Deputy Commissioner of Income-tax, V. M/s. Finolex Cables Ltd., Pune

ITA 564/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1169 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 21-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J G PENDSE
• Keywords: Capital asset; Business income; Depreciation; Speculation loss; Revenue expenditure; Reassessment proceedings
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E , , !'!! # , $ % BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 360/PN/2014 $& ' !(' / ASSESSMENT YEAR : 2007-08 FINOLEX CABLES LIMITED, 26/27, MUMBAI-PUNE ROAD, PIMPRI, PUNE-411018 PAN : AAACF2637D ....... / APPELLANT )& / V/S. DY. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE / RESPONDENT / ITA NOS. 564 & 565/PN/2014 $& ' !(' / ASSESSMENT YEARS : 2005-06 & 2007-08 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(2), PUNE ....... / APPELLANT )& / V/S. FINOLEX CABLES LIMITED, 26/27, MUMBAI-PUNE ROAD, PIMPRI, PUNE-411018 PAN : AAACF2637D / RESPONDENT ASSESSEE BY : SHRI J.G. PENDSE REVENUE BY : SHRI RAJESH DAMOR / DATE OF HEARING : 26-08-2015 / DATE OF PRONOUNCEMENT : 31-08-2015 2 ITA NOS. 360, 564 & 565/PN/2014, A.YS. 2005-06 & 2007-08 * / ORDER PER VIKAS AWASTHY, JM : THESE ARE SET OF THREE APPEALS. ITA NO. 564/PN/2014 H AS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF I NCOME TAX (APPEALS)-V, PUNE DATED 24-12-2013 FOR THE ASSESSMENT Y EAR 2005-06. IN ITA NO. 360/PN/2014, THE ASSESSEE HAS IMPUGNED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DATED 24-12- 2013 FOR ASSESSMENT YEAR 2007-08. THE REVENUE HAS FILED CROSS A PPEAL IN ITA NO. 565/PN/2014 AGAINST THE ORDER OF COMMISSIONER OF INCO ME TAX (APPEALS) FOR THE ASSESSMENT YEAR 2007-08. 2. THE REVENUE IN BOTH THE APPEALS HAVE ASSAILED THE OR DERS OF COMMISSIONER OF INCOME TAX (APPEALS) FOR RESPECTIVE ASSESSM ENT YEARS ON ONE GROUND I.E. ALLOWING DEDUCTION U/S. 80IB OF THE INCO ME TAX ACT, 1961, FOR GOA UNIT IN RESPECT OF SALE OF SCRAP. THE ASSESSEE IN APPEAL HAS RAISED SOLITARY GROUND WHICH R EADS AS UNDER: ON FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN: 1. DENYING DEPRECIATION CLAIMED BY THE ASSESSEE FOR TH E A.Y. 2007-08 RS.1,23,11,709/- ON COMMERCIAL RIGHTS ACQUIRED BY I T IN THE PREVIOUS YEAR RELEVANT TO THE A.Y. 2005-06 UNDER INTANGIBLE ASSET S. THE CIT(A) FURTHER ERRED IN DENYING DEPRECIATION AS AFORESAID WHEN TH E DEPRECIATION CLAIMED BY THE ASSESSEE FROM A.Y. 2005-06 WAS ALLOW ED TO IT IN THE PRECEDING A.Y. 2005-06 AND A.Y. 2006-07 ON THE SAID INTANGIBLE ASSET IN THE ASSESSMENTS COMPLETED U/S. 143(3). SINCE, THE ISSUES RAISED IN THE APPEALS ARE COMMON. ALL TH E APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION. 3 ITA NOS. 360, 564 & 565/PN/2014, A.YS. 2005-06 & 2007-08 3. THE BRIEF FACTS OF THE CASE ARE : THE ASSESSEE IS A CO MPANY REGISTERED UNDER THE COMPANIES ACT AND IS ENGAGED IN M ANUFACTURING AND SALE OF INSULATED WIRES AND CABLES, OPTIC FIBER CABLES, COR RUGATED PVC, FOAM SHEETS, FINANCE, TRADING IN GOODS, LEASING ETC. THE ASSESSEE IN ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR S HAD CLAIMED DEDUCTION U/S. 80IB FOR ITS UNIT LOCATED AT GOA. IN THE C LAIM OF DEDUCTION, THE ASSESSEE HAD ALSO INCLUDED THE VALUE OF SC RAP SALE. THE ASSESSING OFFICER HELD THAT INCOME FROM SALE OF SCRAP IS NOT AN INCOME FROM SALE OF MANUFACTURED PRODUCT OR BY-PRODUCT. THEREF ORE, INCOME FROM SALE OF SCRAP CANNOT BE TREATED AS INCOME FROM INDUS TRIAL UNDERTAKING FOR THE PURPOSE OF DEDUCTION U/S. 80IB. IN ASSESSMENT YEAR 2007-08, THE ASSESSING OFFICER INTER-ALIA MADE DISALLOWA NCE OF DEPRECIATION ON INTANGIBLE ASSETS. AGGRIEVED BY THE ASSESSMENT ORDERS IN THE RESPECTIVE A SSESSMENT YEARS, THE ASSESSEE PREFERRED APPEALS BEFORE THE COMMISS IONER OF INCOME TAX (APPEALS) AGAINST THE ADDITIONS/DISALLOWANCES MA DE BY THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDERS FOR THE ASSESSMENT YEARS 2005-06 AND 2007-08 ACCEPTED THE PLEA OF ASSESSEE WITH REGARD TO DEDUCTION U/S. 80IB ON INCOME FROM SALE OF SCRAP AT GOA UNIT. WITH REGARD TO DISA LLOWANCE OF DEPRECIATION ON INTANGIBLE ASSETS, THE COMMISSIONER OF INCOM E TAX (APPEALS) UPHELD THE FINDINGS OF THE ASSESSING OFFICER. AGAINST THESE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS), BOTH, TH E REVENUE AND THE ASSESSEE ARE IN APPEAL BEFORE THE TRIBUNAL. 4. SHRI J.G. PENDSE APPEARING ON BEHALF OF THE ASSESSEE S UBMITTED AT THE OUTSET, THAT THE ISSUE RELATING TO ELIGIBILITY OF THE A SSESSEE FOR CLAIMING DEDUCTION U/S. 80IB ON INCOME FROM SALE OF SCRAP A T GOA UNIT, IS SQUARELY COVERED BY THE DECISION OF TRIBUNAL IN ASSESSE ES OWN CASE 4 ITA NOS. 360, 564 & 565/PN/2014, A.YS. 2005-06 & 2007-08 IN ITA NO. 105/PN/2007 FOR THE ASSESSMENT YEAR 2002-03 . THE TRIBUNAL HELD THAT THE ASSESSEE IS ELIGIBLE FOR CLAIMING DEDUCT ION U/S. 80IB. THIS VIEW WAS SUBSEQUENTLY FOLLOWED BY THE CO-ORDINATE BEN CH OF TRIBUNAL IN ITA NO. 1975/PN/2013 FOR ASSESSMENT YEAR 2004-05. 5. SHRI RAJESH DAMOR REPRESENTING THE DEPARTMENT FAIRLY ADMITTED THAT THIS ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN A SSESSEES OWN CASE IN ASSESSMENT YEARS 2002-03 AND 2004-05. HOWEVE R, THE LD. DR SUPPORTED THE FINDINGS OF ASSESSING OFFICER ON THIS ISSUE. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF BOTH THE SIDES AND HAVE EXAMINED THE ORDERS OF THE AUT HORITIES BELOW. WE HAVE ALSO PERUSED THE ORDERS OF CO-ORDINATE BENCH O F TRIBUNAL IN ITA NO. 105/PN/2007 FOR ASSESSMENT YEAR 2002-03 DECIDE D ON 15-07-2011 AND ITA NO. 1975/PN/2013 FOR ASSESSMENT YE AR 2004-05 DECIDED ON 29-09-2014. WE FIND THAT THE TRIBUNAL HAS ACCE PTED THE CLAIM OF ASSESSEE BY PLACING RELIANCE ON THE DECISION OF HON' BLE MADRAS HIGH COURT IN THE CASE OF M/S. FENNER INDIA LTD. REPORTE D AS 241 ITR 803. THE RELEVANT EXTRACT OF THE ORDER OF TRIBUNAL IN IT A NO. 105/PN/2007 IS AS UNDER: 27. GROUND NO. 6 RELATES TO CIT(A)'S DIRECTION TO THE A.O TO ALLOW THE DEDUCTION U/S 80-IB OF THE ACT IN RESPECT OF SCRAP GENERATED OUT OF MANUFACTURING PROCESS TREATING THE SAME AS BUSINESS INCOME. THE A.O OBSERVED THAT THE SCRAP IS NOT A BYE PRODUCT OF THE ASSESSEE AND HENCE THE SALE OF THE SAME CANNOT BE TREATED AS THE BUSIN ESS INCOME OF THE UNIT AND HENCE NOT ELIGI9BLE FOR DEDUCTION U/S 80-IB OF THE ACT. AS REGARDS THE ALTERNATIVE GROUND OF THE ASSESSEE OF TAKING NET IN COME EARNED OUT OF THE SALE OF SCRAP, THE A.O. OBSERVED THAT THE SAME IS N OT ACCEPTABLE AS THE COST RELATING TO THE SALE OF SCRAP WAS ALREADY DEBI TED TO THE P & L A/C OF THE UNIT. THE A.O ALSO DID NOT GRANT DEDUCTION U/S 80-IB IN RESPECT OF MISCELLANEOUS INCOME AMOUNTING TO RS.56,32,480/- RE LYING ON THE JUDGMENTS OF APEX COURT IN THE CASE OF PANDIAN CHEM ICALS (233 ITR 497) AND STERLING FOODS LTD. (236 AITR 529). ON APPEAL, THE CIT(A) HAS CONFIRMED THE VIEW TAKEN BY THE A.O ON THIS ISSUE. 5 ITA NOS. 360, 564 & 565/PN/2014, A.YS. 2005-06 & 2007-08 28. AT THE VERY OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE HAS MENTIONED THAT THE SAID ISSUE IS ALSO COVERED IN FA VOUR OF THE ASSESSEE BY VIRTUE OF .MADRAS HIGH COURT JUDGMENT IN THE CAS E OF M/S FENNER INDIA LTD (241 ITR 803) FOR THE PROPOSITION THAT TH E PROFIT ON SALE OF SCRAP MATERIAL SINCE HAD A DIRECT LINK OR NEXUS WITH THE INDUSTRIAL UNDERTAKING AND THEREFORE, IT IS ELIGIBLE FOR DEDUCTION U/S 80I B, CONSIDERING THE SIMILARITY IN LANGUAGE USED IN SECTIONS 80HH AND 80 IB OF THE ACT, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE SHOULD SUCCEED IN THIS REGARD ALSO. ACCORDINGLY, GROUND 3 OF THE REVENUE'S APPEAL IS DISMISSED. IN ASSESSMENT YEAR 2004-05, THE CO-ORDINATE BENCH BY FOLLOWING THE DECISION RENDERED IN ASSESSEES OWN CASE IN ASSESSM ENT YEAR 2002-03 GRANTED RELIEF TO THE ASSESSEE. 7. THE REVENUE HAS NOT BEEN ABLE TO CONTROVERT THE FIN DINGS OF THE TRIBUNAL ON THIS ISSUE. SINCE, THERE IS NO CHANGE IN FACTS AND CIRCUMSTANCES IN THE IMPUGNED ASSESSMENT YEARS, WE DO NOT FIND ANY REASON TO TAKE A DIFFERENT VIEW. ACCORDINGLY, WE UPHOLD T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE AND DISM ISS BOTH THE APPEALS OF THE REVENUE. 8. NOW, WE WILL TAKE UP THE APPEAL OF ASSESSEE. THE ASSE SSEE IN ITS APPEAL HAS IMPUGNED THE FINDINGS OF COMMISSIONER OF INCOME T AX (APPEALS) IN DENYING DEPRECIATION ON INTANGIBLE ASSETS. THE LD . AR SUBMITTED THAT THE ASSESSEE HAS SET UP A PLANT FOR MAN UFACTURING OF OPTIC FIBER CABLES. THE ASSESSEE ENTERED INTO A LONG TER M PURCHASE AGREEMENT FOR PROCUREMENT OF RAW MATERIAL (PREFORMS) FROM S HIN ETSU CHEMICAL COMPANY LIMITED, JAPAN. THE SAID PREFORMS ARE USE D IN MANUFACTURING PROCESS WHEREBY FIBRE IS DRAWN OUT OF THE S AID PERFORMS, WHICH IS THEN FURTHER USED IN MANUFACTURING OF OPTIC FIBRE C ABLES. THE PREFORM IS THE MOST CRUCIAL AND CRITICAL RAW MATERIAL REQUIRE D FOR THE MANUFACTURE OF OPTIC FIBRE CABLES. SHIN ETSU IS HAVING MOR E THAN 50% 6 ITA NOS. 360, 564 & 565/PN/2014, A.YS. 2005-06 & 2007-08 MARKET SHARE IN THE SALE OF PREFORM, WORLDWIDE. SINCE, SHIN E TSU HAD SUBSTANTIAL CONTROL OVER THE WORLD MARKET, IT BECOME THE SINGLE SOURCE SUPPLIER OF PREFORM TO THE ASSESSEE. AS PER THE LONG TER M SUPPLY AGREEMENT DATED 07-12-2000, SHIN ETSU WOULD SUPPLY 400 KGS OF PREFORMS PER MONTH FOR A PERIOD OF THREE YEARS STARTING FROM OCTOBER, 2001. THEREAFTER, ANOTHER AGREEMENT DATED 20-01-2001 WAS EXECUTED. ACCORDING TO THE SECOND AGREEMENT 200 KGS PREFORM PER MONTH WOULD BE SUPPLIED BY SHIN ETSU FOR A A PERIOD OF 5 YEARS STARIN G FROM DECEMBER, 2001. THE RATE OF PREFORM WAS MUTUALLY AGREED AT 70.5 JAPANESE YEN PER GRAM. SUBSEQUENTLY, THE PRICES OF PRE FORMS CRASHED DOWN IN THE WORLD MARKET. THE ASSESSEE PERSUADED SHIN ETSU T O REVIEW AND REVISE THE AGREED PRICES DOWNWARDS TO BRING IT IN LINE WITH THE WORLD MARKET PRICE. AN AGREEMENT FOR SUPPLY OF PREFORM A T THE REVISED RATE WAS EXECUTED TO BE EFFECTIVE FROM 15-05-2003 (ASSES SMENT YEAR 2004-05). ACCORDING TO THE SAID AGREEMENT THE ASSESSEE AGREED TO PAY LUMP SUM AMOUNT OF 285 MILLION JAPANESE YEN FOR THE UNSUP PLIED QUANTITY UNDER 200 KG AND 400 KG AGREEMENT. THE RATE OF PREFORMS WAS REVISED FROM 70.5 JAPANESE YEN TO 38 JAPANESE YEN . THE ASSESSEE AGREED TO PAY A LUMPSUM AMOUNT OF 285 MILLION JAPANESE YE N TO PROTECT ITS BUSINESS INTEREST AND SECURE SOURCE OF SUPP LY OF CRITICAL RAW MATERIAL. SINCE, THE LUMPSUM PAYMENT WAS MADE TO SECURE ADVANTAGE OF ENDURING NATURE, THE ASSESSEE TREATED THE SAME AS C APITAL IN NATURE. ACCORDINGLY, IT WAS ADDED IN THE BLOCK OF ASSETS AND DEP RECIATION WAS CLAIMED. IN THE ASSESSMENT YEARS 2004-05, 2005-06 AND 2006-07, THE REVENUE ACCEPTED THE CLAIM OF THE ASSESSEE. THE RETURN FOR THE ASSESSMENT YEARS 2004-05, 2005-06 AND 2006-07 WERE P ROCESSED U/S. 143(3). NO OBJECTION WHATSOEVER WAS RAISED BY THE ASSE SSING OFFICER ON THIS ISSUE. IN ASSESSMENT YEAR 2004-05 REASSESSMENT PR OCEEDINGS WERE INITIATED. APART FROM OTHER SUBMISSIONS, THE ASSESSEE HAD FURNISHED A NOTE ON ADDITION TO INTANGIBLE ASSET, GIVING REASONS FOR MA KING 7 ITA NOS. 360, 564 & 565/PN/2014, A.YS. 2005-06 & 2007-08 LUMPSUM PAYMENT AND CLAIMING DEPRECIATION ON THE SAME AFTE R CAPITALIZATION OF THE AMOUNT. THE ASSESSING OFFICER RAISED OB JECTION ON THE CLAIM OF DEPRECIATION ON THE SAID AMOUNT FOR THE FIRST T IME IN ASSESSMENT YEAR 2007-08. THE LD. AR OF THE ASSESSEE SU BMITTED THAT THE DEPRECIATION WAS CLAIMED ON THE WRITTEN DOWN VALUE BR OUGHT FORWARD FROM ASSESSMENT YEAR 2006-07. THE INTANGIBLE ASS ETS WERE CREATED ON ACQUISITION OF COMMERCIAL RIGHTS AND WERE CAPIT ALIZED IN ASSESSMENT YEAR 2004-05. THE DISALLOWANCE OF DEPRECIATION CANNOT BE MADE ON THE BROUGHT FORWARD WRITTEN DOWN VALUE. ONCE, T HE DEPRECIATION HAS BEEN ALLOWED AND THE ASSET HAS BEEN CO NSIDERED AS PART OF THE BLOCK, THE SAME CANNOT BE DISALLOWED IN SUBS EQUENT YEARS. THE LD. AR IN SUPPORT OF HIS SUBMISSIONS PLACED RELIANCE ON THE DECISION RENDERED IN THE CASE OF KODAK POLYCHROME GRAPH ICS (I) (P) LTD. VS. ACIT; 171 TTJ (MUMBAI) 224. 9. THE LD. DR CONTROVERTING THE SUBMISSIONS MADE ON BEHA LF OF THE ASSESSEE SUBMITTED THAT THE ENTIRE TRANSACTION IS A TRA DING TRANSACTION. NO CAPITAL ASSET HAD COME INTO EXISTENCE ON WHICH DEPREC IATION CAN BE CLAIMED. THE ASSESSEE HAS MADE PAYMENT WITHOUT ACTUAL D ELIVERY OF THE ALLEGED CAPITAL ASSET. IN FACT, THE PAYMENT MADE BY T HE ASSESSEE IS IN THE NATURE OF SPECULATIVE LOSS. AS FAR AS REASSESSMENT PROCEEDINGS ARE CONCERNED, THEY HAVE NOTHING TO DO WITH THE DISALLOWA NCE OF DEPRECIATION ON INTANGIBLE ASSET. THE LD. DR POINTED OUT T HAT A PERUSAL OF REASSESSMENT ORDER WOULD SHOW THAT THE ASSESSEE HA S ALREADY TAKEN BENEFIT OF WRITING DOWN OF INVENTORY. ALLOWING DEPRECIATION ON THE SAME WOULD AMOUNT TO DOUBLE DEDUCTION. THE LD. DR VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) AND PRAY ED FOR DISMISSING THE APPEAL OF THE ASSESSEE. 8 ITA NOS. 360, 564 & 565/PN/2014, A.YS. 2005-06 & 2007-08 10. REBUTTING THE SUBMISSIONS OF LD. DR, THE LD. AR OF THE AS SESSEE SUBMITTED THAT WRITING DOWN OF THE INVENTORY HAS NOTHING TO DO WITH THE FUTURE PRICE OF THE VITAL RAW MATERIAL. CAPITALIZATION OF THE LU MPSUM PAYMENT HAS BEEN DONE FOR FUTURE PURCHASE OF PREFORMS A T A REDUCED RATE. IT IS NEITHER SPECULATIVE LOSS NOR IT IS REVENUE EXPENDITURE. 11. WE HAVE HEARD THE SUBMISSIONS OF RIVAL SIDES AT LENGTH AND HAVE EXAMINED THE ORDERS OF THE AUTHORITIES BELOW. AS FAR AS T HE FACTS ARE CONCERNED, THE REVENUE HAS NOT RAISED ANY DISPUTE. THE ONLY POINT OF CONTENTION IS; WHETHER THE ASSESSEE IS ELIGIBLE TO CLAIM DEPR ECIATION ON THE PAYMENT OF LUMPSUM AMOUNT PAID BY ASSESSEE TO SHIN ETSU FOR THE SUPPLY OF RAW MATERIAL (PREFORM) AT THE REDUCED RATE? IT IS AN UNDISPUTED FACT THAT THE LUMPSUM PAYMENT OF 285 MILLION JAP ANESE YEN WAS MADE BY THE ASSESSEE IN THE PERIOD RELEVANT TO ASSESSMENT YEAR 2004-05 AND THE ASSESSEE HAD CAPITALIZED THE SAME IN THE VERY FIRST YEAR ITSELF. THE ASSESSEE HAD CLAIMED DEPRECIATION O N THE SAID AMOUNT IN THE ASSESSMENT YEARS 2004-05, 2005-06 AND 2 006-07. THE REVENUE HAD ACCEPTED THE CLAIM OF ASSESSEE IN EACH OF THE SAID ASSESSMENT YEARS. IN THE IMPUGNED ASSESSMENT YEAR, TH E ASSESSING OFFICER DISALLOWED THE CLAIM ON THE GROUND THAT NO CAPITAL A SSET WAS ACQUIRED BY THE ASSESSEE. NO INTANGIBLE ASSET, LIKE TECHNIC AL KNOWHOW, HAD COME INTO EXISTENCE, THEREFORE, THE ASSESSEE CANNOT CLAIM DEPRECIATION ON THE PAYMENTS MADE TO SHIN ETSU. IN THE FIRST APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THE CLAIM OF ASSESSEE WITH FOLLOWING OBSERVATIONS: 14. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE A S WELL AS REPLY OF THE APPELLANT, IN THIS CASE, UNDISPUTED FACT REMAIN S THAT THE AMOUNT IN QUESTION HAS BEEN PAID IN RESPECT OF RAW MATERIAL W HICH COULD NOT BE OBTAINED BY THE APPELLANT ON ACCOUNT OF DELAY IN SE TUP OF PLANT. THE APPELLANT DUE TO CRASH IN PRICES AND IN ORDER TO KE EP THE BUSINESS RELATIONSHIP AGREED TO PAY ON ACCOUNT OF UNSUPPLIED QUANTITY OF PREFORMS 9 ITA NOS. 360, 564 & 565/PN/2014, A.YS. 2005-06 & 2007-08 AND CLAIMS THE SAME TO BE INTANGIBLE ASSET BY WAY O F COMMERCIAL RIGHT. THIS CLAIM OF THE APPELLANT IS WITHOUT ANY MERIT AS NO RIGHT HAS BEEN ACQUIRED BY THE APPELLANT AND THE SAME WAS PAID MER ELY TO KEEP THE PURCHASE AGREEMENT ALIVE AND REDUCE THE PRICES OF P REFORMS. THEREFORE, 1 DO NOT FIND ANY INFIRMITY IN THE ORDER OF ASSESSING OFFICER, THE CLAIM OF THE APPELLANT THAT THE AMOUNT WAS PART OF WDV BROUG HT DOWN FROM EARLIER YEARS IS ALSO UNSUSTAINABLE AS WRONGLY BROU GHT DOWN WDV CANNOT BE ACCEPTED AS SACROSANCT. THEREFORE, I DO N OT FIND ANY MERIT IN THE GROUND TAKEN AND THEREFORE, THE SAME IS DISMISS ED. 12. THE ASSESSEE IN THE PERIOD RELEVANT TO ASSESSMENT YEAR 2004-05 HAD CAPITALIZED THE AMOUNT OF 285 MILLION JAPANESE YEN AND HAD CLAIMED DEPRECIATION THEREON YEAR AFTER YEAR. THIS FACT IS EVIDENT FROM THE BALANCE SHEET FILED BY THE ASSESSEE FOR THE FINANCIAL YEAR ENDING ON 31-03-2004, 31-03-2005 AND 31-03-2006. ONCE, IT HAS BE COME THE PART OF BLOCK OF ASSET ON WHICH THE DEPRECIATION HAS BEEN ALLOWED FOR THE THREE ASSESSMENT YEARS, THE DEPRECIATION CANNOT BE DENIED IN THE SUBSEQUENT ASSESSMENT YEARS ON THE WRITTEN DOWN VALUE . THE ASSET CANNOT BE TAKEN OUT OF BLOCK OF ASSETS. SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN THE CASE OF KODAK POLYCHROME GRAPHICS (I ) (P) LTD. VS. ACIT (SUPRA). THE RELEVANT EXTRACT OF THE FINDINGS OF THE TR IBUNAL ON THE ISSUE OF DISALLOWANCE OF CLAIM OF DEPRECIATION IS AS UNDER: 20. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, PERU SED THE RELEVANT FINDINGS OF THE ASSESSING OFFICER AS WELL AS THE LE ARNED COMMISSIONER (APPEALS) AND THE MATERIAL PLACED ON RECORD. IT HAS NOT BEEN DISPUTED BEFORE US THAT THE ASSETS ON WHICH THE DEPRECIATION HAS BEEN CLAIMED IN THIS YEAR ARE FORMING PART OF BLOCK OF ASSETS AND T HE WRITTEN DOWN VALUE ON SUCH ASSETS IS COMING FROM THE EARLIER YEARS. ON SUCH ASSETS, DEPRECIATION HAS BEEN ALLOWED BY THE DEPARTMENT IN THE ASSESSMENT YEAR 2000-01 AND 2002- 03 AND ALSO IN THE SUBSEQUEN T ASSESSMENT YEARS. ONCE THE DEPRECIATION HAS BEEN ALLOWED ON 'B LOCK OF ASSETS', THE SAME CANNOT BE DISALLOWED IN THIS YEAR ON THE WRITT EN DOWN VALUE. THUS, WITHOUT GOING INTO THE ASPECTS AS TO WHETHER MARKET ING DATA BASE AND FACILITY FOR USE OF NETWORK AND HUMAN RESOURCES ARE IN THE NATURE OF BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE IN THE NATURE OF INTANGIBLE ASSETS WITHIN THE MEANING OF SECTION 32(1)(II), WE SET ASIDE THE 10 ITA NOS. 360, 564 & 565/PN/2014, A.YS. 2005-06 & 2007-08 IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER ( APPEALS) AND DIRECT THE ASSESSING OFFICER TO ALLOW THE DEPRECIAT ION ON SUCH ASSETS AS IT HAS BEEN ALLOWED IN THE EARLIER YEAR AND IS PART OF 'BLOCK OF ASSETS'. CONSEQUENTLY, GROUND NO.4, RAISED BY THE ASSESSEE I S TREATED AS ALLOWED. 13. THUS, IN VIEW OF THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEPRECIATION ON T HE WRITTEN DOWN VALUE OF INTANGIBLE ASSETS IN THE IMPUGNED ASSESSMENT YEAR. THE APPEAL OF THE ASSESSEE IS ALLOWED, ACCORDINGLY. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE I.E. ITA NO. 360/PN/2014 IS ALLOWED AND BOTH THE APPEALS OF THE REVEN UE I.E. ITA NOS. 564 & 565/PN/2014 ARE DISMISSED. ORDER PRONOUNCED ON MONDAY, THE 31 ST DAY OF AUGUST, 2015. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 31 ST AUGUST, 2015 RK *+,$-.'/'(- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-V, PUNE 4. ' / THE CIT-V, PUNE 5. !*+ %%,- , ,- , . /01 , / DR, ITAT, A BENCH, PUNE. 6. + 2 34 / GUARD FILE. // ! % // TRUE COPY// #5 / BY ORDER, %6 ,1 / PRIVATE SECRETARY, ,- , / ITAT, PUNE