ACIT 8(3)(OSD), MUMBAI V. OLYMPUS ELEVATOR P. LTD, MUMBAI

ITA 645/MUM/2011

• Counselvise Citation: 64519914 RSA 2011
• Duration Of Justice: 3 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 24-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Keywords: Depreciation

Judgement Text

` IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI . . , ! ' # $$% , & ! ' BEFORE SHRI N K SAINI, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER . : 645 / / 2011 A.Y. 2007-08 ITA NO. : 645/MUM/2011 (ASSESSMENT YEAR: 2007-08) DY. CIT CIR. 8(2), R. NO. 216-A, AAYAKAR BHAVAN, M K ROAD, MUMBAI -400 020 VS M/S OLYMPUS ELEVATOR PVT LTD, PRAMUKH PLAZA, GROUND FLOOR, CARDINAL GRACIOIUS ROAD, CHAKALA, ANDHERI (EAST), MUMBAI -400 099 PAN: AAACO 7123 P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.L. PERUMAL RESPONDENT BY : NONE /DATE OF HEARING : 13-02-2014 / DATE OF PRONOUNCEMENT : 13-02-2014 * O R D E R . . , . . : PER N K SAINI, AM: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER D ATED 24 TH SEPTEMBER, 2010 OF CIT(A) -17, MUMBAI. FOLLOWING GROUNDS HAV E BEEN RAISED IN THIS APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT DEPRECIATION ON INTANGIBLE ASSETS OF RS. 39.24 CRORES IS ALLOWABLE, WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RELYING ON THE DECISION OF THE HONBLE ITAT C BENCH MUMBAI IN ITA NO. 465/M/09 DATED 17/12/2009, WITHOUT IDENTIFYING WHICH T YPE OF INTANGIBLE ASSETS HAVE BEEN ACQUIRED BY THE ASSESSEE BECAUSE ON LY ASSETS MENTIONED IN SECTION 33(1)(II) ARE ELIGIBLE FOR DEPRECIATION AND NO OTHER INTANGIBLE ASSET IS ELIGIBLE. M/S OLYMPUS ELEVATOR PVT LTD ITA 645/MUM/2011 2 2. FROM THE ABOVE GROUNDS IT IS GATHERED THAT ONLY GR IEVANCE OF THE DEPARTMENT RELATES TO THE DEPRECIATION ON INTANGIBLE ASSETS OF RS.39 .24 CRORES. 3. THE FACTS OF THE CASE IN BRIEF ARE THAT, THE ASSESSEE FILED THE RETURN OF INCOME ON 31.10.2007, DECLARING TOTAL INCOME OF RS . NIL. THE SAID RETURN WAS PROCESSED U/S 143(1) OF THE INCOME- TAX ACT, 1961 (HEREINAFTER REFERRED TO AS AN ACT) ACCEPTING THE RETURNE D INCOME. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY. THE A O, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASKED THE ASSESSEE T O SHOW CAUSE AS TO WHY THE DEPRECIATION CLAIM OF RS. 5,10,91,347/- IN THE RETURN OF INCOME ON ACCOUNT OF MAINTENANCE, GOODWILL ETC SHOULD NOT B E DISALLOWED. SINCE THERE WAS NO EXPLANATION FURNISHED BY THE ASSESSEE, THE AO DISALLOWED THE DEPRECIATION AS WAS DONE IN THE ASSESSMENT Y EAR 2005-06. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFOR E THE LD. CIT(A) AND SUBMITTED THAT THE ITAT VIDE ORDER DATED 17.1 2.2009 FOR THE AY 2005-06 FOUND THE CLAIM OF THE ASSESSEE IN ORDER. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DI RECTED THE AO TO WORK OUT THE DEPRECIATION FOR THIS YEAR AFTER GIVING EFFECT FOR THE ASSESSMENT YEAR 2005-06. NOW, THE DEPARTMENT IS IN APPEAL. 5. THE LD. DR SUPPORTED THE ORDER OF THE AO AND FURTHE R SUBMITTED THAT THIS ISSUE WAS TO BE VERIFIED BY THE AO AS TO WHETH ER THE ITAT HAS ALLOWED THE CLAIM OF THE ASSESSEE. ON BEHALF OF THE ASSESSE E, NOBODY WAS PRESENT. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR AND C AREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT APPEARS THAT A SIMILAR ISSUE HAVING IDENTICAL FACTS HAS BEEN DECIDED IN FAVOUR OF TH E ASSESSEE BY THE ITAT VIDE ORDER DATED 17.12.2009 AND THE RELEVAN T PORTION OF M/S OLYMPUS ELEVATOR PVT LTD ITA 645/MUM/2011 3 THE SAID ORDER HAS BEEN REPRODUCED BY THE LD. CIT(A) IN PARA 6.1 OF THE IMPUGNED ORDER, WHICH READ AS UNDER: WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PAR TIES AND PERUSED THE RECORD. IT IS RELEVANT TO MENTION THAT A SPECIFIC QUERY RAISED BY THE BENCH TO LEARNED REPRESENTATIVES OF THE PARTIES WHETHER ANY APPEAL IS FILED BY THE REVENU E AGAINST THAT ORDER OF THE CIT(A). THE LEARNED REPRESENTATIVE OF THE PARTIES SUBMIT TED THAT REVENUE DID NOT FILE ANY APPEAL ON THIS ISSUE. SINCE THE REVENUE IS NOT IN APPEAL AND ONLY THE ASSESSEE IS IN APPEAL, THEREFORE, THE ISSUE TO BE EXAMINED IS A LIMITED ONE I.E. WHETHER THE CIT(A) HAS CORRECTLY TAKEN THE FIGURE OF INTANGIBLE ASSETS OF RS.2 ,90,89,225/- AS AGAINST THE ASSESSEES CLAIM AT RS. 39.24 CRORES. ON PERUSAL OF DE TAILS, WE FIND THAT THE ASSESSEE HAS PAID RS. 36.5 CRORE TOTAL CONSIDERATION OUT OF WHICH RS. 3.5 CRORE WAS PAID IN SUBSEQUENT YEAR. THE TOTAL LIABILITIES TAKEN WERE RS.33, 15,88,264/-. IT MEANS THAT TOTAL OUT FLOW OF THE FUNDS IN CASE OF A ASSESSEE WAS RS. 69,65,88,264/-, WHICH IS DETAILED AS UNDER: AMOUNT PAID BY THE ASSESSEE RS. 36,50,00,000 TOTAL LIABILITIES RS. 33,15,08,264 ------------------------- RS.69,65,88,264 ============= AGAINST THE TOTAL CONSIDERATION OF RS. 69,65,88,264/-, T HE ASSESSEE RECEIVED TOTAL FIXED AND CURRENT ASSETS INCLUDING GOODWILL RS. 30,41,82,799/- W HICH IS DETAILED AS UNDER:- CURRENT ASSETS RS. 29,84,65,789 FIXED ASSETS RS. 24,44,986 GOOD WILL RS. 32,72,024 ------------------------- RS.30,41,82,799 ============== THE CLAIM OF THE ASSESSEE IS THAT THE BALANCE AMOUNT O F RS. 39,24,05,465/- (RS 69,65,88,264/- (-) RS 30,41,82,799/-) WERE PAID AGAINS T INTANGIBLE ASSETS WHICH IS SUBJECT TO DEPRECIATION. WE FIND THAT THE CIT(A) HAS C ALCULATED THE AMOUNT OF INTANGIBLE ASSETS IGNORING THE LIABILITIES TAKEN BY THE ASSESSEE, T HEREFORE, THAT CALCULATION OF THE CIT(A) IS NOT CORRECT. THE CORRECT CALCULATION OF FIGURE IS RS. 39,24,05,465/-. WE, THEREFORE, MODIFY THE ORDER OF CIT(A) BY TAKING THE F IGURE OF SO CALLED INTANGIBLE ASSETS FOR RS. 39,24,05,465/- INSTEAD OF RS 2,90,89,225/- AS TAKEN BY THE CIT(A) WITH THIS MODIFICATION, THE ORDER OF CIT(A) IS CONFIRMED. 7. SINCE THE VIEW TAKEN BY THE LD. CIT(A) IS IN ACCORDANCE WITH THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR AY 2005- 06 VIDE ORDER DATED 17.12.2009 AND THE AO HAD ALSO MADE DISALLOWANCE ON LY ON THE BASIS OF HIS ORDER FOR THE AY 2005-06, HOWEVER THE SAID V IEW TAKEN BY THE AO HAS BEEN REVERSED BY THE ITAT. THEREFORE, WE DO NOT SEE ANY MERIT IN THE APPEAL OF THE DEPARTMENT. M/S OLYMPUS ELEVATOR PVT LTD ITA 645/MUM/2011 4 8. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 13 TH OF FEBRUARY 2014. SD/- SD/- ( # $$% ) ( . . ) ! ! (SANJAY GARG) (N K SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATE: 13 TH FEBRUARY, 2014 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) ! ! ' (#) - 17, %&' / THE CIT(A) -17, MUMBAI. 4) ! ! ' -8, %&' / THE CIT 8, MUMBAI, 5) #() * , ! * , %&' / THE D.R. C BENCH, MUMBAI. 6) ), - COPY TO GUARD FILE. !./0 / BY ORDER / / TRUE COPY / / [ 1/ 2 &3 ! * , %&' DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *562 .. * CHAVAN, SR. PS