Tagros Chemicals (India) Ltd., CHENNAI V. JCIT, CHENNAI

ITA 528/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7976 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 07-03-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: T BANUSEKAR
• Keywords: Capital asset; Depreciation; Additional evidence; Revenue expenditure; Capital expenditure
• Section: 234B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , ! ' . #$ , % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER . / ITA NO. 528/MDS/2016 / ASSESSMENT YEAR : 2010-11 M/S. TAGROS CHEMICALS (INDIA) LTD ., JHAVER CENTRE, RAJA ANNAMALAI BUILDING, 19, NEW NO.72, MARSHALS ROAD, EGMORE, CHENNAI 600 008. PAN AAACT2952K ( /APPELLANT) V. THE INCOME-TAX OFFICER, NON-CORPORATE WARD-10(1), CHENNAI - 34. RESPONDENT) / APPELLANT BY : SHRI T. BANUSEKAR, FCA / RESPONDENT BY : SHRI SHIVA SRINIVAS, JCIT, D.R ! / DATE OF HEARING : 09.11.2016 '# ! / DATE OF PRONOUNCEMENT : 06.02.2017 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 29 .1.2016. - - ITA 528/MDS/16 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: 2. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) FAILED TO APPRECIATE THAT THE ORDER OF THE ASSESSIN G OFFICER IS WITHOUT JURISDICTION. 3. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN UPHOLDING THE DISALLOWANCE OF SET OFF OF M UTUAL FUND LOSSES OF 2,389,525/- AGAINST THE TOTAL INCOME OF IMPUGNED YEAR. 4. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN UPHOLDING THE DISALLOWANCE OF DEDUCTION OF 2.50 CRORES U/S.35AC BEING DONATION TO APPROVED TRUSTS. 5. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) FAILED TO APPRECIATE THAT THE SUM OF 2.50 CRORES HAS BEEN CREDITED INTO THE ACCOUNT OF MAHILA UTKARSH SANSTHA N TRUST HELD WITH KOTAK MAHINDRA BANK, KOLKATA. 6. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN UPHOLDING THE DISALLOWANCE EVEN AFTER THE ASSESSING OFFICER IN HIS REMAND REPORT HAS STATED T HAT THE BANKER OF THE APPELLANT HAS CONFIRMED THAT THE FUND S HAVE BEEN TRANSFERRED THROUGH PROPER BANKING CHANNELS TO THE INTENDED PARTY. 7. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) FAILED TO APPRECIATE THAT A DEDUCTION IS ALLOWED U/ S.35AC IF PAYMENTS ARE MADE TO APPROVED ASSOCIATION AND THAT IT DOES NOT TALK ABOUT THE UTILIZATION OF SUCH FUNDS B Y SUCH ASSOCIATION FOR ALLOWING THE DEDUCTION. 8. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN CONFIRMING THE DISALLOWANCE OF DEPRECIATIO N OF 1,45,35,605/- ON INTANGIBLE ASSETS. - - ITA 528/MDS/16 3 9. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) FAILED TO APPRECIATE THAT ACQUISITION OF RIGHTS TO EXPORT AND MARKET APPELLANTS PRODUCTS IN FOREIGN COUNTRIES IS TO BE TREATED AS INTANGIBLE ASSETS AND DEPRECIATION ALLOW ED ON THE SAME. 10. FOR THAT WITHOUT PREJUDICE TO THE ABOVE, THE SA ID EXPENSES INCURRED ARE ALLOWABLE AS REVENUE EXPENDIT URE. 11. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEA LS) ERRED IN UPHOLDING THE DISALLOWANCE OF 8,36,270/- BEING 2% OF TRAVEL AND CONVEYANCE EXPENSES. 12. FOR THAT THE APPELLANT OBJECTS TO THE LEVY OF INTEREST UNDER SECTIONS 234B AND 234C OF THE INCOME TAX ACT. 3. AT THE TIME OF HEARING, THE LD. AR SUBMITTED THA T THE ASSESSEE IS NOT INTERESTED TO PRESS GROUND NOS. 3 & 11. ACCORDINGLY, THESE TWO GROUNDS ARE DISMISSED AS NOT PRESSED AND GROUND NO.2 IS TOO GENERAL WHICH DOES NOT REQUI RE ADJUDICATION. 4. NOW, THE GROUND NOS.4 TO 7 FOR OUR CONSIDERATION IS WITH REGARD TO DISALLOWANCE OF ` 2.5 CRORES BEING DONATION MADE U/S.35AC OF THE ACT. 5. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE HAS MADE DONATION OF 2.5 CRORES TO MAHILA UTKARSH SANSTHAN TRUST BEING AN APPROVED INSTITUTION. THE DONATIONS WERE DEPOSI TED IN THE - - ITA 528/MDS/16 4 TRUSTS BANK ACCOUNT HELD WITH KOTAK MAHINDRA BANK, KOLKATA. IN THIS REGARD, THE ASSESSEE ALSO RECEIVED FROM THE TRUST THE FORM 58A DATED 31.12.2009 FOR DONATIONS OF 2 CRORES AND FORM 58A DATED 7.3.2010 FOR THE BALANCE OF 50 LAKHS. HOWEVER, IT IS GIVEN TO UNDERSTAND THAT A POLICE CO MPLAINT WAS LODGED BY THE TRUST PRESIDENT REGARDING THE AMOUNTS DEPOSITED BY SECRET DONORS IN ITS BANK ACCOUNT HELD WITH KOTA K MAHINDRA BANK, KOLKATA THAT THESE WERE WITHDRAWN IN HUGE AMO UNT BY ANONYMOUS PERSONS AND NO AMOUNT WAS RECEIVED BY THE TRUST FOR THE UTILIZATION OF ITS ACTIVITIES. THE ASSESSI NG OFFICER OBSERVED THAT SINCE THE INTENDED DONATIONS AS CLAIMED BY THE ASSESSEE HAS NOT REACHED THE ACTUAL TRUST AS CONFIRMED BY TH E TRUSTEE, THE DONATION MADE BY THE ASSESSEE WAS NOT TRULY AND GEN UINELY INCURRED FOR THE ACTIVITIES OF THE TRUST. ACCORDING LY, THE ASSESSING OFFICER DENIED RELIEF U/S.35AC OF THE ACT. AGAINST THIS, THE ASE WENT IN APPEAL BEFORE THE CIT(APPEALS), WHO HAS CON FIRMED THE ACTION OF THE ASSESSING OFFICER. 5.1 BEFORE THE CIT(APPEALS), THE ASSESSEE FILED D ETAILED SUBMISSIONS BEFORE THE CIT(A) ON 23.09.2014, THE GI ST OF WHICH IS AS FOLLOWS : - - ITA 528/MDS/16 5 1. THE ASSESSEE COMPANY HAS MADE THE DONATION TO MAHILA UTKARSH SANSTHAN AS THE TRUST WAS APPROVED FOR THE PURPOSE OF SEC.35AC. 2. CERTIFICATE IN FORM 58A ISSUED BY THE TRUST IN S UPPORT OF THE DONATIONS OF 2.5 CRORES MADE BY THE APPELLANT COMPANY TO THE APPROVED TRUST WAS ALSO MADE AVAILAB LE BEFORE THE ASSESSING OFFICER. 3. THE CONDITION FOR CLAIMING DEDUCTION UNDER SECTI ON 35AC IS SOLELY THAT THE PAYMENT IS MADE TO AN ASSOC IATION OR INSTITUTION APPROVED BY THE NATIONAL COMMITTEE F OR CARRYING OUT ANY ELIGIBLE PROJECT OR SCHEME. 4. THE DUTY CAST BY THE STATUTE UPON THE PERSON MAK ING THE PAYMENT IS RESTRICTED THUS FAR AND THE PURPORTE D NON UTILIZATION OF THE SAID FUNDS BY THE TRUST FOR THE INTENDED PURPOSES WILL THUS NOT AFFECT THE DEDUCTION IN THE HANDS OF THE APPELLANT UNDER SECTION 35AC AS HELD IN THE CAS E OF CHOTATINGRAI TEA ESTATE PVT. LTD. VS. CIT [1999] 23 6 ITR 644 (GAUHATI). THEREFORE, SINCE PAYAMENT MADE BY T HE APPELLANT TO THE TRUST HAS THUS BEEN MADE IN COMPLI ANCE OF THE PROVISIONS UNDER SECTION 35AC, THE DEDUCTION UN DER SECTION 35AC CANNOT BE DENIED. 5. FURTHER EVEN GOING BY THE ALLEGATIONS MADE BY TH E TRUSTEE THAT THE FUNDS DONATED DID NOT REACH THEM, THE VERACITY OF WHICH IS NOT KNOWN TO APPELLANT, IT IS MOST HUMBLY SUBMITTED THAT WHERE THE MONEYS SO DONATED, IN GOOD FAITH DID NOT REACH THE INTENDED DONEE, IT IS TO BE APPRECIATED THAT THE APPELLANT HAS BEEN FRAUDULENTL Y RELIEVED OF ITS MONEY AND HAS THUS INCURRED A LOSS TO THE EXTENT OF 2.5 CRORES ON ACCOUNT OF SUCH BREACH OF TRUST. THEREFORE, WITHOUT PREJUDICE TO THE ABOVE, IT IS MO ST HUMBLY SUBMITTED THAT SUCH LOSS ARISING ON ACCOUNT OF BREACH OF TRUST SHALL BE ALLOWED UNDER SECTION 28(1 )(I) READ WITH SECTION 29 AS LOSS INCIDENTAL TO BUSINESS, CON SISTENT WITH THE RATIO OF THE DECISION IN THE CONTEXT OF EMBEZZLEMENT OF CASH IN THE CASE OF BADRIDAS DAGA V . CIT [1958] 34 ITR 10(SC). - - ITA 528/MDS/16 6 6. THE CIT(A), IN THE COURSE OF HEARING, CALLED FOR A REMAND REPORT FROM THE AO AND THE AO SUBMITTED THE REMAN D REPORT ON 18.11.2014, WHICH READS AS FOLLOWS: 1. THE ISSUE PERTAINING TO THE ADDITIONAL GROUND R AISED BY THE ASSESSEE HAS BEEN ADDRESSED IN THE ASSESSMEN T ORDER PASSED BY THE AO DT. 31.03.2010 UNDER POINT 3 , FROM PAGE 2 TO PAGE 8. 2. THE ISSUE PERTAINS TO THE 2.5 CRORES WHICH THE ASSESSE CLAIMS TO HAVE DONATED TO MAHILA UTKARSH SANSTHAN TRUST. ON THIS ISSUE, DETAILS HAVE BEEN CALLED FOR REGARDING THE PROOF OF PAYMENT AND THE ACKNOWLEDGMENT OF THE SAID TRUST OF RECEIPT OF SUCH FUNDS. IN THIS REGARD, THE ASSESSEE ADDRESSED A LE TTER TO THE PRESIDENT OF THE SAID TRUST FOR AN ACKNOWLEDGME NT OF RECEIPT OF FUNDS. 3. IN RESPONSE TO THE ABOVE, THE PRESIDENT OF THE S AID TRUST REPLIED THAT THE TRUST HAD NOT RECEIVED ANY O F THE ABOVE MENTIONED FUNDS. 4. THE ASSESSEE CLAIMS THAT A DONATION HAS BEEN MAD E TO THE ASSESSEE. THE ONUS IS ON THE ASSESSEE TO PR OVE THE GENUINENESS OF THE PAYMENTS AND THE RECEIPT OF THE SAME. 5. ADDITIONALLY, IT IS SEEN FOR AY 2011-12 THE ASSE SSEE HAD MADE SIMILAR CLAIM OF DONATION WHICH HAS NOT BE EN CONFIRMED BY THE RECIPIENT INDICATING A PATTERN OF FRAUDULENT CLAIMS. 6.1 REMAND REPORT OF ASSESSING OFFICER DATED 13.02. 2015: - - ITA 528/MDS/16 7 THE REMAND REPORT CALLED FOR IS HEREBY SUBMITTED W ITH COMMENTS AND MENTIONED GROUND WISE: 1. ON THE REMAND REPORT CALLED FOR, THE BANKER OF T HE ASSESSEE WAS ASKED TO CONFIRM THE PAYMENTS AND THE RECIPIENTS OF THE ALLEGED PAYMENTS. THE REPORT FORWARDED BY SBI, CAG BRANCH, CHENNAI IS FORWARDED FOR THE KIND PERUSAL OF THIS AUTHORITY. 2. FROM THE REPORT SUBMITTED, IT IS SEEN THAT THE B ANK HAS NOT CONFIRMED IF THE PAYMENTS HAVE BEEN MADE THROUGH ACCOUNT-PAYEE CHEQUES. IT IS ALSO NOT CLEA R AS TO WHO THE ACTUAL BENEFICIARIES ARE OF THE IMPUGNED FUNDS DONATED U/S.80F OF THE IT ACT. 3. IT IS NOT CLEAR IF THE ACCOUNT (PAYEE) WHICH IS MENTIONED IN THE REPORT GIVEN IS ACTUALLY AN ACCOUN T WHICH IS OPENED AND OPERATED BY THE TRUST. 4. IT NEEDS TO BE REITERATED THAT ON AN INDEPENDENT ENQUIRY CONDUCTED DURING THE SCRUTINY PROCEEDINGS, THE TRUST HAD DENIED RECEIPT OF ANY FUNDS FROM THE ASSESSEE. 5. IN THE LIGHT OF THE ABOVE, THE ISSUE MAY BE DECI DED ON MERITS. 6.2 THE ASSESSEES COMMENTS DATED 26.02.2015 ON THE REMAND REPORT DATED 18.11.2014 ARE AS FOLLOWS: IN RESPONSE TO THE REMAND REPORT DATED 18.11.2014, THE APPELLANT HAS OFFERED THE FOLLOWING COMMENTS: A) THE APPELLANT HAD MADE A DONATION TO AN INSTITUT ION APPROVED FOR THE PURPOSE OF SECTION 35AC AND HAS FURNISHED THE BANK STATEMENT AND CERTIFICATE UNDER SECTION 58A IN PROOF OF THE GENUINENESS OF THE PAYM ENT MADE AND THE RECEIPT THEREOF. - - ITA 528/MDS/16 8 THUS, FULFILLING THE CONDITION PRESCRIBED FOR AVAIL ING DEDUCTION UNDER SECTION 35AC. B) FURTHER IT WAS POINTED OUT THAT THE ASSESSING OF FICER HAS NOT BROUGHT ON RECORD THE REASON AS TO WHY SONIA SHARMA HAVING ACKNOWLEDGED RECEIPT OF THE DONATIONS OF 2.5 CRORES MADE BY THE APPELLANT COMPANY VIDE THE CERTIFICATE UNDER SECTION 58A HAS ALSO ALLEGED THAT NO DONATION WAS RECEIVED BY THE TRUST FROM THE APPELLA NT COMPANY. C) IT WAS ALSO SUBMITTED THAT THE ASSESSING OFFICER WITHOUT INVESTIGATION IN THIS REGARD, HAS PURELY ACTED BASE D ON CONJECTURES AND SURMISES IN CONCLUDING THAT IT INDI CATES A PATTERN OF FRAUDULENT CLAIMS BY THE APPELLANT COM PANY, MERELY BECAUSE THE APPELLANT COMPANY HAS MADE SIMILAR CLAIMS IN ASSESSMENT YEAR 2011-12 AND THE RECEIPT OF SUCH PAYMENTS ARE ALSO NOT CONFIRMED BY THE TRUST. 6.3 APPELLANTS COMMENTS ON THE REMAND REPORT DATED 13.02.2015 IS GIVEN BELOW: IN RESPONSE TO THE REMAND REPORT DATED 13.02.2015, THE APPELLANT HAS OFFERED THE FOLLOWING COMMENTS: A) A REQUEST WAS MADE TO THE BANKERS, SEEKING A CONFIRMATION ON THE LINES AS REQUIRED BY THE ASSESS ING OFFICER ON THE CHEQUE PAYMENTS MADE TO THE TRUST TO THE TUNE OF 2.5 CRORES. B) IN RESPONSE TO OUR LETTER THE BANKERS HAVE ISSUE D A CONFIRMATION VIDE LETTER DATED 24 TH FEBRUARY 2015, CLEARLY INDICATING THE DATE, CHEQUE NUMBERS, AMOUNT, BENEFICIARY ACCOUNT NAME AND THE TYPE OF CROSSING. - - ITA 528/MDS/16 9 C) A COPY OF THE ABOVE MENTIONED BANK CONFIRMATION WAS SUBMITTED ALONG WITH A PETITION IN TERMS OF RULE 46 A, AS IT FORMS ADDITIONAL EVIDENCE. 6.4 REMAND REPORT OF THE ASSESSING OFFICER DATED 14 .10.2015 READS AS UNDER: THE REMAND REPORT CALLED FOR IS SUBMITTED AS FOLLO WS : 1. IN VIEW OF THE REMAND REPORT PROCEEDINGS, A LETT ER WAS ADDRESSED TO THE BRANCH MANAGER, SBI, CAG BRANCH TO VERIFY THE PAYMENTS AS CLAIMED BY THE ASSESSEE. 2. VIDE LETTER DATED 19.12.2014, THE BRANCH MANAGER , SBI, CAG BRANCH HAS CONFIRMED THAT THE PAYMENTS AS CLAIMED BY THE ASSESSEE HAVE BEEN PAID INTO THE BAN K ACCOUNTS REGISTERED UNDER THE NAME OF MAHILA UTKARS H SANSTHAN. A COPY OF THE LETTER IS ENCLOSED FOR THE KIND PERUSAL OF THIS AUTHORITY. 3. FROM THE ABOVE, IT HAS BEEN CONFIRMED BY THE BAN KER OF THE ASSESSEE THAT FUNDS HAVE BEEN TRANSFERRED THROUGH PROPER BANKING CHANNELS TO THE INTENDED PARTY. 4. A DECISION IN THE CASE MAY BE TAKEN ON MERITS AN D ON FACTS OF THE CASE. 6.5 FINALLY, THE ASSESSEE SUBMITTED THAT BASED ON T HE DETAILED SUBMISSIONS MADE ON 23.09.2014 AND ITS REP LY TO REMAND REPORT DATED 26.02.2015, SINCE PAYMENT MADE BY THE ASSESSEE OF 2.5 CRORES TO THE TRUST HAS BEEN MADE IN - - ITA 528/MDS/16 10 COMPLIANCE OF THE PROVISIONS UNDER SECTION 35AC, TH E DISALLOWANCE OF DEDUCTION UNDER SECTION 35AC IS NOT CALLED FOR. 6.6 FURTHER, IT WAS SUBMITTED THAT THE ASSESSING O FFICER VIDE HIS REMAND REPORT DATED 14.10.2015 HAS ALSO CONFIRM ED THAT THE FUNDS ARE TRANSFERRED THROUGH PROPER BANKING CHANNE LS TO THE INTENDED PARTY, THERE IS NO REASON TO DENY THE DEDU CTION UNDER SECTION 35AC OF THE ACT. THEREFORE, THE ASSESSEE H UMBLY SUBMITTED BEFORE CIT(APPEALS) THAT THE DISALLOWANCE OF DEDUCTION OF ` 2.5 CRORES UNDER SECTION 35AC TO BE DELETED. 7. THE CIT(APPEALS) OBSERVED THAT ACCORDING TO TH E AO, THE ASSESSEE IS NOT ENTITLED FOR CLAIM OF DEDUCTION U/S .35AC OF THE ACT FOR ITS DONATION OF 2.5 CRORES ALLEGEDLY PAID TO MAHILA UTKARSH SANSTHAN TRUST. FURTHER, THE CIT(APPEALS) OBSERVED THAT THE AO HAS INCORPORATED THE SCANNED CORRESPOND ENCES FROM MAHILA UTKARSH SANSTHAN TRUST IN HIS ASSESSMEN T ORDER AND THE AO CONCLUDED THAT THE TRUST REPRESENTED BY ITS PRESIDENT, MS. SONIA SHARMA (TRUSTEE) HAS ACKNOWLED GED THAT THE TRUSTEE HAS NOT RECEIVED THE DONATION CLAIMED T O HAVE BEEN PAID BY THE ASSESSEE COMPANY FOR THE F.Y. 2009-10 R ELEVANT THIS - - ITA 528/MDS/16 11 A.Y. 2010-11. ACCORDING TO THE CIT(APPEALS), IT IS CLEAR FROM WRITTEN COMMUNICATION OF THE AFORESAID TRUST THAT T HE TRUST HAS ALREADY FILED AN FIR AGAINST THE IRREGULARITIES AND MALPRACTICES COMMITTED WITH AND IN THE NAME OF THE TRUST. 7.1 FURTHER, THE CIT(APPEALS) OBSERVED THAT THE PRE SIDENT OF THE TRUST HAS FURTHER CLAIMED THAT A COMPLAINT HAS BEEN LODGED AGAINST THE BANK MANAGER OF M/S. KOTAK MAHINDRA IN KOLKATA AND ITS ASSOCIATES, WHO AIDED IN THE MISAPPROPRIATION A ND FORGING OF ACCOUNTS IN THE NAME OF THE TRUST. THE PRESIDENT O F THE TRUST HAS STATED THAT THE TRUST WAS REQUESTED BY SOME SEC RET DONORS TO OPEN AN ACCOUNT IN KOLKATA AND THE ACCOUNTS WAS OPENED WITH VARIOUS INCORRECT DOCUMENTS WITH THE ASSISTANCE OF THE BANK MANAGER CONCERNED AND HIS ASSOCIATES. 7.2 THE CIT(APPEALS) FURTHER OBSERVED THAT THE BANK ACCOUNT AND THE RELEVANT PASS BOOK WERE NEITHER GIVEN NOR S ENT TO THE TRUST WHOSE ONLY ADDRESS IS AT INDORE, MADHYA PRADE SH. THE PRESIDENT OF THE TRUST HAS FURTHER STATED THAT THE TRUST HAD NO OFFICES ELSEWHERE IN INDIA EXCEPT AT INDORE AND NOT ISSUING AND SENDING PASS BOOK / CHEQUE BOOK TO THEIR TRUST IS A N INDICATION - - ITA 528/MDS/16 12 OF THEIR INTENTION TO MISAPPROPRIATE IN THE NAME OF THE TRUST. ACCORDING TO THE CIT(APPEALS), AS PER THE STATEMENT OF THE PRESIDENT OF THE AFORESAID TRUST THAT THE TRUSTS B ANK ACCOUNT WAS USED TO DIVERT THE MONEY FOR THE PURPOSE OF CLAIMIN G INCOME TAX DEDUCTION BY FRAUDULENT MEANS. THE CIT(APPEALS) OB SERVED THAT IN THE REMAND REPORT DATED 18.11.2014, THE AO HAS C ONCLUDED THAT IN A.Y. 2011-12 TOO, THE ASSESSEE HAS MADE SIM ILAR CLAIM OF DONATION WHICH WAS NOT CONFIRMED BY THE RECIPIENT I NDICATING A PATTERN OF FRAUDULENT CLAIMS. EVEN IN THE SECOND R EMAND REPORT OF THE AO DATED 13.2.2015, IT IS STATED THAT THE BANK HAS NOT CONFIRMED IF THE PAYMENTS HAVE BEEN MADE THROUGH A/ C PAYEE CHEQUES AND IT IS ALSO NOT CLEAR AS TO WHO THE ACTU AL BENEFICIARY OF THE IMPUGNED FUNDS DONATED IS AND WHETHER THE TRUST A/C WAS OPENED AND OPERATED BY THE TRUST. 7.3 THE CIT(APPEALS) OBSERVED THAT IN THE FINAL REM AND REPORT, THE AO HAS MERELY STATED THAT THE BRANCH MA NAGER, SBI & C&AG BRANCH, CHENNAI HAS CONFIRMED THAT THE PAYMENT S, AS CLAIMED BY THE ASSESSEE HAVE BEEN PAID INTO THE BAN K ACCOUNTS REGISTERED UNDER THE NAME OF THE AFORESAID TRUST. IN THE SAID - - ITA 528/MDS/16 13 LETTER, ONLY THE LIST OF CHEQUES PRESENTED BY M/S. KOTAK MAHINDRA LTD., KOLKATA, IN THE NAME OF THE TRUST, ARE LISTED . THIS LETTER IS NOT A PROOF THAT THE DONATION ALLEGEDLY PAID BY THE ASS ESSEE TO THE TRUST WAS GENUINE AND WHETHER THE SAID DONATION WAS PROPERLY USED FOR THE PURPOSE OF THE TRUST WHEN THE PRESIDEN T OF THE TRUST HERSELF HAS DENIED HAVING RECEIVED THE MONEY. THE CIT(APPEALS) FURTHER OBSERVED THAT THE AO IN THE REMAND REPORT H AS CONCLUDED THAT THE DECISION IN THE CASE MAY BE TAKEN ON MERIT S AND ON THE FACTS OF THE CASE BASED ON THE COMMUNICATION RECEIV ED FROM THE AFORESAID SBI BRANCH. 7.4 IN VIEW OF THE ABOVE, THE CIT(APPEALS) CONCLUDE D THAT THE FACTS AND CIRCUMSTANCES IN THIS CASE ARE OVERWHELMI NGLY AGAINST THE ASSESSEE. THE STATEMENT OF THE PRESIDENT OF TH E TRUST CLEARLY INDICATES THAT THE ASSESSEE HAS DIVERTED ITS TAXABL E INCOME UNDER THE GARB OF DONATION U/SD.35AC OF THE ACT WHICH DID NOT REACH THE OBJECTIVE OF THE TRUST. THE POLICE COMPLAINT REGIS TERED BY THE PRESIDENT OF THE TRUST ALSO CONFIRMS THIS POINT OF VIEW. ACCORDING TO THE CIT(APPEAL) ALL THE REMAND REPORTS POINTED O UT THAT THERE WAS DIVERSION OF ASSESSEES TAX ABLE INCOME THROUGH FRAUDULENT - - ITA 528/MDS/16 14 MEANS IN THE NAME OF THE TRUST. THE CORRESPONDENCE DATED 19.12.2014 OF SBI, EGMORE BRANCH, CHENNAI ONLY CONF IRMS THAT THE MONEY WAS TRANSMITTED TO THE ACCOUNT OF MAHILA UTKARSH SANSTHAN IN KOLKATA, WHICH DOES NOT CERTIFY THAT TH E MONEY WAS TAKEN BY THE TRUSTEES FOR THE PURPOSE OF THE TRUST. THEREFORE, THIS STATEMENT FROM SBI DOES NOT SUPPORT THE ASSESSEES POINT OF VIEW. ACCORDINGLY, THE CIT(APPEALS) CONFIRMED THE DISALLOWANCE OF ASSESSEES CLAIM OF DEDUCTION OF 2.5 CRORES. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE MAIN ISSUE IN THIS APPEAL IS WITH R EGARD TO GENUINENESS OF DONATION OF ` 2.5 CRORES TO M/S.MAHILA UTKARSH SANSTHAN TRUST. ACCORDING TO THE LOWER AUTHORITIES , THE ENQUIRY REVEALED THAT THE DONATION WAS NOT VALIDLY MADE TO SAID TRUST AND ON THE BASIS OF ENQUIRY IT WAS DENIED THE EXEMPTION U/S.35AC OF THE ACT. NOW THE CONTENTION OF THE AR IS THAT THE M ONEY HAS BEEN RECEIVED BY THE TRUST AND IF THERE IS ANY DISCREPAN CY IN THE OPERATION OF BANK ACCOUNT OF THE TRUST, ASSESSEE CA NNOT BE FAULTED. IT WAS ALSO BROUGHT TO OUR NOTICE THAT WH ILE THE ASSESSING - - ITA 528/MDS/16 15 OFFICERS REMAND REPORT DATED 14.10.2015 IT WAS STA TED THAT THE AMOUNT HAVE BEEN PAID INTO THE BANK ACCOUNTS REGIST ERED UNDER THE NAME OF M/S.MAHILA UTKARSH SANSTHAN TRUST AS EV IDENCED FROM THE LETTER DATED 19.12.2014 OF BRANCH MANAGER SBI, CAG BRACH. HOWEVER, CIT(APPEALS) PLACED RELIANCE ON THE LETTER ISSUED BY PRESIDENT MISS SONIA SHARMA THAT THE TRUS TEE HAS NOT RECEIVED THE DONATION FROM THE ASSESSEE AND THE TRU ST HAS FILED FIR WITH THE POLICE AUTHORITIES AGAINST THE IRREGUL ARITIES AND MALPRACTICES COMMITTED WITH AND IN THE NAME OF TRUS T AND ALSO COMPLAINT WAS LODGED AGAINST THE BANK MANAGER OF KO TAK MAHINDERA, KOLKOTTA. IN OUR CONSIDERED OPINION, IF THERE IS A MALPRACTICE OR MISAPPROPRIATION TAKEN PLACE IN THE TRUST FOR WHICH THE ASSESSEE CANNOT BE FAULTED AND BENEFIT U/S.35AC OF THE ACT DENIED. FURTHER, IT IS TO BE NOTED THAT SIMILAR IS SUE CAME FOR CONSIDERATION BEFORE THIS TRIBUNAL IN THE CASE OF M/S. MANGAL TECH PARK PVT. LTD. IN ITA NO.1439/MDS/2014 & 2084/ MDS/2015 FOR THE AY 2008-09. THE TRIBUNAL VIDE ITS ORDER DA TED 17.6.2016 HELD AS UNDER: 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMS THAT A SUM OF 2,25,00,000/- WAS DONATED TO - - ITA 528/MDS/16 16 THREE TRUSTS. THE ASSESSEE HAS DONATED A SUM OF 1 CRORE TO AADIVASI MAHILA VIKAS SAMIDHI. THE ASSESSEE HA S ALSO DONATED TO NANDHIGRAM SAMAJ KALYAN PARISHAD A SUM O F 75 LAKHS AND ANOTHER SUM OF 50 LAKHS WAS DONATED TO AKSHYA NAGAR PALLISIRI SANGHA. THE ASSESSING OFFICER, ON E XAMINATION, FOUND THAT THOUGH THE ABOVE THREE TRUSTS ARE GENUINE , THE BANK ACCOUNT TO WHICH THE MONEY WAS TRANSFERRED DOES NOT BELONG TO THE ABOVESAID TRUSTS. WE HAVE CAREFULLY G ONE THROUGH THE ENQUIRY REPORT FILED BY THE INSPECTOR O F INCOME TAX, JAMSHEDPUR, DATED 24.12.2010, THE COPY OF WHICH IS AVAILABLE AT PAGE 8 OF THE PAPER BOOK. FROM THE EN QUIRY REPORT, IT APPEARS THAT THE RECEIPT SAID TO BE ISSU ED BY THE SECRETARY OF AADIVASI MAHILA VIKAS SAMIDHI DOES NOT CONTAIN THE SIGNATURE OF THE SECRETARY. IN FACT, THE SECRE TARY DENIED HER SIGNATURE IN FORM 58A. THE SECRETARY HAS ALSO FURTHER CLAIMED THAT SHE NEITHER KNOWS THE ASSESSEE-COMPANY NOR RECEIVED ANY MONEY DURING THE YEAR UNDER CONSIDERAT ION. IN VIEW OF THIS SPECIFIC STATEMENT, IT APPEARS THAT THE MONEY HAS NOT REACHED AADIVASI MAHILA VIKAS SAMIDHI. THIS COPY OF THE REPORT SUBMITTED BY THE INCOME TAX INSPECTOR WAS NOT FURNISHED TO THE ASSESSEE. THE ASSESSEE, HOWEVER, ENCLOSED A COPY OF THE COMMUNICATION SAID TO BE RECEIVED BY THE DY. COMMISSIONER OF INCOME TAX, CHENNAI FROM THE DY. DIR ECTOR OF INCOME TAX (INVESTIGATION), JAMSHEDPUR. THIS COMMUNICATION CLEARLY INDICATES THAT THE BANK ACCOU NT OF THE RECIPIENT TRUST DOES NOT SHOW THE RECEIPT OF DONATION . THE DY. DIRECTOR OF INCOME TAX (INVESTIGATION), JAMSHEDP UR, HAS REPORTED TO THE DY. COMMISSIONER OF INCOME TAX, CHEN NAI, AS FOLLOWS: 1. M/S ADIVASI MAHILA VIKAS SAMITI (PAN: AAAAA 2945B) PHULDUNGRI, GHATSILA, JHARKHAND IS A GENUINE CONCERN, WHICH HAS REGISTRATION U/S 12AA/AA OF IT ACT, 1961 AND FILES ITS RETURN OF INCOME WITH THE D Y. CIT, CIRCLE -1, JAMSHEDPUR. 2. THE CHARITABLE ACTIVITIES UNDERTAKEN BY THIS SA MITI ARE ON VERY SMALL SCALE AND IN THE AREA OF FORMATION OF SELF HELP GROUPS, MANUFACTURING OF CANDLE, PREPARING TAS HAR THREAD, ETC. - - ITA 528/MDS/16 17 3. SUMMONS WERE ISSUED TO THE PRESIDENT OF THE SAM ITI, SHRI DIKU HANSDA TO PRODUCE THE BOOKS OF ACCOUNT AN D BANK STATEMENTS OF SAMITI FOR F.YS 07-08 & 08-09 AN D SMT. SUKUL HANSDA, THE THEN SECRETARY OF THE SAMITI AND HER STATEMENT WAS RECORDED. 4. VERIFICATION OF RECEIPT & PAYMENT ACCOUNT OF THE SAMITI FOR F.YR 07-08 SHOWS THAT IT HAS NOT RECEIVED ANY D ONATION FROM M/S MANGAL TECH PARK PVT. LTD. NEITHER, THE BA NK STATEMENTS OF THE SAMITI SHOWS TO HAVE RECEIVED SUC H HEAVY SMOUNTS FROM DONATION. 5. SMT. SUKUL HANSDA, THE THEN SECRETRAY OF M/S AD IVASI MAHILA VIKAS SAMITI DENIED TO HAVE RECEIVED ANY AMO UNT AS DONATION FROM M/S MANGAL TECH PARK PVT. LTD. SHE A LSO DENIED HER SIGNATURE ON THE RECEIPTS OF MONEY (FORM NO.58A) WHICH HAVE BEEN SENT TO THIS OFFICE BY YOU . 6. CONCLUSION: ADVASI MAHILA VIKAS SAMITI, PHULDUN GRI, P.O GHATSILA, DIST. SINGHBHUM, JHARKHAND HAS NOT RECEIV ED THE DONATIONS OF 1 CRORE ( 35,000 THROUGH RTGS, 30,000/- & 35,000 THROUGH DRAFTS) AS CLAIMED BY M/S MANGAL TECH PARK PVT. LTD. 10. FROM THE ABOVE, IT APPEARS THAT NO DONATION WAS RECEIVED BY AADIVASI MAHILA VIKAS SAMIDHI FROM THE ASSESSEE- COMPANY. APPARENTLY, THESE COMMUNICATIONS WERE NOT BROUGHT TO THE NOTICE OF THE ASSESSEE. THE ASSESSING OFFICER HAS OBSERVED IN THE ASSESSMENT ORDER THAT THE OUTCOME OF THE ENQUIRY WAS PUT TO SHRI BALASUBRAMANIAN, ONE OF THE DIRECTOR OF THE ASSESSE E-COMPANY. HOWEVER, IT IS NOT KNOWN WHETHER THE SAID BALASUBRAMAN IAN IS LOOKING AFTER THE AFFAIRS OF THE ASSESSEE-COMPANY O R NOT. FROM THE MATERIALS AVAILABLE ON RECORD, IT APPEARS THAT ONE SHRI - - ITA 528/MDS/16 18 VIJAYSADARANGANI, FILED THE APPEAL BEFORE THIS TRIBU NAL IN HIS CAPACITY AS DIRECTOR. IF SHRI VIJAYSADARANGANI WAS LOOKING AFTER THE DAY TODAY AFFAIRS OF THE ASSESSEE-COMPANY, THIS TRI BUNAL IS OF THE CONSIDERED OPINION THAT HE WOULD HAVE FILED THE RETU RN BEFORE THE ASSESSING OFFICER IN THE REGULAR COURSE. THEREFORE, IT IS OBLIGATORY ON THE PART OF THE ASSESSING OFFICER TO BRING TO TH E NOTICE OF THE DIRECTOR WHO IS IN-CHARGE OF THE DAY TODAY ADMINISTR ATION SO THAT HE MAY BE IN A BETTER POSITION TO REPLY OR ENLIGHTE N THE ASSESSING OFFICER WITH REGARD TO THE DONATION SAID TO BE GIVEN BY THE ASSESSEE-COMPANY. THEREFORE, THIS TRIBUNAL IS OF TH E CONSIDERED OPINION THAT IT NEEDS TO BE CLARIFIED WHO IS LOOKING AFTER THE AFFAIRS OF THE ASSESSEE-COMPANY ON DAY TODAY BASIS AT THE R ELEVANT POINT OF TIME. WHETHER SHRI BALASUBRAMANIAN OR SHRI VIJ AYSADARANGANI WAS LOOKING AFTER THE AFFAIRS OF THE ASSESSEE-COMPAN Y AT THE RELEVANT POINT OF TIME. IF SHRI BALASUBRAMANIAN WAS LOOKING AFTER THE AFFAIRS OF THE ASSESSEE-COMPANY, THEN IT HAS T O BE CLARIFIED WHETHER THE ENQUIRY REPORT FILED BY THE INCOME TAX IN SPECTOR AND THE COMMUNICATION SAID TO BE RECEIVED BY THE DY. CO MMISSIONER OF INCOME TAX, CHENNAI FROM THE DY. DIRECTOR OF INCOME TAX(INVESTIGATION), JAMSHEDPUR, WAS COMMUNICATED TO T HE ASSESSEE. THE ASSESSEE CLAIMS BEFORE THIS TRIBUNAL T HAT NO OPPORTUNITY WAS GIVEN TO IT TO CROSS EXAMINE THE SEC RETARY AND TREASURER OF THE TRUST WHO DENIED THE RECEIPT OF MONEY . THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE A SSESSING OFFICER EXAMINED THE SECRETARY AND TREASURER OF THE TRUST, AN OPPORTUNITY SHALL BE GIVEN TO THE ASSESSEE TO CROS S EXAMINE THEM TO FIND OUT WHETHER ACTUALLY THE TRUST RECEIVED THE M ONEY OR NOT. - - ITA 528/MDS/16 19 IT IS ALSO NECESSARY TO FIND OUT WHO ACTUALLY OPENE D THE BANK ACCOUNT IN AXIS BANK AT KOLKATA AND OPERATED THE SA ME. IF THE TRUSTEES OF THE SO CALLED THREE TRUSTS OPENED THE BA NK ACCOUNT IN THE NAME OF SOME OTHER PERSONS WITH CONNIVANCE OF TH E OFFICIALS OF AXIS BANK, THE ASSESSING OFFICER HAS TO FIND OUT WH AT KIND OF ACTION WAS TAKEN AGAINST THE AXIS BANK OFFICIALS AND THE TR USTEES WHO ARE RESPONSIBLE FOR OPENING THE BANK ACCOUNT. SINCE TH ESE DETAILS ARE NOT AVAILABLE ON RECORD, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE ASS ESSING OFFICER. 9. IN VIEW OF THE ABOVE BINDING ORDER OF THE CO-ORD INATE BENCH OF THIS TRIBUNAL, TAKING A CONSISTENT VIEW, WE ARE INCLINED TO REMIT THE ISSUE IN DISPUTE TO THE FILE OF THE A SSESSING OFFICER TO REEXAMINE THE ISSUE ON A SIMILAR DIRECTION AND ALS O THE CLAIM OF ASSESSEE HAS TO BE CONSIDERED AS VALID, IF IT HA S TRANSFERRED THE FUNDS TO THE BANK ACCOUNT OPENED IN THE NAME OF AN INSTITUTION WHICH WAS DULY REGISTERED U/S 35AC OF THE ACT ON THE SAID DATES OF TRANSFER OF FUNDS. FURTHER, IF THERE IS A MALPRA CTICE OR DISCREPANCIES IN THE MANAGEMENT OF THE TRUST ACCOUN T FOR WHICH THE ASSESSEE CANNOT BE RESPONSIBLE SO AS TO DENY TH E BENEFIT U/S.35AC OF THE ACT. THIS GROUND OF THE APPEAL IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. - - ITA 528/MDS/16 20 10. NEXT GROUND IS WITH REGARD TO DISALLOWANCE OF D EPRECIATION ` 1,45,35,605 ON INTANGIBLE ASSETS. 11. THE FACTS OF THE CASE ARE THAT THE ASSESSEE DUR ING THE YEAR UNDER APPEAL HAD CLAIMED DEPRECIATION OF 1,45,35,605/- ON INTANGIBLE ASSET IN THE NATURE OF LICENSE OBTAIN ED TOWARDS CARRYING ON BUSINESS AND OBTAINING MARKETING RIGHTS IN EUROPEAN COUNTRIES. THIS ALSO INCLUDES EXPENSES RELATED TO DOSSIER COST AND REGISTRATION EXPENSES/VALIDATION, ANALYSIS, EFF ICACY TRIAL ETC. WHICH ARE ESSENTIAL FOR OBTAINING REGISTRATION / LI CENSE OF THE PRODUCTS OF THE ASSESSEE IN VARIOUS COUNTRIES, APAR T FROM REIMBURSEMENT OF SIMILAR EXPENSES INCURRED BY AGENT S ON BEHALF OF THE ASSESSEE. THE AO WAS OF THE OPINION THAT TH E EXPENSES ARE IN THE NATURE OF ACQUIRING EXCLUSIVE RIGHT FOR SO MANY YEARS AND IT HAS THE SAME COLOUR OF APPRECIABILITY AND EN HANCEMENT IN ITS VALUE, TRADE UTILITY IN THE COURSE OF ITS TIME. ACCORDING TO THE AO, THE ASSESSEE COMPANY IS ACQUIRING AN ENDURING R IGHT, WHICH MAY ENHANCE FROM TIME TO TIME AS PER THEIR DOSSIER STUDIES / REPORTS AND IS NOT SQUARELY FALLING UNDER THE SPECI FIC DEFINITION OF INTANGIBLE ASSETS AS DEFINED IN THE INCOME TAX ACT. THE ASSESSEE IS INCURRING HUGE REGISTRATION CHARGES IN FOREIGN - - ITA 528/MDS/16 21 COUNTRIES TO EXPLORE THEIR MARKET IN SUCH COUNTRIES WITH LONG TERM VISION AND PROSPECTIVE OUTLOOK TO DEMONSTRATE ITS B USINESS AND STRENGTH AND THESE EXPENSES ARE NOT QUALIFIED EITHE R AS REVENUE EXPENSES OR AS DEPRECIABLE INTANGIBLE ASSETS AS CLA IMED BY THE ASSESSEE. THE REGISTRATION EXPENSE IS A CAPITAL IN VESTMENT TO CREATE A CAPITAL ASSET OF APPRECIABLE NATURE WITH E XCLUSIVE RIGHTS IN RESPECTIVE MARKETS. 11.1 FURTHER, THE LD. A.R SUBMITTED THAT SUCH REGIS TRATION FEE/LICENSE FEE GIVES RISE TO A RIGHT WHICH IS OF T HE SAME NATURE AS KNOW-HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICEN CES, AND FRANCHISES MENTIONED IN SEC.32(1)(II). FURTHER, IT WAS SUBMITTED THAT THE PHRASE OR ANY OTHER BUSINESS OR COMMERCIA L RIGHTS OF SIMILAR NATURE SHOWS THAT THE LEGISLATORS INTENDED CLAUSE (II) OF SEC.32(1) TO BE AN INCLUSIVE CLAUSE AND NOT AN EXHA USTIVE ONE RESTRICTED TO THE ASSETS SPECIFICALLY MENTIONED THE REIN. PROVIDED THE ASSET IN QUESTION GIVES RISE TO A BUSINESS OR C OMMERCIAL RIGHT WHICH IS OF SIMILAR NATURE AS THE ASSETS MENTIONED IN SEC.32(1)(II), IT WOULD BE AN ASSET ELIGIBLE FOR DE PRECIATION UNDER THAT SECTION. - - ITA 528/MDS/16 22 11.2 THE LD. AR, SUBMITTED BEFORE THE CIT(A) THAT T HE DISALLOWANCE OF DEPRECIATION MADE BY THE AO IS ERRO NEOUS AND PRAYED THAT THE DISALLOWANCE TO BE DELETED AND THE DEPRECIATION OF 1,45,35,605/- TO BE RESTORED. WITHOUT PREJUDICE T O THE ABOVE, ASSUMING WITHOUT CONCEDING THAT THE ABOVE EX PENDITURE IS NOT IN THE NATURE OF CAPITAL EXPENDITURE, IT WAS FURTHER PRAYED BY THE LD. AR THAT ALTERNATIVELY THE EXPENDITURE IN CURRED DURING THE YEAR IN CONSIDERATION, TOWARDS REGISTRATION/LIC ENSE AS MENTIONED EARLIER BE ALLOWED AS REVENUE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS OR PROFESSION UNDER SEC.37. FURTHER, THE LD. AR, SUBMITTED THAT THE BREAK-UP OF REGISTRATION EXPENSES (COUNTRY & PRODUCT WISE DE TAILS) UPTO THE F.Y. 2009-10 WILL BE SUBMITTED AT THE TIME OF HEARI NG. FINALLY, THE LD. AR PRAYED TO DELETE THE DISALLOWANCE AND RESTOR E THE DEPRECIATION OF 1,45,35,605/- CLAIMED BY THE ASSESSEE OR ALTERNATIVELY ALLOW THE EXPENDITURE INCURRED DURING THE YEAR IN CONSIDERATION, TOWARDS REGISTRATION/LICENSE AS REVE NUE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS OR PROFESSION UNDER SEC.37 OF THE ACT. - - ITA 528/MDS/16 23 12. THE CIT(APPEALS) AFTER CONSIDERING THE OBSERVAT ION OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE OBSERVED THA T THE AO HAS JUSTIFIED IN DISALLOWING THE AFORESAID DEPRECIA TION. ACCORDING TO THE CIT(APPEALS), THE AO REBUTTED ALL THE POINTS RAISED BY THE ASSESSEE IN THE ASSESSMENT STAGE. BEFORE THE CIT(A PPEALS), THE ASSESSEE HAS REITERATED MOST OF THE POINTS SUBM ITTED BEFORE THE AO AND THE CASE LAWS MENTIONED BY THE ASSESSEE ARE NOT APPLICABLE TO THE ASSESSEES CASE. THE CIT(APPEAL S) CONCURRED WITH AOS CONCLUSION, IN WHICH IT IS STATED THAT TH E ASSESSEE IS NOT ENTITLED FOR DEPRECIATION ON INTANGIBLE ASSETS. BESIDES, IT IS NOT QUALIFIED AS REVENUE EXPENDITURE AS POINTED OUT BY THE AO. ACCORDINGLY, THE CIT(APPEALS) CONFIRMED THE FINDING OF THE AO ON THIS GROUND AND DISALLOWED THE ASSESSEES CLAIM OF DEPRECIATION ON INTANGIBLE ASSETS TO THE EXTENT OF ` 1,45,35,605/-. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR OPINION, THE ASSET IS A LICENSE OBTAINED TOWARDS CARRYING ON BUSINESS WHICH GIVES RIGHT TO ACCESS MARKETING RIGHTS IN EUROPEAN COUNTRIES. AS SEEN FRO M THE FACTS OF - - ITA 528/MDS/16 24 THE CASE, IN OUR OPINION, THIS IS A BUSINESS OR COM MERCIAL RIGHT WHICH GIVES A RIGHT TO ACCESS CARRYING OF BUSINESS IN EUROPEAN COUNTRIES AND IT IS THE LICENSE OR AKIN TO LICENSE IN TERMS OF SEC.32(1)(II) OF THE ACT. THEREFORE, DEPRECIATION I S ALLOWABLE ON THE COST OF THE INTANGIBLE ASSETS. FOR THIS PURPOSE , RELIANCE WAS PLACED ON THE JUDGEMENT OF SUPREME COURT IN THE CAS E OF TECHNO SHARES AND STOCKS LTD., IN [2010] 327 ITR 32 3 (SC). ACCORDINGLY, WE DECIDE THE ISSUE IN FAVOUR OF THE A SSESSEE. 14. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 06 TH FEBRUARY, 2017 AT CHENNAI. SD/- SD/- ( ! ' . #$ ) ( $ % & ' ) DUVVURU RL REDDY ( )*+,-.+/001+.2( 3 45 /JUDICIAL MEMBER ! 4567708,9+,9:;<=;. $3 /CHENNAI, >4 /DATED, THE 06 TH FEBRUARY, 2017. K S SUNDARAM 4? @ABA / COPY TO: 1 . / APPELLANT 3. C( / CIT(A) 5. ADE F / DR 2. / RESPONDENT 4. C / CIT 6. EGH / GF