APPELLANT; 5 COMPUTING THE NET MARGIN OF THE APPELLANT IN DETERMINATION OF THE ARM'S LENGTH PRICE AFTER INCLU DING INTEREST ON WORKING CAPITAL; 6 NOT GIVING THE APPELLANT SUFFICIENT OPPORTUNITY TO EXPLAIN I CLARIFY / FURTHER SUBSTANTIATE THE LOSSES AT NET LEVEL; 7 NOT GRANTING THE APPELLANT THE OPTION OF A PRICE WHICH MAY VARY FROM THE ARITHMETIC MEAN BY AN AMOUNT NOT EXCEEDING FIVE PERCENT OF SUCH ARITHMETIC MEAN AS PER THE ACT ; 8 REJECTING THE SECONDARY BENCHMARKING ANALYSIS CONSIDERING THE GROSS LEVEL ANALYSIS CONDUCTED BY T HE APPELLANT; AND 9 MECHANICALLY FOLLOWING THE ORDER PASSED UNDER SE CTION 92CA(3) BY THE LEARNED TPO AND COMPLETELY IGNORING THE SUBMISSIONS MADE BY THE APPELLANT TO THE LEARNED AO AND THEREBY CONFIRMING THE DISALLOWANCE MADE BY THE LEA RNED TPO LEADING TO AN ADDITION OF RS. 141,268,918. 10. LD. COUNSEL SUBMITTED THAT NO OPPORTUNITY WAS P ROVIDED TO ASSESSEE TO OFFER ITS COMMENTS ON THE SELECTION OF COMPARABLES BY TPO. NO OBJECTIONS WERE INVITED FROM ASSESSEE AND THIS WAS SPECIFICALL Y CHALLENGED BEFORE LD. CIT(A) VIDE GROUND NO. 2.8 REPRODUCED BELOW: WITHOUT PREJUDICE TO GROUND 1.1, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED AO (ALONG 8 WITH THE LEARNED TPO- UNDER REFERENCE FROM THE LEAR NED AO) ERRED IN NOT GIVING THE APPELLANT SUFFICIENT OPPORT UNITY TO EXPLAIN/ CLARIFY/ FURTHER SUBSTANTIATE THE LOSSES A T NET LEVEL. 11. HE SUBMITTED THAT MATTER IS TO BE RESTORED BACK TO THE FILE OF LD. TPO. IN SUPPORT OF THIS CONTENTION LD. COUNSEL RELIED ON THE DECISION IN THE CASE OF METAL TOYS INDIA LTD. WHEREIN IN PARA 41 IT HAS BEE N OBSERVED AS UNDER: 41. NOW COMING TO THE ARGUMENT OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT ONCE THE /ASSESSEE ITSELF HAS CHOSEN TNMM AS MOST APPROPRIATE METHOD IN TPR, THEN IT CANNOT RESORT TO CHANGE ITS METHOD AT AN ASSESSMENT OR APPELLATE STAGE. IN OUR OPINION, SUCH A CONTENTION CANNOT BE UPHELD BECAUSE IF IT IS FOUND ON THE FACTS OF THE C ASE THAT A PARTICULAR METHOD WILL NOT RESULT INTO PROPER DETER MINATION OF THE ALP, THE TPO OR THE APPELLATE AUTHORITIES CAN V ERY WELL HOLD THAT WHY A PARTICULAR METHOD CAN BE APPLIED FO R GETTING PROPER DETERMINATION OF ALP OR THE ASSESSEE CAN DEM ONSTRATE A PARTICULAR METHOD TO JUSTIFY ITS ALP. THUS, EVEN IF THE ASSESSEE HAD ADOPTED TNMM AS THE MOST APPROPRIATE METHOD IN THE TRANSFER PRICING REPORT, THEN ALSO IT IS NOT PRECLU DED FROM RAISING THE CONTENTIONS/OBJECTIONS BEFORE THE TPO O R THE APPELLATE COURTS THAT SUCH A METHOD WAS NOT AN APPR OPRIATE METHOD AND IS NOT RESULTING INTO PROPER DETERMINATI ON OF ALP AND SOME OTHER METHOD SHOULD BE RESORTED. THE ULTIM ATE AIM OF THE TRANSFER PRICING IS TO EXAMINE WHETHER THE PRIC E OR THE MARGIN ARISING FROM AN INTERNATIONAL TRANSACTIONS W ITH THE RELATED PARTY IS AT ALP OR NOT. THE DETERMINATION O F APPROXIMATE ALP IS THE KEY FACTOR FOR WHICH MOST AP PROPRIATE METHOD IS TO BE FOLLOWED. THEREFORE, IF AT ANY STAG E OF THE PROCEEDINGS, IT IS FOUND THAT BY ADOPTING ONE OF TH E PRESCRIBED METHODS OTHER THAN CHOSEN EARLIER, THE MOST APPROPR IATE ALP CAN BE DETERMINED, THE ASSESSMENT AUTHORITIES AS WE LL AS THE APPELLATE COURTS SHOULD TAKE INTO CONSIDERATION SUC H A PLEA BEFORE THEM PROVIDED, IT IS DEMONSTRATED AS TO HOW A CHANGE IN THE METHOD WILL PRODUCE BETTER OR MORE APPROPRIATE ALP ON THE FACTS OF THE CASE. ACCORDINGLY, WE REJECT THE CONTE NTIONS OF THE 9 LEARNED DEPARTMENTAL REPRESENTATIVE AND ALSO THE OB SERVATIONS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSION ER (APPEALS) THAT THE ASSESSEE CANNOT RESORT TO ADOPTI ON OF RPM METHOD INSTEAD OF TNMM. 12. LD. DR REFERRED TO PAGE 12 OF LD. CIT(A)S ORDE R AND POINTED OUT THAT ASSESSEE DID NOT PRODUCE CERTIFIED COST SHEETS SO A S TO ENABLE THE LD. CIT(A) TO VERIFY THE VERACITY OF THE COST OF THE ASSOCIATE D ENTERPRISES CONSIDERED BY THE ASSESSEE WHILE APPLYING THE COST PLUS METHOD. H E FURTHER POINTED OUT THAT ASSESSEE SUBMITTED ALTERNATIVE ANALYSIS WHICH COULD NOT BE ACCEPTED BECAUSE THE TRANSFER PRICING DOCUMENT CANNOT BE SUBSTITUTED AT APPELLATE STAGE. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE PERUSED THE RECORD OF THE CASE, ADMITTEDLY LD. TPO WHILE SELECTING NEW COMPARABLES DID NOT PROVIDE ANY OPPORTUNITY TO ASSESSEE FOR FILING ITS OBJECTIONS. HE REJECTED THE COST PLUS METHOD ADOPTED BY ASSESSEE AND CONSIDERE D THE TNM METHOD AS THE MOST APPROPRIATE METHOD, BECAUSE ASSESSEE FAILE D TO SUBSTANTIATE THE COST INCURRED BY AES WHICH WAS ADOPTED AS BASE FOR APPLY ING COST PLUS METHOD. ON THIS COUNT WE DO NOT FIND ANY REASON TO INTERFER E WITH THE ORDER OF LD. CIT(A). HOWEVER, UNDER SUCH CIRCUMSTANCE ALTERNATE ANALYSIS SUBMITTED BY ASSESSEE WAS REQUIRED TO BE CONSIDERED BY REFERRI NG THE SAME TO LD. TPO. IN THIS REGARD WE MAY REFER TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE 10 CASE OF MOSER BAER INDIA LTD. VS. ADDL. CIT 316 ITR 1 HAS OBSERVED AS UNDER: AUTHORITIES WHICH HAVE POWER TO DECIDE AND WHOSE D ECISIONS WOULD PREJUDICE A PARTY, ENTAILING CIVIL CONSEQUENC ES, WOULD BE REQUIRED TO ACCORD ORAL HEARING EVEN WHERE THE STAT UTE IS SILENT. THE PROVISIONS OF SUB-SECTION (3) OF SECTION 92CA C AST A DUTY IN NO UNCERTAIN TERMS ON THE TRANSFER PRICING OFFICER TO AFFORD AN OPPORTUNITY OF AN ORAL HEARING. THE REASONS FOR COM ING TO SUCH A CONCLUSION, APART FROM THE CLEAR WORDING OF SUB-S ECTION (3) OF SECTION 92CA, IS THAT, APART FROM THE CIVIL CONSEQU ENCES THAT THE DETERMINATION OF THE ARM'S LENGTH PRICE WOULD HAVE ON THE ASSESSEE, ANY ADJUSTMENT BY THE ASSESSING OFFICER T O THE ARM'S LENGTH PRICE DETERMINED BY THE ASSESSEE BASED ON TH E DETERMINATION BY THE TRANSFER PRICING OFFICER UNDER SUB-SECTION (3) OF SECTION 92CA, WOULD RESULT IN IMPOSITION OF PENALTY UNDER SECTION 271 (1)( C) OF THE ACT READ WITH EXPLANATIO N 7 THERETO. 14. IN VIEW OF ABOVE DISCUSSION, WE ARE OF THE OPIN ION THAT ASSESSEE HAS BEEN DENIED PROPER OPPORTUNITY TO PLACE RELEVANT F ACTS BEFORE THE LD. TPO AND, THEREFORE, WITHOUT GOING INTO THE MERITS OF TH E CASE, WE RESTORE THE MATTER TO THE FILE OF LD. TPO TO DECIDE THE ISSUE D E NOVO AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. 15. ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PU RPOSES. ITA NO. 2922/DEL/2011 ( REVENUES APPEAL) : 16. WHILE COMPLETING THE ASSESSMENT, THE AO HAD, IN TER ALIA, MADE FOLLOWING ADDITIONS/DISALLOWANCES: 11 - DISALLOWANCE OF ADVERTISEMENT AND PUBLICITY EXPENS ES; - DEPRECIATION ON WDV AND EXCLUSIVE BUSINESS RIGHTS (GOODWILL) PAID TO USHA INTERNATIONAL LTD. FOR AY 2001-02 - DEPRECIATION ON WDV ON PATENTS, TRADEMARKS AND INT ELLECTUAL PROPERTY RIGHTS PAID TO SEIL AIRCON LTD. 17. LD. CIT(A) HAD DELETED THE DISALLOWANCE. BEING AGGRIEVED THE DEPARTMENT IS IN APPEAL BEFORE US AND HAS TAKEN FOL LOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION M ADE ON A/C OF ADVERTISEMENT AND PUBLICITY EXPENDITURE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION M ADE ON A/C OF DEPRECIATION ON EXCLUSIVE BUSINESS RIGHTS (GOODWILL ). 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION M ADE ON A/C OF DEPRECIATION ON PATENTS, TRADEMARKS AND INTELLECTUA L PROPERTY RIGHTS ACQUIRED BY THE ASSESSEE COMPANY FROM SEIL A IRCON LTD. 4. THE APPELLANT CRAVES TO LEAVE, TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF THE HE ARING. 18. BRIEF FACTS APROPOS GROUND NO. 1 ARE THAT ASSES SEE HAD CLAIMED A SUM OF R. 5,21,51,834/- ON ACCOUNT OF EXPENSES INCURRED DURING THE YEAR ON ACCOUNT OF ADVERTISEMENT AND PUBLICITY. THE ASSESSE ES REPLY HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER IN WHICH IT WAS SUBMITTED THAT MARKETING COSTS INCURRED DURING THE PRODUCT CAMPAIGN WERE DEF ERRED AND AMORTIZED OVER A PERIOD OF 4 YEARS. THE DETAILS OF OPENING, E XPENDITURE INCURRED DURING 12 THE YEAR, WRITTEN OFF DURING THE YEAR AND CLOSING B ALANCE OF ADVERTISEMENT AND PUBLICITY EXPENDITURE WAS EXPLAINED AS UNDER: OPENING BALANCE 46074417 ADD: INCURRED DURING THE EYAR 52151834 LESS: WRITTEN OFF DURING THE EYAR BY DEBITING P&L A /C. 222280060 CLOSING BALANCE 75998191 19. IT WAS POINTED OUT THAT THOUGH THE EXPENDITURE OF RS. 52151834 WAS INCURRED DURING FY 2002-03, BUT ONLY AN AMOUNT OF R S. 22228060 WAS DEBITED TO PROFIT & LOSS ACCOUNT IN FY 2002-03. HOW EVER, IN THE CORPORATE TAX RETURN THE ENTIRE AMOUNT OF EXPENDITURE INCURRE D DURING THE FY 2002-03 AMOUNTING TO RS. 52151834 WAS CLAIMED AS REVENUE EX PENDITURE AND THE AMOUNT OF RS. 22228060 WAS ADDED BACK. THE ASSESSEE PLACED RELIANCE ON VARIOUS DECISIONS TO SUBMIT THAT THE ENTIRE AMOUNT WAS ALLOWABLE AS BUSINESS EXPENDITURE: - KEDARNATH JUTE MFG. CO. LTD. VS. CIT 82 ITR 363; - AMAR RAJA BATTERIES LTD. VS. ACIT 272 ITR 17 (AT)(H YD-ITAT) - HINDUSTAN COMMERCIAL BANK LTD. V. RE. 21 ITR 353 (A LL) - NATIONAL INDUSTRIAL CORPORATION LTD. 124 TAMAN 413 (DELHI) - CIT V. BERGER PAINTS (INDIA) LTD. 254 ITR 503 (CAL. ) - CAMPA BEVERAGES (P) LTD. V. IAC 34 ITD 241 (DELHI T RIBUNAL) 20. THE AO CONCLUDED THAT EXPENDITURE WAS BASICALLY FOR LAUNCH OF A NEW BUSINESS PRODUCT AS WELL AS BENEFIT OF ENDURING NAT URE WAS THERE. ACCORDINGLY, RELYING O THE DECISION OF THE HONBLE SUPREME COURT IN CIT 13 VS. MADRAS AUTO SERVICE (P) LTD. (1998) 233 ITR 468 , HE DENIED THE ASSESSEES CLAIM. 21. BEFORE LD. CIT(A), THE ASSESSEE POINTED OUT THA T THESE EXPENSES WERE INCURRED FOR THE PURPOSE OF RENTAL PAYMENTS FOR PUT TING HOARDINGS OF THE ASSESSEE COMPANY, EXPENSES INCURRED ON POSTERS/ BAN NERS FOR INCREASING THE VISIBILITY OF THE PRODUCT, DESIGNING OF ADVERTISEME NT, ADVERTISEMENT AGENCY COMMISSION, MEGA SHOWS AT DIFFERENT PLACES, ADVERTI SEMENT IN NEWS PAPERS, FABRICATION AND LIGHT FITTING CHARGES AT PLACES FOR MEGA SHOWS, PHOTOGRAPHS ASSIGNMENT CHARGES FOR SHOOTS, GLOW SIGN BOARDS, PR INTING OF ENVELOPES, POSTERS AND STICKERS, COST OF PARTICIPATION AND HOL DING EXHIBITIONS, PRINTING OF CATALOGUES, CALLIGRAPHY CHARGES, HIRING MEDIA CLIPP ING CHARGES, BOOKING OF STALLS ETC. IT WAS POINTED OUT THAT NO BENEFIT OF E NDURING NATURE HAD BEEN RECEIVED BY ASSESSEE AND THE EXPENDITURE HAD BEEN I NCURRED FOR THE TREATMENT OF THE PRODUCTS ALREADY BEING DEALT BY THE ASSESSEE . THE ASSESSEE HAD RELIED ON VARIOUS CASE LAWS WHICH HAVE BEEN MENTIONED AT P AGE 15 OF THE CIT(A)S ORDER. LD. CIT(A) DELETED THE ADDITION IN VIEW OF T HE SUBMISSIONS MADE BY ASSESSEE. 22. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THIS ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 1346 & 404/DEL/2010 FOR AY 2002-03. THE DEPARTMENTS APP EAL FILED AGAINST THIS 14 ORDER HAS ALSO BEEN DISMISSED BY HONBLE DELHI HIGH COURT VIDE ORDER DATED 31.7.2013. 23. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE ENTIRE MATERIAL AVAILABLE ON RECORD. WE FIND THAT TRIBUNAL IN ITA N O. 1346 & 1404/DEL/2010 IN PARA 14 HAS OBSERVED AS UNDER: 14. AFTER CONSIDERING THE PLEADINGS OF BOTH SIDES AND CASE LAWS RELIED UPON, WE ARE OF THE VIEW THAT THE REVEN UE HAS FAILED TO BRING OUT A CASE TO ESTABLISH THAT ANY CAPITAL A SSETS HAD COME INTO EXISTENCE. FURTHER, AS HELD BY THE HON'BLE HIG H COURT, THERE IS NO CONCEPT OF DEFERRED REVENUE EXPENDITURE IN IN COME-TAX LAWS. THE GENUINENESS OF THE EXPENDITURE HAS NOT BE EN DOUBTED BY THE REVENUE AUTHORITIES. KEEPING ALL THESE FACTS IN VIEW AND FOLLOWING THE DECISION OF HON'BLE JURISDICTIONAL HI GH COURT, WE ALLOW THE GROUNDS OF ASSESSEE'S APPEAL AND DISMISS THE REVENUE'S GROUND NO. 4. 24. RESPECTFULLY FOLLOWING THE SAME THIS GROUND IS DISMISSED. 25. BRIEF FACTS APROPOS GROUND NOS. 2 & 3 ARE THAT ASSESSEE HAD CLAIMED DEPRECIATION AMOUNTING TO RS. 41511312/- WHICH INCL UDED DEPRECIATION OF RS. 28,12,500/- ON GOODWILL AND RS. 1,53,70,313/- ON PA TENT AND TRADE MARKS @ 25%. AO HAD DISALLOWED THE ASSESSES CLAIM IN REGAR D TO DEPRECIATION ON GOODWILL OBSERVING THAT THE SAME WAS NOT COVERED UN DER INTANGIBLE ASSETS UNDER THE INCOME-TAX RULES. AS REGARDS DEPRECIATION ON PATENT AND TRADEMARKS, THE AO DENIED THE ASSESSEES CLAIM, INT ER ALIA, OBSERVING THAT PATENT, TRADE MARKS WERE REQUIRED TO BE REGISTERED UNDER THE TRADEMARKS 15 REGISTRATION ACT AND ONLY THE COMPANY IN WHOSE NA ME THE SAME HAD BEEN REGISTERED, WAS ENTITLED TO USE THE SAME. 26. LD. CIT(A) NOTED THAT DISALLOWANCE OF DEPRECIAT ION OF RS. 28,12,500/- WAS IN RESPECT OF WRITTEN DOWN VALUE OF THE AMOUNT PAID TO USHA INTERNATIONAL LTD. FOR ACQUIRING THE BUSINESS AND C OMMERCIAL RIGHTS SIN AY 2001-02. SHE NOTED THAT THE ASSESSEE COMPANY VIDE B USINESS PURCHASE AGREEMENT ENTERED ON 8.8.2000, PURCHASED THE BUSINE SS OF MANUFACTURE OF AIR-CONDITIONER/ COOLER FROM SIEL AIRCON LTD. USHA INTERNATIONAL LTD. CARRIED ON THE BUSINESS OF , INTER ALIA, DISTRIBUTION OF AI R-CONDITIONERS AND WATER COOLERS MANUFACTURED BY SIEL AIRCON LTD. THE ASSESS EE COMPANY ALSO ENTERED INTO AN AGREEMENT WITH USHA INTERNATIONAL L TD. CALLED BUSINESS PURCHASE AGREEMENT DATED 1.5.2000 FOR PURCHASE OF SAID BUSINESS AND ITS ASSETS INCLUDING EXCLUSIVE BUSINESS RIGHTS. LD. CIT (A) FURTHER NOTICED THAT AS PER CLAUSE 4 OF THE AGREEMENT WITH USHA INTERNATION AL LTD. CONSIDERATION FOR EXCLUSIVE BUSINESS RIGHT PAYABLE TO USHA INTERNATIO NAL LTD. WAS RS. 1,73,00,000/- AND FOR OTHER BUSINESS AND COMMERCIAL RIGHTS OF RS. 27,00,000/- WAS CAPITALIZED AS GOODWILL IN THE BOOK S OF A/C. SHE NOTED THAT IN AY 2001-02 THE TRIBUNAL HAD ALLOWED THE ASSESSEES CLAIM AND FOLLOWING THE SAME SHE ALLOWED THE ASSESSEES CLAIM OF RS. 28,12, 500/-. 16 27. HAVING HEARD BOTH THE PARTIES, WE FIND THAT TH E ISSUE RELATING TO DEPRECIATION ON WDV OF GOODWILL PAID TO USHA INTERN ATIONAL LTD., IS COVERED IN FAVOUR OF THE ASSESSEE BY EARLIER DECISI ONS OF THE TRIBUNAL. WE FIND THAT THE ITAT DELHI BENCH B VIDE ITS ORDER D ATED 23.12.2011 RENDERED IN ITA NO. 1346/DEL/2010 & 1404/DEL/2010 H AS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER: 4. IN THE GROUND NO.2 OF REVENUE'S APPEAL, THE ISSU E INVOLVED IS DELETING THE ADDITION OF RS.37,50,000/- MADE BY THE ASSESSING OFFICER CLAIMED AS 'GOODWILL' BY THE ASSESSEE ON AC COUNT OF DEPRECIATION ON WDV PAID TO USHA INTERNATIONAL LTD. FOR ACQUIRING BUSINESS AND COMMERCIAL RIGHTS. 5. LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFI CER. ON THE OTHER HAND, THE LEARNED AR SUBMITTED THAT THE ASSES SEE COMPANY HAS PURCHASED MARKETING , RIGHTS ALONG WITH EMPLOYEES AND PREMISES AND ALSO TRADE NAMES ETC. FR OM 'USHA INTERNATIONAL LTD UNDER THE BUSINESS AGREEMENT DATE D 1ST MAY, 2000. AS PER THE AGREEMENT, THE USHA INTERNATIONAL LTD. WAS NOT TO COMPETE WITH THE ASSESSEE COMPANY FOR 20 YEA RS IN THE MARKETING OF AIR-CONDITIONERS AND WATER COOLERS OF M/S. SIEL AIRCON LTD. THE LEARNED AR SUBMITTED THAT THIS AGRE EMENT WAS FOR BUSINESS RIGHTS, THEREFORE, ELIGIBLE FOR DEPREC IATION UNDER SECTION 32 OF THE INCOME-TAX ACT AS INTANGIBLE ASSE TS. HE FURTHER PLEADED THAT THE EXCLUSIVE BUSINESS RIGHTS AS DEFIN ED IN THE AGREEMENT WERE REPRESENTED AS CARRYING ON THE BUSIN ESS AS SUCCESSOR TO USHA INTERNATIONAL LTD. WHICH INCLUDE ALL RECORDS OF BUSINESS INCLUDING RECORDS OF SUPPLIERS AND CUST OMERS; THE BENEFIT OF THE CURRENT ORDERS; THE BENEFIT OF ALL B IDS AND PROPOSALS THAT HAVE BEEN MADE BY USHA INTERNATIONAL LTD. AND ALL RIGHTS TO USHA INTERNATIONAL LTD. DISTRIBUTION NETWORK FOR THE BUSINESS EXCLUDING USHA INTERNATIONAL LTD.'S COMPAN Y SHOP. 17 THE CONSIDERATION FOR EXCLUSIVE BUSINESS RIGHTS WAS PAYABLE OF RS.L,73,00,000/-. FOR OTHER BUSINESS AND COMMERCIA L RIGHTS RS.27,00,000/- WAS PAID. THESE AMOUNTS WERE CAPITAL IZED AS GOODWILL IN BOOKS OF ACCOUNTS. THESE AMOUNTS WERE P AID TO USHA INTERNATIONAL LTD. DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR 2001-02. THESE AMOUNTS WERE CAPITAL IZED AS GOODWILL IN THE BOOKS OF ACCOUNT. F OR COMPUTING TH E TAXABLE INCOME, DEPRECIATION WAS CLAIMED @ 250/0 AS PRESCRI BED IN SCHEDULE OF DEPRECIATION RATES IN RESPECT OF THE IN TANGIBLE ASSETS. THE DEPRECIATION IN THE YEAR 2001-02 WAS CL AIMED AT RS.50,00,000/- AND IN ASSESSMENT YEAR 2002-03 AT RS.37,50,000/-. FOR THE ASSESSMENT YEAR 2001-02, TH E CIT (A) 'GRANTED THE RELIEF. THE REVENUE WENT IN APPEAL BE FORE THE IT AT WHEREIN THE ITAT HAD DISMISSED THE REVENUE'S APPEAL BY UPHOLDING THE ORDER OF THE CIT (A). THE ITAT HAS HE LD AS UNDER :- A PERUSAL OF THE BUSINESS PURCHASE AGREEMENT ALSO CLEARLY SHOWS THAT UIL AS AGREED TO SELL TO TH E ASSESSEE AND. THE ASSESSEE AGREED TO PURCHASE THE BUSINESS AND THE GOODWILL AND THE OTHER ASSETS THEREOF. A PERUSAL OF THE CONSIDERATION ALSO CLEARL Y SHOWS THAT THE AGREEMENT IS FOR SELLING S ITEMS, FIRST ONE BEING THE BUSINESS, SECOND GOODWILL AND THIRD OTHER ASSETS. THE PURCHASE CONSIDERATION ALSO SHOWS THE COMPUTATION OF SUCH 3 ITEMS BEING THE EXCLUSIVE BUSINESS RIGHTS FOR A CONSIDERATION OF RS.L,73,00,000/-, 27,00,0001- WITHOUT ANY SPECIFICATIONS AND (C) THE TRANSFERABLE DEPOSITS WHICH WOULD HAVE TO BE CONSIDERED AS OTHER ASSETS. THIS BEING AS THE AMOUNT OF RS.27,00,000/- AS SHOWN IN THE PURCHASE PRICE HAS NOT BEEN SHOWN TO BE IN RELATION TO EITHER EXCLUSIVE BUSINESS RIGHTS OR FOR TRANSFERABLE DEPOSITS. THE SAME WOULD HAVE TO BE TREATED AS BEING TOWARDS 'GOODWILL'. THIS BEING 18 SO, WE ARE OF THE VIEW THAT THE AMOUNT OFRS.27,00,0001- AS PAID BY THE ASSESSEE WOULD HAVE TO BE TREATED AS GOODWILL. IN REGARD TO THE BALANCE OF 1.73 CRORES, IT IS FOR THE EXCLUSIVE BUSINESS RIGHTS.' THE ITAT VIDE PARA 7 OF THEIR ORDER HELD AS UNDER: 'IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS RIGHT IN HOLDING THAT THE ASSESSEE WAS ENTITLED TO THE DEPRECIATION IN REGARD TO THE PURCHASE OF THE EXCLUSIVE BUSINESS RIGHTS TO THE EXTENT OF RS.1,73,00,000 AND DIRECTING THE AO TO GRANT DEPRECIATION ON THE SAME. IN REGARD TO THE AMOUNT OF RS.27,00,000 AS PAID BY THE ASSESSEE, AS IT HAS NOT BEEN SHOWN THAT THIS AMOUNT HAD BEEN PAID FOR ANY SPECIFIC RIGHTS, THE SAME WOULD HAVE TO BE TREATED AS GOODWILL AND THE DEPRECIATION ON THE SAME CANNOT BE GRANTED. IN THE CIRCUMSTANCES, THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE IS MODIFIED TO THE EXTENT THAT THE AO IS DIRECTED TO GRANT THE DEPRECIATION ON THE CONSIDERATION OF RS.173,00,000/- PAID TO UIL FOR THE PURCHASE OF THE EXCLUSIVE BUSINESS RIGHTS WHICH ARE TO BE TREATED AS INTANGIBLE ASSETS. THE ACTION OF THE AO IN DISALLOWING THE DEPRECIATION ON THE GOODWILL TO THE EXTENT OF RS.27,00,000 IS CONFIRMED.' LD. AR PLEADED THAT THE FACTS ARE SAME AND THERE IS NO CHANGE IN THE CIRCUMSTANCES, THEREFORE, THE ORDER OF THE CI'I' (A) MAY BE UPHELD: 6. WE HAVE HEARD BOTH SIDES AND PERUSED THE MATERI AL ON RECORD. SINCE THE ASSESSEE HAS GOT THE RELIEF F FRO M ITAT IN THE PRECEDING YEAR, ON THE SAME FACTS. THE ISSUE REMAIN S THE SAME, 19 THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF I 'I'A'T, WE DISMISS THIS GROUND OF REVENUE'S APPEAL. 28. NO CHANGE IN FACTS, FOR THE ASSESSMENT YEAR IN QUESTION, HAVE BEEN BROUGHT TO OUR NOTICE. THEREFORE, RESPECTFULLY FOLL OWING THE EARLIER ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE UPHOLD THE ORDER OF CIT(A). GROUND IS DISMISSED. 29. AS REGARDS DEPRECIATION ON WDV OF PATENT, TRADE MARK AND INTELLECTUAL PROPERTY RIGHTS PAID TO CIEL AIRCON LTD. IS CONCERN ED, LD. CIT(A) NOTED THAT ASSESSEE COMPANY VIDE BUSINESS PURCHASE AGREEMENT E NTERED ON 8.8.2000 PURCHASED THE MANUFACTURING BUSINESS OF SIEL AIRCON LTD. AND THE CONSIDERATION FOR THE INTELLECTUAL PROPERTY RIGHTS, PAID BY THE ASSESSEE WAS RS. 109,300,000 TO SAL. THE ASSESSEE POINTED OUT TH AT AS PER PROVISION OF TRADEMARK ACT, 1999, A PERSON IS ENTITLED TO ASSIGN USE OF TRADEMARK. IN THIS REGARD REFERENCE WAS MADE TO SECTIONS 37 & 38 OF TH E TRADEMARKS ACT, 1999. IT WAS FURTHER POINTED OUT THAT THERE WAS NO STATUT ORY REQUIREMENT UNDER THE LAW TO GET THE TRADEMARK REGISTERED UNDER THE TRADE MARKS ACT, 1999 SO AS TO ENJOY THE LEGAL OWNERSHIP THEREOF. IT WAS POINTED O UT THAT REGISTRATION OF TRADEMARKS WAS DESIRABLE BUT NOT A STATUTORY COMPU LSION. THE ASSESSEE HAD RELIED ON VARIOUS JUDICIAL PRONOUNCEMENTS WHEREIN I T WAS HELD THAT THE REGISTRATION OF AN ASSET IN THE NAME OF PURCHASER W AS NOT NECESSARY FOR THE 20 PURPOSE OF CLAIMING DEPRECIATION. FOLLOWING THE TRI BUNALS DECISION FOR AY 2001-02 THE LD. CIT(A) ALLOWED THE ASSESSEES APPEA L. 30. HAVING HEARD BOTH THE PARTIES WE FIND THAT WE F IND THAT THE ISSUE RELATING TO DEPRECIATION ON PATENTS, TRADEMARKS AND INTELLECTUAL PROPERTY RIGHTS ACQUIRED BY THE ASSESSEE FROM SIEL AIRCON LT D. IS COVERED IN FAVOUR OF THE ASSESSEE BY EARLIER DECISIONS OF THE TRIBUNAL. THE ITAT DELHI BENCH B VIDE ITS ORDER DATED 23.12.2011 RENDERED IN ITA NO. 1346/DEL/2010 & 1404/DEL/2010 HAS DECIDED THE ISSUE IN FAVOAUR OF THE ASSESSEE BY OBSERVING AS UNDER: 8. THE ASSESSEE COMPANY HAS PURCHASED MANUFACTURIN G BUSINESS OF M/S. SIEL AIRCON LTD. AS A GOING CONCER N VIDE AGREEMENT DATED 08.08.2000. AS A PART OF THIS AGREE MENT, THE ASSESSEE COMPANY ALSO ACQUIRED INTELLECTUAL PROPERT Y RIGHTS WHICH INCLUDE PATENTS, TRADEMARKS, ETC. ETC. AND PA ID RS.10,93,00,000/-. THE AMOUNT WAS CAPITALIZED IN BO OKS AS PAT FIT AND TRADEMARK AND THE SAME IS TREATED AS' INTAN GIBLE ASSETS. THESE INTELLECTUAL PROPERTY RIGHTS HAVE NOT BEEN RE GISTERED IN THE NAME OF ASSESSEE COMPANY. THE ASSESSEE COMPANY CLAIMED DEPRECIATION AS PER SECTION 32 OF INCOME-TAX ACT RE AD WITH SCHEDULE FOR DEPRECIATION @ 25%. THE ASSESSING OFFI CER DISALLOWED THE SAME BY FOLLOWING THE ORDER OF EARLI ER YEAR. THE CIT (A) HAS GRANTED THE RELIEF TO THE ASSESSEE BY F OLLOWING THE DECISION OF ITAT IN ASSESSEE'S OWN CASE FOR ASSESSM ENT YEAR 2001-02 WHERE THE ITAT HAS HELD AS UNDER:- A PERUSAL OF THE PURCHASE PRICE CONSIDERATION AS PER THE BUSINESS PURCHASE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND SAL SHOWS THAT THE 21 CONSIDERATION HAS BEEN 'PAID FOR THE INTELLECTUAL PROPERTY RIGHTS. INTELLECTUAL PROPERTY RIGHTS ARE IMMOVABLE ASSET. IT IS ALSO AN INTANGIBLE ASSET AS PER THE PROVISIONS OF SECTION 32 (1) (II) OF THE AC T. IT IS ALSO UNDISPUTED THAT THE 'ASSESSEE HAS USED T HE INTELLECTUAL PROPERTY RIGHTS IN ITS BUSINESS AND THERE HAS BEEN NO CLAIM AGAINST THE ASSESSEE FOR THE USE OF THE SAID TRADEMARKS. IN FACT AS PER THE AGREEMENT IN CLAUSE 8.1 (A)(I) IT HAS BEEN SPECIFICALLY AGREED THAT ON COMPLETION DULY EXECUTED INSTRUMENTS OF TRANSFER, ASSIGNMENT ETC. AS THE ASSESSEE MAY REASONABLY BE REQUIRED TO COMPLETE THE TRANSFER, ASSIGNMENT AND CONVEYANCE OF THE ASSET IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT SHALL BE DELIVERED TO THE ASSESSEE A T A PLACE NOMINATED BY THE ASSESSEE. THIS CLEARLY SHOWS THAT ONCE THE COMPLETION OF THE AGREEMENT IS DONE BY PAYMENT OF THE CONSIDERATION AS ON THE COMPLETION DATE SPECIFIED IN THE AGREEMENT THE ASSESSEE WOULD BE IN POSSESSION OF THE DULY EXECUTED INSTRUMENTS OF TRANSFER, ASSIGNMENT AND CONVEYANCES OF THE ASSETS AS SPECIFIED IN THE AGREEMENT WHICH ARE BASICALLY THE INTELLECTUAL PROPERTY' RIGHTS AND THE FIXED ASSETS. THIS BEING S O, AS ALSO THE PRINCIPLES AS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD. REFERRED TO SUPRA AND REAFFIRMED THE DECISION OF DALMIA CEMENTS' IT WOULD HAVE TO BE HELD THAT THE ASSESSEE WAS THE OWNER OF THE PROPERTY AND THE ASSESSEE HAVING USED THE SAME IN ITS BUSINESS WAS ENTITLED TO DEPRECIATION ON THE SAME. IN THE CIRCUMSTANCES THE FINDING OF THE LD. CIT(A) ON THIS ISSUE STANDS CONFIRMED.' 22 SINCE THE REVENUE HAS FAILED TO BROUGHT ON RECORD A NY DISTINCTION OF FACTS FROM THE EARLIER YEAR, I.E., 2 001-02, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF I TAT, WE DISMISS THIS GROUND OF REVENUE'S APPEAL ALSO. 31. THERE BEING NO CHANGE IN FACTS AND CIRCUMSTANCE S OF THE CASE AND THE ORDER OF LD. CIT(A) BEING IN CONFORMITY WITH THE EA RLIER ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE UPHOLD THE ORDER OF CIT( A) ON THE ISSUE IN QUESTION. GROUND IS DISMISSED. 32. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES AND THE REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCEMENT IN OPEN COURT ON 12/02/2016. SD/- SD/- (SUDHANSHU SRIVASTAVA) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12/02/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.