DCIT 9(2), MUMBAI V. MARICO LTD ( FORMERLY KNWON AS MARICA INDUSTRIES LTD), MUMBAI

ITA 6660/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75192 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 01-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Depreciation; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Revenue expenditure; Capital expenditure
• Section: 143(3); 32; 148

Judgement Text

B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI .. , , BEFORE SHRI P.M. JAGTAP, AM AND SHRI AMIT SHUKLA, J M ./ I.T.A. NO.6660 /MUM/2012 ( / ASSESSMENT YEAR : 2006-2007 DCIT 9(2), ROOM NO. 218, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / VS. MARICO LIMITED, (FORMERLY KNOWN AS MARICO INDUSTRIES LTD.), RANG SHARDA, K.C. MARG, BANDRA RECLAMATION, BANDRA (W), MUMBAI -400 050. . / PAN : AAACM7493G ( # / APPELLANT ) .. ( $%# / RESPONDENT ) APPELLANT BY SHRI PREETAM SINGH RESPONDENT B Y : SHRI NITESH JOSHI ) * / DATE OF HEARING :06-01-2013 ) * / DATE OF PRONOUNCEMENT : 10-01-2014 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) 20, MUMBAI DATED 27-08-2012 WHEREBY HE CANCELLED TH E ASSESSMENT COMPLETED BY THE A.O. U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 TREATING THE SAME AS BAD IN LAW. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND MARKETING OF FAST MOV ING CONSUMER GOODS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATI ON WAS ORIGINALLY FILED BY IT ON 23-11-2009 DECLARING TOTAL INCOME AT NIL UNDER THE NORMAL PROVISIONS OF ITA 6660/M/12 2 THE ACT AND BOOK PROFIT AT RS. 106.20 CRORES. IN T HE ASSESSMENT ORIGINALLY COMPLETED U/S 143(3) OF THE ACT VIDE AN ORDER DATED 29-12-2009, TOTAL INCOME OF THE ASSESSEE WAS COMPUTED BY THE A.O. AT NIL U NDER THE NORMAL PROVISIONS OF THE ACT AND BOOK PROFIT AT RS. 106.20 CRORES U/S 115 JB OF THE ACT AFTER MAKING SOME ADDITIONS. THEREAFTER, THE A .O. NOTICED THAT DEPRECIATION OF RS. 12,52,86,830/- CLAIMED BY THE A SSESSEE ON TRADE MARK NIHAR ACQUIRED WAS WRONGLY ALLOWED IN THE ASSESSM ENT ORIGINALLY COMPLETED U/S 143(3) OF THE ACT AS THE SAID TRADE MARK WAS NO T REGISTERED IN THE NAME OF THE ASSESSEE. HE ALSO NOTICED THAT THE CLAIM OF TH E ASSESSEE FOR DEPRECIATION AMOUNTING TO RS. 25,80,878/- ON THE AMOUNT PAID TO HINDUSTAN LEVER LIMITED TOWARDS NON-COMPETE FEES @ 25% WAS WRONGLY ALLOWED AS THE EXPENDITURE INCURRED ON PAYMENT OF NON-COMPETE FEES SHOULD HAVE BEEN ALLOWED TO BE AMORTIZED ONLY TO THE EXTENT OF 5%. HE THEREFORE REOPENED THE ASSESSMENT AND ISSUED A NOTICE TO THE ASSESSEE U/S 148 OF THE ACT ON 28-3- 2011. DURING THE COURSE OF REASSESSMENT PROCEEDING S, ELABORATE SUBMISSIONS WERE MADE ON BEHALF OF THE ASSESSEE IN SUPPORT OF I TS CASE THAT THE DEPRECIATION ON TRADE MARK NIHAR AND NON-COMPETE FEES WAS RIGHTLY ALLOWED IN THE ASSESSMENT ORIGINALLY COMPLETED U/S 143(3) O F THE ACT AND THERE WAS NO CASE OF ANY ESCAPEMENT OF INCOME FROM THE ASSESSMEN T. THESE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE, HOWEVER, WERE NOT F OUND ACCEPTABLE BY THE A.O. WHO COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT VIDE AN ORDER DATED 30-12-2011MAKING ADDITIONS OF RS. 12,52 ,86,830/- AND RS. 25,80,878/- TO THE TOTAL INCOME OF THE ASSESSEE BY DISALLOWING ITS CLAIM FOR DEPRECIATION ON TRADE MARK NIHAR AND RESTRICTING ITS CLAIM FOR DEPRECIATION AT 25% ON NON-COMPETE FEES TO 5%. 3. AGGRIEVED BY THE ORDER OF THE A.O. PASSED U/S 14 3(3) R.W.S. 147 OF THE ACT, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) CHALLENGING THE VALIDITY OF THE SAID ASSESSMENT AS WELL AS DISP UTING THE ADDITIONS MADE THEREIN TO ITS TOTAL INCOME. DURING THE COURSE OF APPELLATE PROCEEDINGS, IT WAS ITA 6660/M/12 3 SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) THAT THE ASSESSMENT ORIGINALLY COMPLETED U/S 143(3) WAS REOPENED BY THE A.O. FOR THE FOLLOWING REASONS:- A) TO DISALLOW RS. 12,52,86,830/- BEING DEPRECIATI ON @ 12.5% (ASSET TO PUT TO USE FOR LESS THAT 180 DAYS) ON THE TRADE-MARK NIHAR ACQUIRED BY THE APPELLANT FOR RS. 1,00,22,94,642/- ON THE GROUND THAT THE BRAND/TRADEMARK OWNERSHIP DID NOT REST WITH THE APPELLANT AS IT WAS NOT REGISTERED. B) THE SECOND REASON FOR REOPENING WAS THAT APPELLA NT WAS NOT ENTITLED TO DEPRECIATION @25% ON NON-COMPETE FEES O F RS. 3,44,11,700/- PAID BY THE ASSESSEE TO HINDUSTAN LEV ER LTD. AS NON- COMPETE FEES WAS TO BE SPREAD OVER FOR A PERIOD OF FIVE YEARS AND SO TO BE ALLOWED AT 20% ONLY AND THEREBY MAKING AS ADDITI ON OF RS. 25,80,878/-. 4. IT WAS CONTENDED THAT BOTH THE ABOVE ISSUES HAD ALREADY BEEN EXAMINED BY THE A.O. DURING THE COURSE OF ORIGINAL ASSESSMEN T PROCEEDING AND THE FOLLOWING SUBMISSION IN THIS REGARD WAS MADE IN SUP PORT OF THIS CONTENTION:- A) IN THE BOOKS OF ACCOUNT, THE ASSESSEE HAD DISCL OSED ACQUISITION OF ASSIGNABLE RIGHTS RELATING TO BRAND NIHAR FROM HIND USTAN LEVER LIMITED. FURTHER, IN THE TAX AUDIT REPORT THE ABOVE ACQUISIT ION WAS SHOWN AS ADDITION TO INTANGIBLE ASSETS AND DEPRECIATION THEREON WAS C LAIMED IN THE RETURN OF INCOME. B) DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASS ESSING OFFICER HAS EXAMINED THE ISSUE OF ALLOWABILITY OF DEPRECIATION ON THE NIHAR TRADEMARK (NIHAR IPR). C) VIDE LETTER 18.12.2009, ASSESSEE SUBMITTED A DET AILED NOTE ON WHY DEPRECIATION ON TRADEMARK NIHAR ACQUIRED BY IT SH OULD BE ALLOWED. IN SUPPORT OF USER OF THE INTANGIBLE, THE APPELLANT SU BMITTED SPECIMEN COPIED OF SALES INVOICE OF THE PRODUCT SOLD UNDER IPR NIHAR IN A.Y.2006-07. IT WAS ALSO POINTED OUT DURING THE COURSE OF ASSESSMENT THAT TH E TRADEMARK ACQUIRED BY THE ASSESSEE WAS UNREGISTERED. D) THE ASSESSING OFFICER AFTER DUE CONSIDERATION OF APPELLANTS SUBMISSION AND AFTER DUE APPLICATION OF MIND HAS ALLOWED THE DEPRE CIATION OF RS.12,52,86,830/- E) THE ONLY REASON GIVEN BY THE ASSESSING OFFICER W HILE REOPENING THE ASSESSMENT IS THAT SINCE TRADEMARK WHICH IS ACQUIRE D BY THE ASSESSEE FROM HINDUSTAN LEVER LTD. IS UNREGISTERED TRADEMARK, ALL OWANCE OF DEPRECIATION IS NOT IN ORDER. ITA 6660/M/12 4 F) THE ABOVE REASON COULD NOT HAVE LED THE ASSESSIN G OFFICER TO BELIEVE THAT DEPRECIATION IS WRONGLY ALLOWED AS SECTION 32 NO WH ERE PROVIDES THAT IN ORDER TO ELIGIBLE FOR DEPRECIATION; INTANGIBLE ASSET SUCH AS TRADEMARK HAS TO BE REGISTERED. G) THE LAW THAT REGISTRATION OF A PROPERTY IS NOT R EQUIRED FOR THE PURPOSE OF CLAIMING DEPRECIATION HAS BEEN SETTLED BY THE SUPRE ME COURT IN THE CASE OF MYSORE MINERAL LTD. VS. CIT- 239 ITR. H) SUPREME COURT IN THE CASE OF TECHNO SHARES AND S TOCKS LTD. (327 ITR 323) HAS GIVEN A VERY WIDE MEANING TO THE TERM ANY OTHE R BUSINESS OR COMMERCIAL RIGHT OF SIMILAR NATURE THE SECOND REASON RECORDED BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT WAS THAT ALLOWANCE OF DEPRECIATION ON NO N-COMPLETE FEE IS NOT IN ORDER AND THAT 5% AMORTIZATION SHOULD HAVE BEEN ALL OWED. EVEN THIS REASON COULD NOT HAVE LED THE ASSESSING OFFICER TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. A) THE APPELLANT HAD CLAIMED NON COMPLETE FEES OF RS.3 ,44,11,700/- AS REVENUE EXPENDITURE SINCE PERIOD OF NON COMPETE WAS ONLY FOR A PERIOD OF FIVE YEARS. B) DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S.143 (3) THE ASSESSING OFFICER HAS SPECIFICALLY RAISED THE QUESTION AS TO WHY THE NON COMPETE FEES OF RS.3,44,11,700/- PAID TO HINDUSTAN LEVER LI MITED (HLL) SHOULD NOT BE TREATED AS CAPITAL EXPENDITURE INSTEAD OF RE VENUE AS CLAIMED BY THE APPELLANT. C) AFTER CONSIDERATION OF APPELLANTS SUBMISSIONS, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE APPELLANT TO ALLOW THE PA YMENT OF NON-COMPETE FEES AS REVENUE EXPENDITURE. HE HOWEVER HELD THAT T HE NON COMPETE FEE IS INTANGIBLE ASSET BEING BUSINESS OR COMMERCIAL RI GHT AND ALLOWED DEPRECIATION @ 12.5%(HALF OF 25% DEPRECIATION RATE APPLICABLE FOR INTANGIBLE ASSET.) D) IN THIS REGARD, WE MAY CLARIFY THAT AS STATED IN TH E REASONS ITSELF THAT THE CIT(A) HAS PASSED THE ORDER ON 09.09.2008. THE ORIGINAL ASSESSMENT U/S.143(3) WAS COMPLETED ON 29.12.2009. I.E. MORE THAN 15 MONTHS AFTER THE SAID ORDER OF CIT(A) THE SAID ORDE R OF CIT(A) WAS AVAILABLE ON THE ISSUE OF FRAMING THE ASSESSMENT U/ S.143(3) AND THEREFORE THIS CANNOT BE THE BASIS FOR ASSESSING OF FICER TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. FURTHER, FACTUAL LY, THE PAYMENT OF NON-COMPETE FEE FOR A.Y.2003-04 TO 2005-06 AND IN A .Y.2006-07 ARE FOR DIFFERENT AND INDEPENDENT TRANSACTION HAVING NO COM PANY-RELATION WITH EACH OTHER. ITA 6660/M/12 5 E) THIS IS VIEW IS IN CONFORMITY WITH DECISION OF CHEN NAI BENCH OF ITAT IN THE CASE OF REAL IMAGE TECH PVT. LTD. (120 TTJ 983) AND MADICORP TECHNOLOGIES INDIA LTD. -122 TTJ 394. 5. ON THE BASIS OF ABOVE SUBMISSION, IT WAS CONTEND ED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) THAT THE ORIGINAL AS SESSMENT U/S 143(3) OF THE ACT WAS PASSED BY THE A.O. AFTER DUE CONSIDERATION OF BOTH THE ISSUES NOTED IN THE REASONS RECORDED FOR REOPENING THE ASSESSMENT A ND SINCE THERE WAS NO NEW MATERIAL COMING TO THE POSSESSION OF THE A.O. W HICH WOULD LEAD TO THE CONCLUSION THAT THE INCOME CHARGEABLE TO TAX HAD ES CAPED ASSESSMENT, THE REOPENING WAS BASED MERELY ON A CHANGE OF OPINION. RELIANCE WAS PLACED ON BEHALF OF THE ASSESSEE ON THE FOLLOWING JUDGMENTS O F THE HONBLE BOMBAY HIGH COURT TO CONTEND THAT THE MERE CHANGE OF OPINION IN THE ABSENCE OF ANY TANGIBLE MATERIAL WAS NOT SUFFICIENT TO ASSUME JURI SDICTION U/S 147 R.W.S. 148 OF THE ACT: I) CIT VS. SHRI AMITABH BACHCHAN IN ITA NO. 4646 OF 2 010 VIDE ORDER DATED 05-07-2012. II) M/S RABO INDIA FINANCE LIMITED VS. DCIT, CIRCLE 1(3), MUMBAI & ORS. IN WRIT PETITION NO. 870 OF 2012 VIDE ORDER DATED 09-07- 2012. III) ICICI HOME FINANCE COMPANY LTD. VS. UNION OF I NDIA IN WRIT PETITION NO. 430 OF 2012 VIDE ORDER DATED 20-07-201 2. 6. THE LD. CIT(A) FOUND MERIT IN THE CONTENTION RAI SED ON BEHALF OF THE ASSESSEE ON THE PRELIMINARY ISSUE CHALLENGING THE V ALIDITY OF THE ASSESSMENT MADE U/S 143(3) R.W.S. 147 OF THE ACT AND QUASHED T HE SAID ASSESSMENT FOR THE FOLLOWING REASONS GIVEN IN PARA 3.8 OF HIS ORDE R:- I HAVE PERUSED THE ASSESSMENT ORDER AND WRITTEN S UBMISSIONS OF THE APPELLANT. THE APPELLANT HAS CHALLENGED THE ACTION OF THE ASSESSING OFFICER IN ASSUMING THE JURISDICTION U/S 147/148 AS BAD IN LAW. THE ASSESSING OFFICER HAD EXAMINED BOTH THE CLAIM IN TH E ORIGINAL ASSESSMENT PROCEEDINGS AND THERE WAS NO NEW TANGIBL E MATERIAL. IT IS SEEN THAT BOTH THE ISSUES HAVE BEEN EXAMINED AT LEN GTH BY THE ASSESSING OFFICER IN ITS ORIGINAL ASSESSMENT PROCEE DINGS. IT IS OBVIOUS THAT THE ASSESSING OFFICER HAD FORMED AN OPINION ON BOTH THE ISSUES AFTER THE APPRAISAL OF THE DETAILS CALLED AND FILED BY THE APPELLANT ON BOTH THE ISSUES. THUS, IT CANNOT BE SAID THAT THE ASSESSING OFFICER DID ITA 6660/M/12 6 NOT VERIFY THE CLAIM OF THE ASSESSEE OR DID NOT RAI SE QUERY OR ELICIT ANSWERS IN THE ORIGINAL ASSESSMENT PROCEEDINGS. SI NCE THE ASSESSING OFFICER HAD NOTICED BOTH THE CLAIMS, RAISED QUERIES AND EXTRACTED A RESPONSE FROM THE ASSESSEE AND MENTIONED THE SAME I N THE ORIGINAL ASSESSMENT ORDER, IT IS CLEAR THAT HE HAS APPLIED T HE MIND ON THESE ISSUES. A REOPENING IN THIS SITUATION IS THEREFORE CLEARLY BASED ON CHANGE OF OPINION AND NOT TO BE PERMITTED. THE RE CENT THREE DECISIONS OF THE BOMBAY HIGH COURT (CITED SUPRA) ARE DIRECTLY APPLICABLE TO THE FACTS OF THE CASE. SINCE, THESE JUDGMENTS ARE OF J URISDICTIONAL HIGH COURT HENCE BINDING ON QUASI JUDICIAL AUTHORITIES B ELOW IT. IN THE ABOVE CIRCUMSTANCES THERE IS NO OPTION TO TREAT THE REOPE NING ARE BAD IN LAW AND HENCE QUASHED. 7. KEEPING IN VIEW OF HIS DECISION ON THE PRELIMINA RY ISSUE CANCELLING THE ASSESSMENT MADE BY THE A.O. U/S 143(3) R.W.S. 147 O F THE ACT, THE LD. CIT(A) DID NOT CONSIDER IT NECESSARY TO DECIDE THE OTHER I SSUES RAISED BY THE ASSESSEE DISPUTING THE ADDITIONS MADE IN THE SAID ASSESSMENT ON MERIT. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE HAS PREFER RED THIS APPEAL BEFORE THE TRIBUNAL. 8. THE LD. D.R. SUBMITTED THAT THE ASSESSMENT U/S 1 43(3) WAS ORIGINALLY COMPLETED BY THE A.O. WITHOUT APPLYING HIS MIND TO BOTH THE ISSUES RELATING TO THE ASSESSEES CLAIM FOR DEPRECIATION ON TRADE M ARK NIHAR AS WELL AS DEPRECIATION ON NON-COMPETE FEES. HE CONTENDED THA T SUCH NON-APPLICATION OF MIND BY THE A.O. RESULTED IN ALLOWING WRONG CLAI M MADE BY THE ASSESSEE AND ESCAPEMENT OF INCOME OF THE ASSESSEE TO THAT EX TENT FROM ASSESSMENT. HE CONTENDED THAT SUCH NON-APPLICATION OF MIND BY T HE A.O. ITSELF WAS A TANGIBLE MATERIAL TO FORM THE REASON TO BELIEVE THA T THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND THE REOPENING OF ASSESSM ENT BY THE A.O. THEREFORE WAS IN ACCORDANCE WITH LAW. IN SUPPORT O F THIS CONTENTION, HE RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED VS. ADDL. CI T (WRIT PETITION NO. 502 OF 2012 DTD. JANUARY 10/11, 2013. ITA 6660/M/12 7 9. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, STRONGLY SUPPORTED THE IMPUGNED ORDER OF THE LD. CIT(A) CANCELLING THE ASSESSMENT MADE BY THE A.O. U/S 143(3) R.W.S. 147 OF THE ACT TREATING THE SAME AS BAD IN LAW. HE SUBMITTED THAT BOTH THE ISSUES RAISED BY THE A.O. I N THE REASONS FOR REOPENING HAD BEEN DULY EXAMINED IN THE ORIGINAL ASSESSMENT P ROCEEDING U/S 143(3) OF THE ACT. HE INVITED OUR ATTENTION TO THE SUBMISSIO NS MADE BEFORE THE LD. CIT(A) IN THIS REGARD AS WELL AS THE SUBMISSIONS MA DE ON BEHALF OF THE ASSESSEE BEFORE THE A.O. DURING THE COURSE OF ASSES SMENT PROCEEDING VIDE LETTER DATED 18-12-2009 TO SHOW THAT ENQUIRIES WERE MADE BY THE A.O. ON BOTH THESE ISSUES AND ONLY AFTER HAVING SATISFIED H IMSELF WITH THE SUBMISSIONS MADE BY THE ASSESSEE, THE CLAIM OF THE ASSESSEE ON BOTH THE ISSUES WAS ACCEPTED BY THE A.O. HE CONTENDED THAT BOTH THE CL AIMS OF THE ASSESSEE THUS WERE ACCEPTED/ALLOWED BY THE A.O. ON PROPER APPLICA TION OF MIND IN THE ORIGINAL ASSESSMENT AND THERE BEING NO NEW MATERIAL COMING TO THE POSSESSION OF THE A.O. AFTER THE SAID ASSESSMENT WH ICH COULD LEAD TO FORM A BELIEF ABOUT THE ESCAPEMENT OF INCOME, THE REOPENIN G OF ASSESSMENT BY THE A.O. WAS BAD IN LAW BEING BASED MERELY ON A CHANGE OF OPINION AS RIGHTLY HELD BY THE LD. CIT(A). 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE ASSESSMENT ORIGINALLY COMPLETED U/S 143(3) OF THE ACT WAS REOP ENED BY THE A.O. FOR THE FOLLOWING REASONS RECORDED BY HIM: THE ASSESSEE HAS ACQUIRED UNREGISTERED MARK NIHAR AND PENDING APPLICATIONS FOR THE REGISTRATION IN INDIA FOR A CO NSIDERATION OF RS. 39,24,00,000/- STAMP DUTY IS RS. 2,79,72,500/- AND PROFESSIONAL FEES PAID IS RS. 46,26,147/-. ACCORDINGLY UNREGISTERED TRADE MARK IS REQUIRED AND CAPITALIZED IS RS. 1,00,22,94,642/- ON WHICH DEPRECIATION @ 12.5% ALLOWED IS RS. 12,52,86,830/- WHICH IS NOT IN ORDER. 2. FURTHER, THE ASSESSEE IS MANUFACTURING FAST MOVI NG CONSUMER GOODS. THE ASSESSEE IS ALLOWED DEPRECIATION OF RS. 44,03,44,179/-. IT IS SEEN THAT THE ASSESSEE HAS PAID NON-COMPETENCE F EE OF RS. 3,44,11,700/- TO M/S HINDUSTAN LEVER LIMITED AND IN THE BOOKS OF ACCOUNTS IT IS CAPITALIZED. HOWEVER, IN THE COMPUT ATION THE ASSESSEE ITA 6660/M/12 8 HAS CLAIMED IT AS REVENUE EXPENDITURE. DURING SCRU TINY, THE ASSESSING OFFICER HELD IT AS CAPITAL EXPENDITURE UNDER THE IN TANGIBLE ASSET AND DEPRECIATION @ 25% WAS ALLOWED. IN THIS CONNECTION , IT IS POINTED OUT THAT ON SIMILAR ISSUE THE DEPRECIATION WAS DISALLOW ED AND 5% AMORTIZATION WAS ALLOWED DURING AYS 2003-04, 2004-0 5 AND 2005-06 WHICH WAS CONFIRMED BY THE CIT(A) VIDE ORDER DATED 09-09-2008. AS SUCH ALLOWANCE OF DEPRECIATION ON NON-COMPETENCE FE E PAID DURING THE YEAR IS NOT IN ORDER AND SHOULD HAVE ALLOWED 5% AMO RTIZATION. OMISSION HAS RESULTED IN EXCESS ALLOWANCE OF DEPREC IATION OF RS. 25,80,878/-. A PERUSAL OF THE REASONS RECORDED BY THE A.O. SHOWS THAT THE ASSESSMENT WAS REOPENED BY HIM ON TWO ISSUES RELATING TO ASSESSEE S CLAIM FOR DEPRECIATION ON TRADE-MARK NIHAR AND NON-COMPETE FEES PAID TO HIN DUSTAN LEVER LIMITED WHICH, ACCORDING TO THE A.O., WERE WRONGLY ALLOWED IN THE ORIGINAL ASSESSMENT. THE ASSESSEES CASE IS THAT BOTH THESE ISSUES WERE PROPERLY EXAMINED BY THE A.O. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING U/S 143(3) OF THE ACT AND ON SUCH EXAMINATION, THE SAME WERE ALLOWED BY THE A.O. AFTER APPLYING HIS MIND. IN THIS REGARD, A WR ITTEN SUBMISSION WAS MADE ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) TO SHOW HOW BOTH THESE ISSUES WERE EXAMINED BY THE A.O. DURING THE COURSE OF ASSE SSMENT PROCEEDING U/S 143(3) OF THE ACT AND THE SAME HAS ALREADY BEEN EXT RACTED BY US HEREINABOVE FROM THE IMPUGNED ORDER OF THE LD. CIT(A). THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACED ON RECORD BEFORE US A COPY OF LETTE R DATED 18-12-2009 FILED WITH THE A.O. DURING THE COURSE OF ASSESSMENT PROCE EDING U/S 143(3) OF THE ACT AND A PERUSAL OF THE SAME SHOWS THAT A DETAILED NOTE WAS FILED BY THE ASSESSEE JUSTIFYING ITS CLAIM FOR DEPRECIATION ON T HE TRADE-MARK NIHAR AND FOR DEPRECIATION ON NON-COMPETE FEES IN REPLY TO TH E ENQUIRY MADE BY THE A.O. ON THESE ISSUES. A PERUSAL OF THE ORDER PASSED BY T HE A.O. ORIGINALLY U/S 143(3) OF THE ACT ALSO SHOWS THAT THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ON NON-COMPETE FEES PAID TO HINDUSTAN LEVER LIMITED WA S ACCEPTED BY HIM AFTER PASSING A WELL DISCUSSED ORDER DULY TAKING NOTE OF THE FACT THAT THE EXPENDITURE INCURRED ON NON-COMPETE FEES IN THE EAR LIER YEARS WAS ALLOWED TO BE AMORTISED @ 5%. ALTHOUGH THERE WAS NO SUCH DISC USSION ON THE ISSUE OF ITA 6660/M/12 9 ASSESSEES CLAIM FOR DEPRECIATION ON TRADE-MARK NI HAR IN THE SAID ASSESSMENT ORDER, THE SUBMISSION MADE BY THE ASSESS EE JUSTIFYING ITS CLAIM ON THIS ISSUE VIDE LETTER DATED 18-12-09 IS SUFFICI ENT TO SHOW THAT ENQUIRY WAS MADE BY THE A.O. ON THIS ISSUE AND APPARENTLY AFTER HAVING SATISFIED WITH THE DETAILED NOTE FILED BY THE ASSESSEE JUSTIFYING ITS CLAIM FOR DEPRECIATION ON TRADE-MARK NIHAR, THE SAME WAS ALLOWED BY THE A.O . IN THE ASSESSMENT ORIGINALLY COMPLETED U/S 143(3) OF THE ACT, THE CLA IM OF THE ASSESSEE ON BOTH THESE ISSUES THUS WAS ALLOWED BY THE A.O. ON PROPER APPLICATION OF MIND WHICH CLEARLY CONSTITUTED EXPRESSION OF OPINION BY HIM ON BOTH THESE ISSUES. IN THE CASE OF EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LTD. (SUPRA) RELIED UPON BY THE LD. D.R., THERE WAS A COMPLETE FAILURE ON THE PART OF THE A.O. TO APPLY HIS MIND DURING THE ORIGINAL ASSESSMENT PROCE EDINGS TO POINTS ON WHICH ASSESSMENT WAS SOUGHT TO BE REOPENED AND THEREFORE THE REOPENING OF ASSESSMENT WAS HELD TO BE VALID BY THE HONBLE BOMB AY HIGH COURT HOLDING THAT THERE WAS TANGIBLE MATERIAL AS WELL AS REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. THE FACTS INVOLVED IN THE SAID CASE THUS WERE MATERIALLY DIFFERENT FROM THE FACTS INVOL VED IN THE PRESENT CASE AND THE RELIANCE PLACED BY THE LD. D.R. ON THE SAID CAS E IS CLEARLY MISPLACED. 11. HAVING HELD THAT BOTH THE ISSUES ON WHICH ASSES SMENT WAS SOUGHT TO BE REOPENED BY THE A.O. HAD ALREADY BEEN CONSIDERED AN D DECIDED BY THE A.O. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING BY APPLYING HIS MIND, THE NEXT ISSUE THAT IS REQUIRED TO BE CONSIDERED IS WHE THER THERE WAS ANY TANGIBLE MATERIAL WHICH HAD COME TO THE POSSESSION OF THE A. O. AFTER COMPLETION OF THE ORIGINAL ASSESSMENT TO FORM A REASON TO BELIEVE THA T THE CLAIM OF THE ASSESSEE ON THESE ISSUES WAS WRONGLY ALLOWED IN THE ORIGINAL ASSESSMENT RESULTING IN ESCAPEMENT OF INCOME FROM THE ASSESSMENT. IN THIS REGARD, IT IS OBSERVED FROM THE PERUSAL OF THE REASONS RECORDED BY THE A.O . THAT THERE WAS NO SUCH TANGIBLE MATERIAL COMING TO HIS POSSESSION THAT HAS BEEN REFERRED TO OR RELIED UPON BY HIM TO FORM A BELIEF ABOUT THE ESCAPEMENT O F INCOME AND EVEN THE LD. ITA 6660/M/12 10 D.R. HAS NOT BEEN ABLE TO DISPUTE THIS POSITION WHI CH IS CLEARLY EVIDENT FROM THE REASONS RECORDED BY THE A.O. IT IS THUS CLEAR THAT THE ASSESSMENT COMPLETED ORIGINALLY U/S 143(3) OF THE ACT WAS REOP ENED BY THE A.O. ON THE BASIS OF SAME SET OF FACTS AND SAME MATERIAL WHICH WAS AVAILABLE AT THE TIME OF COMPLETING THE ASSESSMENT ORIGINALLY U/S 143(3) OF THE ACT AND THE REOPENING THUS WAS CLEARLY BASED ON A MERE CHANGE O F OPINION WHICH IS NOT PERMISSIBLE IN LAW AS RIGHTLY HELD BY THE LD. CIT(A ) RELYING ON THE THREE DECISION OF THE HONBLE BOMBAY HIGH COURT CITED ON BEHALF OF THE ASSESSEE. WE, THEREFORE, FIND OURSELVES IN AGREEMENT WITH THE LD. CIT(A) THAT THE REOPENING OF ASSESSMENT BY THE A.O. ON THE BASIS OF A MERE CHANGE OF OPINION WAS BAD IN LAW AND THE ASSESSMENT COMPLETED IN PURS UANCE THEREOF IS LIABLE TO BE CANCELLED. ACCORDINGLY WE UPHOLD THE IMPUGNE D ORDER OF THE LD. CIT(A) AND DISMISS THIS APPEAL FILED BY THE REVENUE. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JANUARY, 2014. . ) / 0 10-01-2014 ) SD/- SD/- (AMIT SHUKLA) (P.M. JAGTAP ) JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 0 DATED [ .../ RK , SR. PS ITA 6660/M/12 11 ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $%# / THE RESPONDENT. 3. () / THE CIT(A)20, MUMBAI. 4. / CIT 9, MUMBAI 5. 5 $7 , * 7 , / DR, ITAT, MUMBAI B BENCH 6. : / GUARD FILE. / BY ORDER, %5 $ //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI