The Dy. CIT, Circle-3(1)(2), Ahmedabad V. M/s. Rasna Pvt. Ltd., Ahmedabad

ITA 3207/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5088 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 05-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PF JAIN
• Keywords: Depreciation; Rectification of order; Reassessment proceedings
• Section: 147; 148; 154

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH B BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO.3206 TO 3208/AHD/2016 / ASSTT. YEAR: 2003-2004, 2005-2006 AND 2007-2008 DCIT,.CIR.3(1)(2) AHMEDABAD. VS. RASNA PVT. LTD. 4/6, 4 TH FLOOR, TRADE CENTRE NR. STADIUM CROSS ROAD NAVRANGPURA, AHMEDABAD. PAN : AABCR 5577 P / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI MUDIT NAGPAL, SR.DR ASSESSEE BY : SHRI P.F. JAIN, AR ! / DATE OF HEARING : 24/07/2018 '#$ ! / DATE OF PRONOUNCEMENT: 01/08/2018 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT THREE APPEALS ARE DIRECTED AT THE INSTANCE OF THE REVENUE AGAINST SEPARATE ORDERS OF THE LD.CIT(A) OF EVEN DA TED I.E. 2.9.2016 PASSED IN THE ASSESSMENT YEARS 2003-04, 2005-06 AND 2007-08. 2. SOLITARY SUBSTANTIAL GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITIONS OF RS.1,14,84,375/-, RS.64,59,961/- AND RS.36,33,728/- WHICH WERE ADDED BY THE AO BY MAKING DISALLOWANCE OF DEPRECIATION ON NON-COMPETE TERRITORY RIGHTS IN THE ASSESSMENT YEARS 2003-04, 2005-06 AND 2007-08 R ESPECTIVELY. ITA NO.3206 TO 3208/AHD/2016 2 3. FACTS IN ALL THREE YEARS ARE COMMON EXCEPT VARIA TION OF DATES. IN THE ASSESSMENT YEAR 2002-03, NOTICE UNDER SECTION 1 48 WAS ISSUED ON 30.3.2004 FOR REOPENING OF THE ASSESSMENT. THE AO INTENDED TO DISALLOW DEPRECIATION ON NON-COMPETE TERRITORY RIGH TS IN THAT ASSESSMENT YEARS. AGGRIEVED WITH THIS NOTICE, THE ASSESSEE FILED A SPECIAL CIVIL APPLICATION BEFORE THE HONBLE GUJARA T HIGH COURT. IT APPEARS THAT THE HONBLE HIGH COURT HAS STAYED THE PROCEEDINGS IN THE ASSESSMENT YEAR 2002-03. IN SUBSEQUENT ASSESSMENT Y EARS THE LD.AO DISALLOWED THE DEPRECIATION WITHOUT ADJUDICATING TH E ISSUE SPECIFICALLY BY OBSERVING THAT SINCE THE DEPARTMENT HAS NOT YET ACCEPTED THE ASSESSEES CLAIM FOR DEPRECIATION, THE SAME IS BEIN G DISALLOWED. AND THAT .. HOWEVER, CONSEQUENTIAL EFFECT WOULD BE GIV EN ON THE ISSUE, IF REQUIRED, AS PER THE DECISION OF HONBLE GUJARAT HI GH COURT. . 4. IN ASSESSMENT YEAR 2005-06, THE ASSESSMENT ORDER WAS PASSED ON 28.12.2007 AND IN ASSESSMENT YEAR 2007-08 IT WAS PASSED ON 16.12.2009. THE AO HAS NOT INDEPENDENTLY EXAMINED THE ISSUE IN ANY OF THE ASSESSMENT YEARS. HE SIMPLY DISALLOWED THE CLAIM. DISSATISFIED WITH THE ASSESSMENT ORDER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.FIRST APPELLATE AUTHORITY. THE LD.CI T(A) HAS DISPOSED OF ALL THESE APPEALS BY OBSERVING AS UNDER: THIS ISSUE IS TO BE DECIDED BY THE AO IN THE LIGHT OF FINAL DECISION OF HONBLE HIGH COURT AND HENCE THIS GROUND OF APP EAL IS ALLOWED SUBJECT TO FINAL OUTCOME OF HONBLE GUJARAT HIGH CO URT 5. THE DEPARTMENT DID NOT FILE ANY APPEAL AGAINST T HE ORDER OF THE LD.CIT(A) IN THE ASSESSMENT YEARS 2003-04 AND 2004- 05. HOWEVER, IN THE ASSESSMENT YEAR 2005-06 IT HAS CHALLENGED ORDER OF THE LD.CIT(A). THE TRIBUNAL HAS DISMISSED THE APPEAL OF THE REVENU E BY OBSERVING THAT SINCE IDENTICAL ORDER HAS BEEN ACCEPTED BY THE DEPA RTMENT IN THE ITA NO.3206 TO 3208/AHD/2016 3 ASSESSMENT YEARS 2003-04 AND 2004-05 ACCORDINGLY TH ERE IS NO REASON FOR THE DEPARTMENT TO FEEL AGGRIEVED IN THE ASSESSM ENT YEAR 2005-06. 6. IT EMERGES OUT FROM THE RECORD THAT IN ASSESSMEN T YEAR 2006-07, THE TRIBUNAL FIRST DIRECTED THE LD.CIT(A) TO DECIDE THE ISSUE ON MERIT. THE LD.CIT(A) HAS ALLOWED THE DEPRECIATION TO THE A SSESSEE BY MAKING AN ELABORATE DISCUSSION. THE DEPARTMENT AGGRIEVED W ITH THIS ORDER OF THE LD.CIT(A) CARRIED THE MATTER IN APPEAL BEFORE T HE TRIBUNAL VIDE ITA NO.575/AHD/2013. THE TRIBUNAL HAS DECIDED THE APPE AL ON 10.5.2013 AND UPHELD THE ORDER OF THE LD.CIT(A). THIS FINDIN G HAS BEEN REPRODUCED BY THE CIT(A) IN THE IMPUGNED ORDER. 7. THE ASSESSEE MOVED AN APPLICATION UNDER SECTION 154 AND SUBMITTED TO THE AO THAT ITS GROUNDS OF APPEAL FOR GRANT OF DEPRECIATION WAS ALLOWED BY THE CIT(A) SUBJECT TO THE DECISION O F HONBLE GUJARAT HIGH COURT IN THE ASSESSMENT YEAR 2002-03. IN THE ASSESSMENT YEAR 2002-03, THE GUJARAT HIGH COURT HAS QUASHED NOTICE FOR REOPENING OF THE ASSESSMENT, HENCE IN THE ASSESSMENT YEAR 2002-0 3 DEPRECIATION STANDS ALLOWED. SUCH APPLICATIONS WERE FILED ON 2. 8.2015, 21.8.2015 AND 14.8.2015 IN THE ASSESSMENT YEARS 2003-04, 2005 -06 AND 2007-08 RESPECTIVELY. THESE APPLICATIONS HAVE BEEN DISPOSE D BY SEPARATE ORDERS DATED 16.9.2015. IT IS PERTINENT TO OBSERVE THAT A LL THESE ORDERS ARE VERBATIM SAME EXCEPT VARIATION IN QUANTUM AND DATE OF APPLICATIONS OR DATE OF CIT(A)S ORDER. THE ORDER OF THE AO PASSED UNDER SECTION 154 OF THE ACT IN THE ASSESSMENT YEAR 2003-04 READS AS UNDER: ORDER U/S. 154 OF THE I.T. ACT, 1961 VIDE APPLICATION DATED 22/08/2015 BEARING ASK NO.278240815008028, ASSESEE HAD REQUESTED THAT IN A PPEAL EFFECT FOR CIT(A)'S ORDER DATED 27/09/2006 THE ISSU E OF DEPRECIATION OF RS.1,14,84,375/- HAD NOT BEEN GIVEN EFFECT TO. FURTHER, NO APPEAL WAS FILED ON THIS ISSUE OF DEPRE CIATION BEFORE HON'BLE ITAT. THEREFORE, IT ACCORDING TO ASSESSEE A SSUMES FINALITY AND DEPRECIATION SHOULD BE ALLOWED IN EFFECT TO CIT (A)'S ORDER. ITA NO.3206 TO 3208/AHD/2016 4 2. THE CLAIM OF THE ASSESEE HAS BEEN DULY VERIFIED. IT HAS BEEN FOUND THAT THE ISSUE OF DEPRECIATION WAS LEFT GIVEN EFFECT TO UNTIL SCA NO.375 OF 2005 IS DECIDED BY HON'BLE GUJARAT HI GH COURT IN ASSESSEE'S OWN CASE FOR A.Y. 2002-03. IN THIS ASSES SMENT YEAR I.E. A.Y. 2002-03, THE CASE WAS REOPENED U/S 147 OF THE IT ACT. THE REASON RECORDED FOR REOPENING CONTAINED THE ISS UE OF 'ALLOWABILITY OF DEPRECIATION ON NON-COMPETE TERRIT ORY RIGHTS'. ON BEING PROVIDED WITH THE REASON, ASSESSEE FILED AN S CA BEFORE GUJARAT HIGH COURT AND, THUS, FOR ALL SUBSEQUENT YE ARS IN WHICH ADDITION WAS MADE ON THIS GROUND, CIT(A) DIRECTED T HIS OFFICE TO DECIDE THE ISSUE IN LIGHT OF THE FINAL DECISION OF THE HON'BLE HIGH COURT FOR A.Y. 2002-03. THUS, THE EFFECT TO CIT(A) ORDER WAS KEPT IN ABEYANCE UNTIL THE DECISION OF GUJARAT HIGH COUR T'S ORDER. 3. ON ARRIVAL OF THE ORDER OF GUJARAT HIGH COURT IN SPECIAL CIVIL APPLICATION NO.375 OF 2005 DATED 09/07/2012, IT WAS OBSERVED THAT THE HON'BLE COURT HAS QUASHED THE PROCEEDINGS U/S 147 OF THE IT ACT BY HOLDING REOPENING OF THE CASE INVALID AND NOTICE U/S 148 AS HULL AND VOID. HOWEVER, THE HON'BLE HIGH COURT I N ITS ORDER HAD MADE NO OBSERVATION ON THE MERITS OF DISALLOWANCE O F DEPRECIATION ON NON-COMPETE TERRITORY RIGHTS. THUS, THE DECISION OF THE HON'BLE HIGH COURT DOES NOT CALL INTO QUESTION THE VALIDITY OF THIS DISALLOWANCE. AS SUCH, THE DEPARTMENT IS BOUND BY T HIS DECISION ONLY TO THE EXTENT OF AVOIDING REOPENING OF CASE U/ S 147 AND MAKING AN ADDITION ON THIS GROUND. BUT FOR ALL THE SUBSEQUENT EYARS THE ADDITION AS MADE VIDE THE ORIGINAL ASSESS MENT ORDER U/S.143(3), WHICH IS NOT IN CONTRAVENTION OF THE CO URTS DECISION. 4. IN VIEW OF THE ABOVE, THE CLAIM OF ALLOWANCE OF DEPRECIATION IS NOT EXPRESSLY ALLOWED BY THE DECISION OF THE GUJ ARAT HIGH COURT AND HEREBY DENIED. THUS, ASSESSEES APPLICATION FO R RECTIFICATION STANDS RESOLVED AND HEREBY DISPOSED OFF. 8. AGAINST THIS ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE LD.CIT(A). THE LD.CIT(A) RELIED UPON ORDER OF THE ITAT PASSED IN THE ASSESSMENT YEAR 2006-07 AND HELD THAT DEPRECIATION IS TO BE GRANTED TO THE ASSESSEE. THE FINDING OF THE LD.CIT(A) WHICH I S COMMON IN ALL THREE YEARS IS WORTH TO NOTE. IT READS AS UNDER: 3.2 I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AS WELL AS THE OBSERVATION OF THE A.O. IT IS OBSERVED THAT THE APPELLANT IS AGGRIEVED BY THE RECTIFICATION ORDER U/S.154 OF THE ACT PASSED BY ITA NO.3206 TO 3208/AHD/2016 5 THE A.O. THE APPELLANT HAD REQUESTED THE A.O TO GIV E APPEAL EFFECT FOR CIT(A)'S ORDER DATED 10/10/2006 ON THE I SSUE OF DEPRECIATION OF RS. 1,14,84,3757-. AS THE DEPARTMEN T HAS NOT PREFERRED AN APPEAL BEFORE THE HON'BLE TRIBUNAL IT WAS CONTENDED BY THE APPELLANT THAT THE ORDER OF CIT(A) ALLOWING THE DEPRECIATION SHOULD BE FOLLOWED BY THE DEPARTMENT AND THE EFFECT OF THE SAME SHOULD BE GIVEN THE A.O HAS OBSERVED IN THE ORDER T HAT THE WHOLE ISSUE OF ALLOWING DEPRECIATION HAD STARTED WITH A.Y .2002-03. DURING A Y.2002-03 THE CASE OF THE APPELLANT WAS RE -OPENED AND THE APPELLANT HAD GONE TO THE HIGH COURT THROUGH SP ECIAL CIVIL APPLICATION NO.375 OF 2005. THE HON'BLE GUJARAT HIG H COURT VIDE THEIR ORDER DATED 9/7/2012 QUASHED THE PROCEEDINGS U/S.147 OF THE ACT BUT HAS NOT GIVEN ITS RULING ON THE MERITS OF THE CASE. THUS, ACCORDING TO A.O THE ORDER OF HON'BLE HIGH CO URT OF GUJARAT DOES NOT CALL INTO QUESTION THE. VALIDITY OF THIS D ISALLOWANCE. HENCE, THE A.O HAS REFUSED TO GIVE CLAIM OF ALLOWAN CE OF DEPRECIATION TO THE APPELLANT FOR RS. 1,14,84,375/- . DURING THE APPELLATE PROCEEDINGS THE APPELLANT HAS BROUGHT TO THE NOTICE OF THE UNDERSIGNED THAT THERE ARE FOUR ASSESSMENT YEAR S IN WHICH THE IDENTICAL ISSUE WAS INVOLVED. THESE FOUR ASSESS MENT YEAR- ARE A.Y.2003-04, 2004-05, 2005-06 AND 2007-08. THE HON'BLE ITAT AHMEDABAD VIDE THEIR ORDER IN ITA NO.575/AHD/2013 FOR A.Y.2006-07 PRONOUNCED ON 10/5/ 2013 HAS HELD AT PARA-6 TO 10 AS FOLLOWS:- '6. IN ITA NO. 575/AHD/2013, I.E. REVENUE'S APPEAL FOR THE ASSESSMENT Y YEAR 2006-07, THE GRIEVANCE RAISED BY THE ASSESSING OFFICER IS AS FOLLOWS: THAT THE LEARNED C IT(A) HAS ERRED IN LAW, AND ON FACTS, IN DELETING THE ADDITIO N OF RS 48,44,971 ON ACCOUNT OF DISALLOWANCE OF DEPRECIATIO N ON 'NON COMPETE TERRITORY RIGHTS'. 7. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSES HAS CLAIMED DEPRECIATION OF RS 48,44,9 71, ON NON- COMPETE RIGHTS TREATED BY THE ASSESSEE AS INTA NGIBLE ASSETS IN THE DEPRECIATION SCHEDULE. THIS CLAIM WAS MADE FOR THE FIRST TIME IN THE ASSESSMENT YEAR 2002-03, AND TO EXAMINE VERACITY OF THIS CLAIM, FOR WHICH NO DETAIL S WERE ALLEGED TO HAVE BEEN FURNISHED BY THE ASSESSEE, THE ASSESSMENT WAS REOPENED UNDER SECTION 147 OF THE AC T. THIS REASSESSMENT PROCEEDING, AS ALSO ISSUE ON WHIC H THE REASSESSMENT WAS INITIATED, WAS CHALLENGED BEFORE H ON'BLE GUJARAT HIGH COURT. HON'BLE HIGH COURT ADMITTED THE ASSESSEE'S APPLICATION, AND GRANTED INTERIM RELIEF BY WAY OF STAYING IMPLEMENTATION OF OPERATION OF REASSESSMENT NOTICE ITA NO.3206 TO 3208/AHD/2016 6 AND STAYING FURTHER PROCEEDINGS FOR THE ASSESSMENT YEAR 2002-03. IN THE MEANTIME, IN THE ASSESSMENTS FOR TH E ASSESSMENT YEARS 2003-04, 2004-05, 2005-06 AND 2006 -07 ALSO, THE DEPRECIATION ON NON COMPETE RIGHTS WAS DISALLOWED. NO INDEPENDENT REASONS, HOWEVER, WERE G IVEN FOR THE SAID DISALLOWANCE. IT WAS SIMPLY STATED IN THE ASSESSMENT ORDERS THAT 'SINCE THE DEPARTMENT HAS NO T YET ACCEPTED THE ASSESSEE'S CLAIM FOR DEPRECIATION, THE SAME IS BEING DISALLOWED ...' AND THAT.... 'HOWEVER, CONSEQ UENTIAL EFFECT WOULD BE GIVEN 0,7 THE ISSUE, IF REQUIRED, A S PER THE DECISION OF HON'BLE GUJARAT HIGH COURT'. WHEN THE M ATTER TRAVELLED IN APPEAL BEFORE THE COMMISSIONER (APPEAL S] FOR THE ASSESSMENT YEAR 2003-04 AND 2004-05, THE COMMISSIONER (APPEALS] HELD THAT AS THE MATTER IS S UB JUDICE BEFORE HON'BLE GUJARAT HIGH COURT AND THE OU TCOME OF LITIGATION IS AWAITED, 'THIS ISSUE IS TO BE DECI DED BY THE AO IN THE LIGHT OF FINAL DECISION OF HON'BLE HIGH COUR T' AND 'HENCE, THIS GROUND OF APPEAL IS ALLOWED SUBJECT TO FINAL OUTCOME OF HON'BLE GUJARAT HIGH COURT' THE ASSESSIN G OFFICER DID NOT PREFER ANY APPEAL, BEFORE THE TRIBU NAL, AGAINST THIS DECISION OF THE CIT(A). HOWEVER, AGAIN ST THE SAME DIRECTIONS FOR THE ASSESSMENT YEAR 2005-06, TH E ASSESSING OFFICER DID FILE AN APPEAL BEFORE THIS TR IBUNAL. HOWEVER, REJECTING THIS APPEAL AT THE THRESHOLD, A COORDINATE BENCH OF THIS TRIBUNAL, VIDE ORDER DATED 9 TH JULY 2010, OBSERVED AS FOLLOWS: WE FIND THAT ON THE SAME ISSUE ON THE IDENTICAL FACTS THE LEARNED CIT(A) HAD GIVEN THE SAME FINDING AS QUOTED ABOVE IN THE ASSESSMENT YEAR 2003 -04 AND 2004-05. THE REVENUE, IN THOSE YEARS, ACCEPTED THE FINDINGS OF THE LEARNED CIT(A) AND HAD NOT FILED AP PEAL BEFORE THE TRIBUNAL AGAINST THE FINDINGS OF THE LEA RNED CIT(A). LEARNED DR COULD NOT POINT OUT ANY DISTINGU ISHING FEATURES IN THE ABOVE YEARS UNDER APPEAL. THEREFORE , WE DONOT FIND ANY GOOD REASONS TO INTERFERE WITH THE O RDER OF THE LEARNED CIT(A), WHICH IS CONFIRMED AND THE GROU ND OF APPEAL OF THE REVENUE IS DISMISSED. 8. IT WAS IN THIS BACKDROP, AND FOR THE SAME REASON S THE ASSESSEE'S CLAIM FOR DEPRECIATION OF RS 48,44,971, ON NON- COMPETE TERRITORY RIGHTS, WAS DECLINED BY THE ASSES SING OFFICER. WHILE DOING SO, THE ASSESSING OFFICER OBSE RVED THAT, 'CONSIDERING THE FACTS OF THE CASE AND DISCUSSION M ADE IN THIS BEHALF IN THE ASSESSMENT ORDERS FOR AYS 2003-0 4, 2004- 05 AND 2005-06, THE CLAIM IS DISALLOWED FOR THE ASS ESSMENT YEAR 2006-07 ALSO' AND THAT 'HOWEVER, CONSEQUENTIAL EFFECT WOULD BE GIVEN ON THE ISSUE, IF REQUIRED, AS PER TH E DECISION ITA NO.3206 TO 3208/AHD/2016 7 OF HON'BLE GUJARAT HIGH COURT'. WHEN THE MATTER TRA VELLED BEFORE THE CIT(A), THE SAME DIRECTIONS WERE REPEATE D BUT THEN ONCE AGAIN CAME UP BEFORE A COORDINATE BENCH O F THIS TRIBUNAL, AND THE COORDINATE BENCH, IN DEVIATION FR OM THE PAST STAND, HELD THAT THE LEARNED CIT(A) WAS NOT JU STIFIED IN DECIDING THE MATTER ON THE BASIS OF AN ORDER WHICH IS YET TO BE PRONOUNCED, AND REMITTED THE MATTER BACK TO THE FILE OF THE CIT(A). IN THE MEANTIME, HON'BLE GUJARAT HIGH C OURT HAD DELIVERED JUDGMENT FOR THE ASSESSMENT YEAR 2002 -03 AND QUASHED THE REASSESSMENT PROCEEDINGS UNDER SECT ION 147 ON THE GROUND OF JURISDICTION. THERE WAS THUS N O ADJUDICATION ON MERITS. HOWEVER, THE CIT(A) DELETED THE IMPUGNED DISALLOWANCE OF DEPRECIATION BY OBSERVING AS FOLLOWS: .....THE NOTICE UNDER SECTION 148 DATED 30 TH MARCH 2004 FOR THE AY 2002-03 HAS BEEN QUASHED BY HON'BLE HIGH COURT. ACCORDINGLY, THE DISALLOWANCE OF DEPRECIATIO N ON NON COMPETE TERRITORY RIGHTS IN AY 2002-03 BECOMES UNTE NABLE. SINCE THE DISALLOWANCE OF DEPRECIATION IN THE A Y 2 003-04, 2004-05, 2005-06 AND 2006-07 WAS MADE ON THE BASIS OF DISALLOWANCE OF DEPRECIATION IN THE AY 2002-03. ACC ORDINGLY, THESE DISALLOWANCES HAVE ALSO BECOME UNTENABLE AS T HE VETY BASIS OF DISALLOWANCE HAS BEEN QUASHED BY THE HON'BLE HIGH COURT. IN VIEW OF THE ABOVE FACTS, I HOLD THAT THE DISALLOWANCE OF DEPRECIATION ON*NON COMPETE TERRITO RY RIGHTS OF RS 48,44,971 IS UNTENABLE AND THE AO IS D IRECTED TO DELETE THE SAME. ...... 9. AGGRIEVED BY THE RELIEF SO GRANTED BY THE LEARNE D CIT(A), THE ASSESSING OFFICER-IS IN APPEAL BEFORE US. 10. HAVING NOTED THAT IN ALL THE PRECEDING ASSESSME NT YEARS, LEARNED CIT(A) HAD DELETED THE DISALLOWANCE OF DEPRECIATION ON NON-COMPOTE TERRITORY RIGHTS SUBJEC T TO THE RIDER THAT 'HOWEVER, CONSEQUENTIAL EFFECT WOULD BE GIVEN ON THE ISSUE, IF REQUIRED, AS PER THE DECISION OF HON' BLE GUJARAT HIGH COURT', HAVING NOTED THAT NO CONSEQUENTIAL EFF ECT IS REQUIRED TO BE GIVEN TO THE RELIEF SO GRANTED TO TH E ASSESSES AS THERE ARE NO ADVERSE COMMENTS ON THE MERITS OF T HE CLAIM, AND FOR THE SAKE OF CONSISTENCY, WE CONFIRM THE STAND TAKEN BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. IT IS ALSO IMPORTANT TO BEAR IN MIND THE FACT THAT THE NET IMPACT OF THIS DECISION HAVING BEEN ACCEPTED IS TH AT NO REASSESSMENT OR RECOMPUTATION CAN BE DONE AT THIS S TAGE, SINCE SUCH AN ACTION WILL BE TIME BARRED NOW AND TH E PROVISIONS OF SECTION 153(3], WHICH RESTRICT THIS L IMITATION ON TIME BARRING TO GIVE EFFECT TO FINDING OR DIRECTION S OF HON'BLE HIGH COURT'S ORDER WILL NOT COME TO THE RESCUE TO T HE ASSESSES IN THIS CASE SINCE THERE IS NO SUCH 'FINDI NG OR ITA NO.3206 TO 3208/AHD/2016 8 DIRECTION' ON MERITS, WHICH CAN BE GIVEN EFFECT, IN TERMS OF HON'BLE SUPREME COURT'S JUDGMENT IN THE CASE OF RAJ INDER NATH VS C/T[ 120 ITR 14). THE RELAXATION UNDER SECT ION 153(3), AS HELD BY HON'BLE SUPREME COURT IN THIS CA SE, COMES TO THE RESCUE OF THE REVENUE ONLY IN RESPECT OF SUCH FINDINGS OR DIRECTIONS AS ARE NECESSARY FOR DISPOSA L OF THE MATTER. THE MATTER HAVING BEEN DECIDED ON THE GROUN D OF JURISDICTION ALONE, THERE WAS NO NEED TO DEAL WITH THE MERITS OF THE CASE, AND, AS SUCH, FOLLOWING HON'BLE SUPREM E COURT'S JUDGMENT IN THE CASE OF RAJINDER NATH, THE INHERENTLY LIMITED SCOPE OF SECTION 153(3) DOES NOT HELP THE ASSESSING OFFICER. THE DISALLOWANCE OF DEPRECIATION THUS SEEMS TO HAVE REACHED FINALITY. THE LAW IS FAIRLY W E/I SETTLED THAT ONCE ASSESSING OFFICER ACCEPTS A PARTICULAR PO SITION BY NOT CHALLENGING THE SAME IN FURTHER APPEAL, IT CANN OT BE OPEN TO HIM TO DISTURB THE POSITION HAVING SO REACH ED FINALITY, BY APPEAL IN ANOTHER YEAR. NO DOUBT (HERE IS NO RES JUDICATA IN INCOME TAX PROCEEDINGS BUT PRINCIPLES O F CONSISTENCY DO PLAY AN IMPORTANT ROLE IN ALL WALKS OF LIFE AS MUCH AS IN THE INCOME TAX PROCEEDINGS. AS OBSERVED BY HON'BLE SUPREME COURT, IN THE CASE OF PARASHURAM PO TTERY WORKS LTD VS ITO [ 106 ITR 1), '......WE HAVE TO BE AR IN MIND THAT THE POLICY OF LAW IS THAT' THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROC EEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PAR TICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASIJUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY...'. IN ANY CASE, T HERE IS NOT EVEN A WHISPER OF THE REASON FOR COMING TO THE CONCLUSION, ON MERITS, AS TO WHY THE DEPRECIATION O N THE INTANGIBLE ASSETS IN QUESTION HAS BEEN DECLINED. WE HAVE NO OCCASION TO DEAL WITH THE MERITS, AND THE CASE OF T HE ASSESSING OFFICER SIMPLY HINGED ON THE OUTCOME OF H ON'BLE HIGH COURT'S DECISION FOR THE ASSESSMENT YEAR 2002- 03 BUT THEN THIS JUDGMENT IS, AS EVIDENT FROM OUR PERUSAL OF THE SAME, IS NOT ON MERITS AT ALL. IN THREE SUBSEQUENT ASSESSMENT YEARS ALSO, THIS DISALLOWANCE IS DELETED BY THE CIT(A), ACTION CONFIRMED BY A COORDINATE BENCH OF T HE TRIBUNAL IN ONE OF THE ASSESSMENT YEARS, AND REVENU E IS NOT IN FURTHER APPEAL, THE CASE OF THE REVENUE CANNOT B E SALVAGED FOR THOSE YEARS AT THIS STAGE. LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT BROUGHT ON RECO RD ANY MATERIAL ON RECORD TO JUSTIFY THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. WHEN ASKED TO ADDRESS THE MATTER ON MERITS, HE SUBMITTED THAT THE ISSUE CAN BE RESTORED ' TO THE FILE OF THE ASSESSING OFFICER SO THAT MERITS CAN BE EXAMINED. WE DO NOT THINK THAT COURSE OF ACTION IS PERMISSIBL E TO US ITA NO.3206 TO 3208/AHD/2016 9 NOW THAT THE DELETION OF SIMILAR DISALLOWANCE, IN T HE COURSE OF REGULAR SCRUTINY ASSESSMENT PROCEEDINGS, HAS BEE N ACCEPTED BY THE ASSESSING OFFICER FOR THREE IMMEDIA TELY PRECEDING ASSESSMENT YEARS. THAT WILL BE UNSETTLING THE ACCEPTED AND SETTLED POSITION FOR OTHER ASSESSMENT YEARS, AND CONTRARY TO THE DECISION OF THE COORDINATE BENC H IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. HOWEVER, AS WE HAVE REACHED THIS DECISION ON SOMEWHAT PECULIAR FAC TS OF THIS CASE, IN WHICH AN INACTION OF THE REVENUE AUTH ORITIES HAS PREJUDICED THEIR INTERESTS MORE THAN ANYTHING E LSE, PRESENT DECISION CANNOT BE AN AUTHORITY ON THE BROA D LEGAL ISSUES INVOLVED AND MUST REMAIN CONFINED TO THE FAC TS OF THIS CASE. IN VIEW OF THESE DISCUSSIONS, SUBJECT TO THE OBSERVATIONS MADE ABOVE, AND BEARING IN MIND ENTIRE TY OF THE CASE, WE APPROVE THE CONCLUSION ARRIVED AT BY T HE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER.' IT CAN BE SEEN FROM THE ABOVE REFERRED FINDINGS OF THE HON'BLE TRIBUNAL THAT IT HAS DEALT WITH THE ISSUE OF GRANTI NG OF DEPRECIATION ON NON COMPETE TERRITORY RIGHTS AND THE CHRONOLOGIC AL DEVELOPMENT IN THE ORDERS PASSED BY THE A.OS, CIT(A ) AS WELL AS HON'BLE TRIBUNAL. THE HON'BLE TRIBUNAL AT PARA-11 H AS CLEARLY REFLECTED UPON THE INACTION OF THE REVENUE AUTHORIT IES TO DEAL WITH THE ISSUE OF DEPRECIATION ON NON-COMPETE TERRITORY RIGHTS AND THUS HAS REACHED TO THE CONCLUSION OF UPHOLDING THE ORDE R OF THE CIT(A) PASSED VIDE ORDER NO.CIT(A)-XI/62/ITAT/10-11 DATED 18/12/2012 FOR A.Y.2006-07 UNDER PECULIAR CIRCUMSTANCES. IT IS ALSO OBSERVED THAT THE DEPARTMENT HAS NOT PREFERRED THE APPEAL AG AINST THE ORDER OF CIT(A) FOR A.YRS 2003-04 AND 2004-05. IT H AS BEEN MENTIONED BY THE CIT(A) FOR BOTH THE ASSESSMENT YEA RS I.E. A.Y.2003-04 AND 2004-05 THAT THE HON'BLE GUJARAT HI GH COURT HAD ADMITTED THE APPELLANTS SCA. FURTHER IT WAS ALS O HELD BY THE CIT(A) FOR THESE YEARS THAT THE MATTER IS SUBJUDICE WITH GUJARAT HIGH COURT. AS THE OUTCOME OF SCA WERE AWAITED, THE DEPARTMENT DID NOT FILE ANY APPEAL BEFORE THE HON'BLE ITAT AGA INST THE ORDER OF CIT(A) FOR THESE TWO YEARS. THE COORDINATE BENCH OF THE ITAT, FOR A.Y.2005-06 RELIED UPON THE DECISION OF DEPARTM ENT NOT FILING THE APPEALS BEFORE ITAT FOR A.Y.2003-04 & 2004-05 A ND DISMISSED THE APPEAL OF REVENUE FOR A.Y.2005-06. CO NSIDERING ALL THE FACTS ABOVE, I HAVE NO OPTION BUT TO DECIDE THI S ISSUE IN LIGHT OF DECISION HON'BLE ITAT FOR A.Y.2006-07 QUOTED AT PARA 3.2 ABOVE. HON'BLE ITAT HAS ITSELF STATED THAT THE A. O HAS NEVER GIVEN ANY INDEPENDENT REASONS FOR THE SAID DISALLO WANCE. THE MATTER HAD NEVER BEEN DECIDED OR EXAMINED ON MERITS . NOTWITHSTANDING THIS, RESPECTFULLY FOLLOWING THE DE CISION GIVEN BY HON'BLE ITAT IN A.Y.2006-07 VIDE ITA NO.575/A HD/2013 THE ITA NO.3206 TO 3208/AHD/2016 10 A.O IS DIRECTED TO ALLOW THE DEPRECIATION FOR RS.1,14,84,375/-. THUS, GROUND OF APPEAL NO.1 IS AL LOWED. 9. BEFORE US, IT IS SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE ITAT PASSED IN THE ASSESSMENT YEAR 200 6-07 AS WELL AS IN THE ASSESSMENT YEAR 2004-05. HE PLACED ON RECORD C OPY OF THE ORDER DATED 11.5.2018 PASSED IN ITA NO.2475/AHD/2016. ON THE OTHER HAND, THE LD.DR CONTENDED THAT THE CIT (A) WHILE DECIDING THE APPEALS OF THE ASSESSEE HAS NOT ALLOWE D DEPRECIATION TO IT, RATHER DISPOSED OF THESE APPEALS WITH REMARK THAT A DJUDICATION OF THIS ISSUE WOULD BE SUBJECTED TO THE DECISION OF THE HON BLE HIGH COURT. IN THE ASSESSMENT YEAR 2002-03, DEPRECIATION HAS BEEN ALLOWED TO THE ASSESSEE ON TECHNICAL GROUND I.E. REOPENING WAS NOT UPHELD. THAT DOES NOT MEAN THAT ON MERIT IN OTHER YEARS, THE ASSESSEE WILL BE ENTITLED FOR DEPRECIATION. THE AO HAS RIGHTLY DISMISSED THE CLA IM OF THE ASSESSEE IN THESE YEARS WHILE GIVING EFFECT TO THE ORDER OF THE CIT(A). 10. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD. A PERUSAL OF THE ORDERS OF THE LD.CIT(A) W HICH HAVE BEEN IMPUGNED HEREIN, WOULD INDICATE THAT IN THE ORIGINA L ASSESSMENT ORDERS, THE LD.AO HAS NOT SPECIFICALLY ADJUDICATED THE ISSU E, RATHER HE SIMPLY KEPT THE ISSUE PENDING ABOUT ADMISSIBILITY OR NON-A DMISSIBILITY OF DEPRECIATION. THE LD.CIT(A) IN THE ORIGINAL ROUND HAS CONCURRED WITH THE AO TO SOME EXTENT, BUT ULTIMATELY ALLOWED THE GROUN D OF APPEAL. IN ASSTT.YEAR 2002-03 DEPRECIATION WAS GRANTED TO THE ASSESSEE ORIGINALLY AND REOPENING WAS QUASHED. IT MEANS, DEPRECIATION WAS GRANTED TO THE ASSESSEE. THE AO EITHER SHOULD HAVE DEALT WITH THE ISSUE ELABORATELY IN THE ORIGINAL ASSESSMENT ORDER, OR SHOULD HAVE FOLLO WED THE OUTCOME OF THE ASSESSMENT YEAR 2002-03. THE LD.CIT(A) IN THE FIRST ROUND IN ALL THESE YEARS HAS ALLOWED THE GROUND OF APPEAL. IT M EANS, DEPRECIATION OUGHT TO BE GRANTED TO THE ASSESSEE. THE DEPARTMEN T SOUGHT TO ITA NO.3206 TO 3208/AHD/2016 11 DISALLOW THE DEPRECATION TO THE ASSESSEE IN ALL THE SE YEARS EVEN WITHOUT ADJUDICATING THE ISSUE ON MERIT AT ANY STAGE. IT IS NOT PERMISSIBLE. IN THE IMPUGNED ORDERS, LD.CIT(A) HAS APPRECIATED THIS ASPECT AS WELL AS FOLLOWED THE ORDER OF THE ITAT IN ASSESSMENT YEAR 2 006-07, WHICH IS ON MERIT. CONSIDERING ALL THESE ASPECTS, WE DO NOT FI ND ANY MERIT IN THESE APPEALS OF THE REVENUE. THEY ARE DISMISSED. 11. IN THE RESULT, ALL THREE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 1 ST AUGUST, 2018 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER