Sri B.Raveendran Pillai, Kollam V. DCIT, Kollam

ITA 490/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58224 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-12-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 30-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: A S NARAYANAMOORTHY
• Keywords: Depreciation
• Section: 32

Judgement Text

1 ITA NO.490/COCH-2010 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHI BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI SANJAY ARO RA (AM) I.T.A. NO.490/COCH/2010 (ASSESSMENT YEAR 2001-02) SHRI B RAVEENDRAN PILLAI VS DY.CIT, CIR.1 SREEVALSAM KOLLAM THEVALLY, KOLLAM PAN : AFTPP9316G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.S. NARAYANAMOORTHY RESPONDENT BY: MS. VIJAYAPRABHA DATE OF HEARING : 27-12-2011 DATE OF PRONOUNCEMENT: 20-01-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDRUM DATED 1 8-06-2010 AND PERTAINS TO ASSESSMENT YEAR 2001-02. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISAL LOWANCE OF DEPRECIATION ON INTANGIBLE ASSET. 3. SHRI A.S. NARAYANAMURTHY, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED THE DEPRECIATION ON THE INTANGIBLE ASSET BEING THE GOODWILL ON THE GROUND T HAT THE GOODWILL IS NOT AN ASSET FALLING WITHIN THE SCOPE OF SECTION 32 OF THE INCOME-TAX ACT. ON APPEAL BY THE ASSESSEE, THE COMMISSIONER OF INCOME- TAX(A), AFTER 2 ITA NO.490/COCH-2010 CONSIDERING THE DECISION OF THIS TRIBUNAL IN THE AS SESSEES CASE FOR THE ASSESSMENT YEAR 2004-05 FOUND THAT THE GOODWILL IS NOT AN ASSET WITHIN THE MEANING OF SECTION 32 OF THE INCOME-TAX ACT, AND TH EREFORE, NOT ENTITLED OR DEPRECIATION. THE LD.REPRESENTATIVE FURTHER SUBMIT TED THAT AGAINST THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2004-05 THE ASSESSEE FILED AN APPEAL BEFORE THE HIGH COURT. THE HIGH COURT IN ITA NO.17 41 OF 2009 BY A JUDGMENT DATED 23-09-2010 HAS REVERSED THE ORDER OF THIS TRIBUNAL AND HELD THAT THE GOODWILL IS COVERED U/S 32(1)(II) OF THE ACT, THEREFORE, THE ASSESSEE IS ENTITLED FOR DEPRECIATION AS CLAIMED. SINCE THE VERY SAME GOODWILL, VIZ. THE LOGO WAS CONSIDERED BY THE HIGH COURT AND FOUND THAT THE ASSESSEE IS ENTITLED FOR DEPRECIATION U/S 32(1) FOR THE ASSESSMENT YEAR 2004- 05 ACCORDING TO THE LD.REPRESENTATIVE, FOR THE YEAR UNDER CONSIDERATION THE DEPRECIATION HAS TO BE GRANTED ON THE BASIS OF THE JUDGMENT OF THE HIGH COURT. 4. ON THE CONTRARY, MS. VIJAYAPRABHA, THE LD.DR SUB MITTED THAT NO DOUBT FOR THE ASSESSMENT YEAR 2004-05 THE DECISION OF THIS TRIBUNAL WAS REVERSED BY THE HIGH COURT HOLDING THAT INTANGIBLE ASSET IS ALSO AN ASSET WITHIN THE MEANING OF SECTION 32(1)(II) OF THE ACT ENTITLING FOR DEPRECIATION. HOWEVER, ONE OF THE DISTINGUISHING FACTORS THAT THE EMBLEM / LOGO OF THE PREVIOUS OWNER MODIFIED CONSIDERABLY BY THE ASSESSE E WAS NOT CONSIDERED BY THE HIGH COURT. ACCORDING TO THE LD.DR, THE EMB LEM OF THE PREVIOUS OWNER WAS MODIFIED CONSIDERABLY. THEREFORE, IT CAN NOT BE A LOGO / TRADEMARK OF THE PREVIOUS OWNER WHICH WAS USED BY T HE ASSESSEE. MOREOVER, ACCORDING TO THE LD.REPRESENTATIVE, THE V ALUE GIVEN FOR GOODWILL DOES NOT HAVE ANY VALID BASIS. ON A QUERY FROM THE BENCH AS TO ON WHAT BASIS THE DEPARTMENT CLAIMS THAT THE EMBLEM OF THE PREVIOUS OWNER WAS MODIFIED, THE LD.REPRESENTATIVE SUBMITTED THAT THE DEPARTMENT CAME TO KNOW THAT THE ASSESSEE HAS MODIFIED THE EMBLEM / LOGO TH ROUGH ENQUIRY. 3 ITA NO.490/COCH-2010 HOWEVER, NO MATERIAL IS PLACED ON RECORD TO SHOW TH AT THE ASSESSEE HAS MODIFIED THE EMBLEM / LOGO. ON A QUERY FROM THE BE NCH, WHEN THE HIGH COURT FOR THE ASSESSMENT YEAR 2004-05 HAS DIRECTED THE ASSESSING OFFICER TO GRANT DEPRECIATION ON THE VERY SAME LOGO / EMBLEM, COULD THE TRIBUNAL DISTINGUISH THE JUDGMENT OF THE HIGH COURT ON THE G ROUND THAT THE HIGH COURT HAS NOT CONSIDERED THE SO-CALLED MODIFICATION OF THE EMBLEM, THE LD.DR COULD NOT GIVE ANY REASONABLE EXPLANATION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. FOR THE ASSESSMENT YEAR 2004-05 THIS ISSUE WAS SUBJECT MATTER OF APPEAL BEFORE THIS TRIBUNAL IN ITA NO.613/COCH/2008 DATED 06-04-2008. THIS TRIBUNAL H ELD THAT INTANGIBLE ASSET IS NOT AN ASSET WITHIN THE MEANING OF SECTION 32 OF THE ACT, THEREFORE, NOT ENTITLED FOR DEPRECIATION. HOWEVER, ON FURTHER APPEAL BY THE ASSESSEE BEFORE THE HIGH COURT IN ITA NO.1741 OF 2009 DATED 23-09-2010 THE HIGH COURT FOUND THAT THE VERY SAME LOGO / EMBLEM WAS AN INTANGIBLE ASSET ENTITLING FOR DEPRECIATION U/S 32(1)(II) OF THE ACT . ACCORDINGLY THE HIGH COURT DIRECTED THE ASSESSING OFFICER TO GRANT DEPRE CIATION ON THE WRITTEN DOWN VALUE OF GOODWILL. COPY OF THE ABOVE HIGH COU RT JUDGMENT IS PLACED ON RECORD BY THE ASSESSEE. WHEN THE VERY SAME ISSU E OF DEPRECIATION ON THE VERY SAME EMBLEM / LOGO WAS CONSIDERED BY THE HIGH COURT FOR THE ASSESSMENT YEAR 2004-05, THIS TRIBUNAL IS OF THE OP INION THAT THE JUDGMENT OF THE HIGH COURT CANNOT BE DISTINGUISHED ON THE GR OUND THAT THE HIGH COURT HAS NOT CONSIDERED THE MODIFICATION OF THE EM BLEM BY THE ASSESSEE. IF THE DEPARTMENT FEELS THAT THE ASSESSEE HAS MODIF IED THE EMBLEM / LOGO AND THE ASSET WAS NOT USED IN THE FORM IN WHICH IT WAS ACQUIRED FROM THE PREVIOUS OWNER IT WAS FOR THE DEPARTMENT TO BRING T HE SAME TO THE NOTICE OF THE HIGH COURT OR OTHER APPELLATE COURT AND GET THE JUDGMENT FOR THE ASSESSMENT YEAR 2004-05 MODIFIED. THIS TRIBUNAL IS OF THE OPINION THAT AT 4 ITA NO.490/COCH-2010 THIS STAGE, IT MAY NOT BE PROPER TO DISTINGUISH THE JUDGMENT OF THE HIGH COURT IN RESPECT OF THE VERY SAME ISSUE AS CONTENDE D BY THE LD.DR. BY RESPECTFULLY FOLLOWING THE JUDGMENT OF THE JURISDIC TIONAL HIGH COURT FOR THE ASSESSMENT YEAR 2004-05 IN ASSESSEES OWN CASE IN I TA NO.1741 OF 2009 DATED 23-09-2010, THE CLAIM OF THE ASSESSEE FOR DEP RECIATION IS UPHELD. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO GRANT DEPRECIATION ON THE WRITTEN DOWN VALUE OF THE GOODWILL TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY, 2012 SD/- SD/- (SANJAY ARORA) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER ERNAKULAM, DT : JANUARY, 2012 PK/ COPY FORWARDED TO: 1. SHRI B RAVEENDRAN PILLAI, SREEVALSAM, THEVALLY, KOL LAM 2. DY.CIT, CIR.1, KOLLAM 3. THE COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDRUM 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN