DCIT, New Delhi V. M/s Career Launcher (India) Ltd., New Delhi

ITA 3656/DEL/2011

• Counselvise Citation: 365620114 RSA 2011
• Duration Of Justice: 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 28-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Keywords: Depreciation
• Section: 143(3); 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.D. RANJAN ITA NO. 3656/DEL/2011 ASSESSMENT YEAR: 2004-05 DEPUTY COMMISSIONER OF IT, VS. CAREER LAUNCHER (IN DIA) LTD., CIRCLE 3(1), R-90, GK-I, NEW DELHI. NEW DELHI. (PAN: AAACC3885C) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SALIL M ISHRA, SR.DR RESPONDENT BY: NONE ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 25.5.2011 PASSED FOR ASSESSMENT YEAR 2004-05. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT LEARNED C IT(APPEALS) HAS ERRED IN DELETING THE PENALTY OF RS.12,27,443 LEVIED UNDER S EC. 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2. IN RESPONSE TO THE NOTICE OF HEARING, NO ONE HAS COME PRESENT ON BEHALF OF THE ASSESSEE, HOWEVER, WITH THE ASSISTANC E OF LEARNED DR WE HAVE GONE THROUGH THE RECORD CAREFULLY AND WE DO NOT FIN D ANY MERIT IN THIS APPEAL, THEREFORE, WE PROCEED TO DISPOSE OF THE APP EAL EX PARTE QUA THE ASSESSEE. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAS FILED ITS RETURN OF INCOME ON 30 TH SEPTEMBER 2004 DECLARING AN INCOME OF RS.2,30,93,3 00. AN ASSESSMENT WAS PASSED UNDER SEC. 143(3) OF THE ACT ON 30.11.2006 AT AN INCOME OF RS.2,75,55,734. LEARNED ASSESSING OFFICER HAS MADE VARIOUS ADDITIONS AND DISALLOWANCES. IN THE PRESENT APPEAL , WE ARE CONCERNED WITH AN ADDITION OF RS.2,50,000 WHICH WAS MADE BY DISALL OWING DEPRECIATION ON GOODWILL. IN BRIEF, THE FOLLOWING AMOUNTS WERE CONS IDERED FOR VISITING THE ASSESSEE WITH THE PENALTY: A) NON-COMPLETE FEE RS. 5,40,000 B) INTEREST TO GREATER NOIDA AUTHORITY RS.22,07,18 8 C) DEPRECIATION ON GOODWILL RS. 2,50,000 D) DISALLOWANCE OF ADVANCES WRITTEN OFF RS. 4,24 ,259 4. IT EMERGES OUT FROM THE ORDER OF THE LEARNED CIT (APPEALS) THAT THE AMOUNTS MENTIONED AT SR. (A), (B) AND (D) WERE DELE TED BY THE ITAT IN THE QUANTUM APPEAL, THEREFORE, THERE CANNOT BE ANY QUES TION OF VISITING THE ASSESSEE WITH THE PENALTY ON THESE AMOUNTS BECAUSE THE VERY BASIS TO COMPUTE THE PENALTY NO MORE SURVIVE. THERE CANNOT B E ANY ALLEGATION THAT TAXES HAVE BEEN SOUGHT TO BE EVADED BY THE ASSESSEE QUA THESE ADDITIONS. THE ONLY AMOUNT LEFT FOR WHICH THE QUESTION IS TO BE DE CIDED, WHETHER THE PENALTY IS IMPOSEABLE OR NOT, IS THE DEPRECIATION ON GOODWI LL. LEARNED FIRST 3 APPELLATE AUTHORITY HAS DELETED THE PENALTY ON THE GROUND THAT IT IS A DEBATABLE QUESTION WHETHER DEPRECIATION ON THE GOOD WILL WILL BE ADMISSIBLE OR NOT, THEREFORE, ASSESSEE CANNOT BE VISITED WITH THE PENALTY. 5. WITH THE ASSISTANCE OF LEARNED DEPARTMENTAL REPR ESENTATIVE, WE HAVE GONE THROUGH THE RECORD CAREFULLY. LEARNED FIRST A PPELLATE AUTHORITY WHILE ARRIVING AT THIS CONCLUSION MADE A REFERENCE TO THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. HINDUSTAN COCA CO LA BEVERAGES PVT. LTD. IN ITA NO.1391/2010 AND 1396/2010 IN A DECISION REN DERED ON 14.01.2011. THE ASSESSEE HAS CLAIMED DEPRECIATION ON GOODWILL. ASSESSING OFFICER ACCEPTED THE CLAIM OF ASSESSEE, HOWEVER, LEARNED CO MMISSIONER SOUGHT TO REVISE THE ORDER BY EXERCISING POWERS UNDER SEC. 26 3 OF THE ACT. THE ITAT SET ASIDE THE ORDER OF LEARNED CIT ON THE GROUND TH AT ASSESSING OFFICER TOOK A PLAUSIBLE VIEW WHICH IS A POSSIBLE VIEW IN LAW AN D THEREFORE THERE CANNOT BE ANY OCCASION UNDER SEC. 263 OF THE ACT. HON'BLE HIGH COURT AFTER MAKING A DETAILED ANALYSIS ON THE FACTS AND LAW UPHOLD THE ORDER OF THE ITAT. LEARNED FIRST APPELLATE AUTHORITY HAS REPRODUCED TH E OBSERVATIONS OF THE HON'BLE HIGH COURT AND IT IS IMPERATIVE UPON US TO TAKE NOTE OF THE OBSERVATIONS MADE BY THE HON'BLE HIGH COURT IN PARA GRAPHS 24 AND 25 WHICH READ AS UNDER: 4 24. IT IS WORTH NOTING THAT THE MEANING OF BUSINES S OR COMMERCIAL RIGHTS OF SIMILAR NATURE HAS TO BE UNDERSTOOD IN TH E BACKDROP OF SECTION 32(1)(II) OF THE ACT. COMMERCIAL RIGHTS ARE SUCH RI GHTS WHICH ARE OBTAINED FOR EFFECTIVELY CARRYING ON THE BUSINESS A ND COMMERCE, AND COMMERCE, AS IS UNDERSTOOD, IS A WIDER TERM WHICH E NCOMPASSES IN ITS FOLD MANY A FACET. STUDIED IN THIS BACKGROUND, ANY RIGHT WHICH IS OBTAINED FOR CARRYING ON THE BUSINESS WITH EFFECTIV ENESS IS LIKELY TO FALL OR COME WITHIN THE SWEEP OF MEANING OF INTANGI BLE ASSET. THE DICTIONARY CLAUSE CLEARLY STIPULATES THAT BUSINESS OR COMMERCIAL RIGHTS SHOULD BE OF SIMILAR NATURE AS KNOW-HOW, PATENTS, C OPYRIGHTS, TRADEMARKS, LICENSES, FRANCHISES, ETC. AND ALL THES E ASSETS WHICH ARE NOT MANUFACTURED OR PRODUCED OVER RIGHT BUT ARE BROUGHT INTO EXISTENCE BY EXPERIENCE AND REPUTATION. THEY GAIN SIGNIFICANCE I N THE COMMERCIAL WORLD AS THEY REPRESENT A PARTICULAR BENEFIT OR ADV ANTAGE OR REPUTATION BUILT OVER A CERTAIN SPAN OF TIME AND THE CUSTOMERS ASSOCIATE WITH SUCH ASSETS. GOODWILL, WHEN APPOSITELY UNDERSTOOD, DOES CONVEY A POSITIVE REPUTATION BUILT BY A PERSON/COMPANY/BUSINESS CONCE RN OVER A PERIOD OF TIME. REGARD BEING HAD TO THE WIDER EXPANSION OF THE DEFINITION AFTER THE AMENDMENT OF SEC. 132 BY THE FINANCE ACT (2) 1998 AND THE AUDITORS REPORT AND THE EXPLANATION OFFERED BEFORE THE ASSESSING OFFICER, WE ARE OF THE CONSIDERED OPINION THAT THE TRIBUNAL IS JUSTIFIED IN HOLDING THAT IF TWO VIEWS WERE POSSIBLE AND WHEN THE ASSESSING OFFICER HAD ACCEPTED ONE VIEW WHICH IS A PLAUSIBLE ONE, IT WAS NOT APPROPRIATE ON THE PART OF THE COMMISSIONER TO EXER CISE HIS POWER UNDER SEC. 263 SOLELY ON THE GROUND THAT IN THE BOO KS OF ACCOUNT IT WAS MENTIONED AS GOODWILL AND NOTHING ELSE. AS HAS BE EN HELD BY THE APEX COURT IN MALABAR INDUSTRIAL CO. LTD. (SUPRA), MAX INDIA LTD 5 (SUPRA) AND CIT VS. VIMGI INVESTMENT P. LTD. [2007] 290 ITR 505 (DELHI) ONCE A PLAUSIBLE VIEW IS TAKEN, IT IS NOT O PEN TO THE COMMISSIONER TO EXERCISE THE POWER UNDER SECTION 26 3 OF THE ACT. 25. IN VIEW OF THE AFORESAID ANALYSIS, WE ARE OF TH E CONSIDERED OPINION THAT THE ORDER PASSED BY THE TRIBUNAL IS JU STIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE QUESTIONS WHI CH HAVE BEEN RAISED BY THE REVENUE AS SUBSTANTIAL QUESTIONS OF L AW REALLY DO NOT ARISE. RESULTANTLY, THE APPEALS HAVE TO HAVE PAVE T HE PATH OF DISMISSAL WHICH WE DIRECT. THERE SHALL BE NO ORDER AS TO COST S. 6. LEARNED FIRST APPELLATE AUTHORITY THEREAFTER REF ERRED THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RE LIANCE PETRO PRODUCTS REPORTED IN 230 CTR 320. AFTER TAKING INTO CONSIDER ATION THE ORDER OF THE LEARNED CIT(APPEALS), WE ARE OF THE VIEW THAT THE L EARNED FIRST APPELLATE AUTHORITY HAD MADE LUCID ENUNCIATION ON LAW AND FAC TS AND HAS RIGHTLY PLACED THE RELIANCE UPON THE JUDGMENT OF HON'BLE DE LHI HIGH COURT AS WELL AS OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (SUPRA). THE APPEAL OF THE REVENUE IS DE VOID OF ANY MERIT, HENCE, IT IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 27.09.2011 SD/- SD/- ( K.D. RANJAN ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27/09/2011 MOHAN LAL 6 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR