Indus Mobile Distribution Pvt. Ltd., CHENNAI V. ITO Company Ward 2(1), CHENNAI

ITA 673/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5078 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 23-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M SUBASHRI IRS
• Keywords: Reopening of assessment; Depreciation; Transfer pricing; Set aside
• Section: 143(3); 37(1); 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH : CHENNAI , , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./I.T.A. NOS.673, 674 & 675/CHNY/2018. ! ' / ASSESSMENT YEARS : 2007-08, 2008-09 AND 2009-1 0. M/S. INDUS MOBILE DISTRIBUTION PVT. LTD. NO.281, TTK ROAD, ALWARPET, CHENNAI 600 018. VS. THE INCOME TAX OFFICER, COMPANY WARD 2(1) CHENNAI. [PAN AABCI 6304D] ( / APPELLANT) ( /RESPONDENT) # $ % / APPELLANT BY : SHRI. B. RAMAKRISHNAN, C.A. &' # $ % /RESPONDENT BY : MS. M. SUBASHRI, IRS, JCIT. ( ) $ * /DATE OF HEARING : 25 03-2019 +,'! $ * /DATE OF PRONOUNCEMENT : 16-05-2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THESE THREE APPEALS HAVE BEEN FILED BY THE ASSES SEE DIRECTED AGAINST DIFFERENT ORDERS OF THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS)-13, CHENNAI (HEREINAFTER CALLED AS CIT(A )) DATED 10.11.2017, 10.11.2017 AND 22.11.2017 FOR THE ASSES SMENT YEARS 2007-08, 2008-09, AND 2009-2010. ITA NOS.673 TO 675 /2018 :- 2 -: 2. SINCE, THE IDENTICAL FACTS AND ISSUES ARE INVOLVED IN THESE APPEALS, WE PROCEED TO DISPOSE THE SAME VIDE THIS C OMMON ORDER. 3. FOR THE SAKE OF CONVENIENCE AND CLARITY, THE FACTS RELEVANT IN ITA NO.673/CHNY/2018 FOR ASSESSMENT YEAR 2007-2008 ARE STATED HEREIN. 4. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. FOR THAT THE ORDER OF THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS) IS CONTRARY TO LAW, FACTS AN C IRCUMSTANCES OF THE CASE. RE-OPENING OF ASSESSMENT:- 2. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE VALIDITY F THE RE ASSESSMENT PROCEEDINGS U/S 147 DESPITE THE ASSESSMENT ORIGINAL LY COMPLETED U/S 143(3) OF THE ACT. 3. DISALLOWANCE OF DEPRECIATION ON TRADEMARK 4. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF D EPRECIATION ON TRADE MARK AMOUNTING TO 76,12,500/- 5. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE AGREEMENT ENTER ED BETWEEN THE APPELLANT AND M/S. UNIVERCELL TELECOMMUNICATIONS INDIA (P) LTD. IS NOT A VALID AG REEMENT AS THE SAME WAS ENTERED INTO ON A POST DATED STAMP PAPER, AND THE A LL PARTIES TO THE AGREEMENT WAS A SINGLE PERSON WITHOUT CONSIDERING T HE SUBSTANCE OVER FORM I.E., THE CONSIDERATION BEING PAID AND RECORDED IN THE BOOKS OF M/S.UNIVERCELL TELECOMMUNICATIONS INDIA PRIVATE LIMITED AND THE SA ME BEING OFFERED TO TAX WHICH WAS DULY REFLECTED IN THE RETURN OF INCOME OF RESPECTIVE PARTIES. 5. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAVING ACCEPTED FRANCHISEE F E OF 0.01 % OF NET SALES AMOUNTING TO RS.3,14,847/- AS THE INCOME OF THE APPELLANT BA SED ON THE ITA NOS.673 TO 675 /2018 :- 3 -: AGREEMENT COULD NOT HAVE HAD REASON TO DISALLOW THE DEPRECIATION ON TRADEMARK WH ICH WAS ALSO BASED ON THE SAME AGREEMENT. FOR THESE GROUNDS AND SUCH OTHER GROUNDS THAT MAY B E ADDUCED BEFORE OR DURING, THE HEARING OF THE APPEAL, IT IS PRAY D THAT THE HON'BL E TRIBUNAL MAY BE PLEASED TO PASS SUCH OTHER ORDERS AS THE HON'BLE TRIBUNAL MAY DEEM FIT. 5. GROUND NO.1 RAISED BY THE ASSESSEE IS GENERAL IN N ATURE, THEREFORE DOES NOT REQUIRE ANY ADJUDICATION. LD. CO UNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT, HE WAS NOT PRESSING GROUND NO.2 ASSAILING REOPENING OF ASSESSMENT. LD. COUNSE L HAS ALSO MADE AN ENDORSEMENT TO THIS EFFECT IN THE GROUNDS OF AP PEAL. ACCORDINGLY THIS GROUND IS DISMISSED AS NOT PRESSED. 6. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT NAMELY M/S. INDUS MOBILE DISTRIBUTION PVT. LTD IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE CO MPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINESS OF WHOLESALE TRADING AND DISTRIBUTION OF MOBILE PHONES AND ACCESSORIES. THE RETURN OF INCOME FOR THE AY 2007-08 WAS FILED ON 26.10.2007 DISCLOSI NG TOTAL INCOME OF RS. 17,58,080/-, AND THE SAME WAS REVISED ON 29.10. 2013 AT A LOSS OF RS.1,01,33,182/-. AGAINST THE SAID RETURN OF INCOM E, THERE WAS NO SCRUTINY ASSESSMENT PROCEEDINGS. SUBSEQUENTLY, DU RING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2010-20 11, LD. ASSESSING OFFICER FOUND THAT THE CLAIM OF DEPRECIATION ON IN TANGIBLE ASSET WAS ITA NOS.673 TO 675 /2018 :- 4 -: NOT CORRECT AND THEREFORE INITIATED THE REASSESSME NT PROCEEDINGS BY ISSUING NOTICE U/S.148 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON 13.03.2013 TO THE APPELLANT. IN RESPONSE TO NOT ICE U/S.148 OF THE ACT, THE APPELLANT HAD FILED REPLY VIDE LETTER D ATED 11.04.2013 STATING THAT TO TREAT THE INCOME ORIGINALLY FILED AS RET URN IN RESPONSE TO NOTICE ISSUED U/S.148 OF THE ACT. SUBSEQUENTLY, ASS ESSEE HAD SOUGHT REASONS FOR REOPENING THE ASSESSMENT AND THE SAME W AS PROVIDED BY L ASSESSING OFFICER THROUGH HIS LETTER DATED 08.07.2 013. FINALLY ASSESSMENT WAS COMPLETED AT A TOTAL LOSS OF RS.57, 83,182/- BY DISALLOWING THE DEPRECIATION ON INTANGIBLE ASSETS BEING TRADE MARK ACQUIRED FROM M/S. UNIVERCELL TELECOMMUNICATIONS INDIA PVT. LTD AT A COST OF RS. 3,48,00,000/-. WHILE DENYING THE CLA IM FOR DEPRECIATION ON INTANGIBLE ASSETS, LD. ASSESSING OFFICER HAD QUE STIONED THE GENUINENESS OF AGREEMENT OF ASSIGNMENT OF TRADE MA RK RIGHT ENTERED BETWEEN THE APPELLANT AND THE M/S. UNIVERCELL TELEC OMMUNICATIONS INDIA PVT. LTD DATED 01.02.2007. THE GENUINENESS O F THE AGREEMENT IS DOUBTED ON THE GROUND THAT THE AGREEMENT WAS ON THE POST DATED STAMP PAPER WHICH IS DATED 09.07.2007 AND ALSO THE AGREEMENT IS SIGNED BY ONE SHRI. D. SATISH BABU IN ALL CAPACITI ES I.E. ASSIGNOR, ASSIGNEE AND CONFIRMING PARTY AND ALSO QUESTIONED T HE NECESSITY OF PROCURING THE TRADE MARK AND AGAIN GIVING BACK TO THE SAME PARTY FOR A CONSIDERATION OF 0.01% OF THE TURNOVER. BASED ON THESE FACTS, LD. ITA NOS.673 TO 675 /2018 :- 5 -: ASSESSING OFFICER INFERRED THAT THE TRANSACTION WE RE MALAFIDE AND DISALLOWED THE CLAIM FOR DEPRECIATION. 7. BEING AGGRIEVED BY THE LD. ASSESSING OFFICER ORDER, ASSESSEE FILED AN APPEAL BEFORE LD. COMMISSIONER OF INCOME T AX (APPEALS) CONTENDING THAT THE VERY REOPENING THE ASSESSMENT IS NOT VALID IN LAW, IN AS MUCH AS, REOPENING IS BASED ON CHANGE O F OPINION ON THE SAME SET OF FACTS WHICH ARE IN EXISTENCE AND ALSO CONTENDING THAT ASSESSING OFFICER HAD NO POWER TO QUESTION THE NECE SSITY TO ENTER INTO TRANSACTION AND ALSO FINDING FAULT WITH THE CONCLU SION REACHED BY THE ASSESSING OFFICER THAT THE TRANSACTION IS MALAFIDE AND TRANSACTION BETWEEN ASSESSEE AND M/S. UNIVERCELL TELECOMMUNICA TIONS INDIA PVT. LTD IS BASED ON IRRELEVANT MATERIAL. HOWEVER, LD. COMM ISSIONER OF INCOME TAX (APPEALS) DISMISSED THE APPEAL BOTH ON THE REOPENING AND MERITS OF THE ISSUE. 8. BEING AGGRIEVED, THE APPELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. LD. AUTHORISED REPRESENTATIVE MR. B .RAMAKRISHNAN, SUBMITTED THAT THE CONCLUSION REACHED BY THE ASSES SING OFFICER THAT IT IS AN ATTEMPT BY THE PARTIES TO CLAIM HIGHER DEPRE CIATION IN ORDER TO EVADE TAXES, IT IS BASED ON THE IRRELEVANT MATERIAL AS MUCH AS APPELLANT COMPANY HAD BEEN INCURRING LOSSES AND M/S. UNIVERC ELL TELECOMMUNICATIONS INDIA PVT. LTD IS MAKING PROFIT S. FURTHER LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT ASSESSING OFFICER AS WELL AS ITA NOS.673 TO 675 /2018 :- 6 -: LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD FAILED TO CONSIDER THE FACTS THAT THE AGREEMENT TO PURCHASE M/S. UNIVERCEL L TELECOMMUNICATIONS INDIA PVT. LTD IS REACHED ON 01. 02.2007 WHICH IS EVIDENCED BY PASSING OF THE CONSIDERATION STATEME NT IN AGREEMENT DATED 01.02.2007 AND THE ADDENDUM DATED 02.02.2007 WAS ENTERED IN ORDER TO REDUCE THE TERMS AND CONDITIONS INTO WRI TING AND TO ENSURE THE CLARITY OF THE AGREEMENT. THEREFORE, THE DATE OF THE STAMP PAPER HAS NO RELEVANCE, IN AS MUCH AS, THE SUBSTANCE OF T HE TRANSACTION REMAINING THE SAME, THEREFORE HE SUBMITTED THAT THE ORDERS OF THE LOWER AUTHORITIES CANNOT BE SUSTAINED. 9. ON THE OTHER HAND, THE LD. SR. DEPARTMENTAL REPRESE NTATIVE PLACED RELIANCE ON THE ORDERS OF LOWER AUTHORITIES. 10. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE SHORT ISSUE INVOLVED IN THIS APPEAL IS WHETHER OR NOT THE TRANSACTION OF PURCHASE OF TRADEMARK FROM ONE SHRI . D. SATISH BABU FOR A CONSIDERATION OF RS.3,48,00,000/- IS GENUINE. THERE IS NO DISPUTE THAT SHRI. D. SATISH BABU IS A OWNER OF TRADEMARK UNIVERCELL AS THE TRADEMARK UNIVERCELL IS REGISTERED UNDER THE NA ME OF SHRI. D. SATISH BABU BY THE GOVERNMENT OF INDIA AND THIS TRADEMARK WAS PURCHASED BY THE APPELLANT FOR A CONSIDERATION OF RS. 3,48,00 ,000/- , AND THE SAID CONSIDERATION WAS PAID ON 15.02.2007. LD. ASSESSING OFFICER HAD ITA NOS.673 TO 675 /2018 :- 7 -: DOUBTED THE GENUINENESS OF THE TRANSACTION PRIMARIL Y FOR FOLLOWING REASONS NAMELY:- (I) THE AGREEMENT ENTERED BETWEEN THE PARTIES ON 01.02. 2007 WAS ON STAMP PAPER WHICH IS POST DATED. (II) IT IS A DEVICE ADOPTED BY THE PARTIES TO EVAD E THE TAXES (III) THERE IS NO NECESSITY OF BUYING THE TRADE MAR K AND AGAIN ALLOWING M/S. UNIVERCELL TELECOMMUNICATIONS INDIA P RIVATE LIMITED TO USE THIS TRADEMARK FOR A CONSIDERATION O F 0.01% ON THE SALES TURNOVER. THE ASSESSING OFFICER HAD NOT DISPUTED, IN PRINCIP LE, THE ELIGIBILITY OF TRADEMARK FOR DEPRECIATION NOR THE COST OF ACQUISI TION OF TRADEMARK, BUT DISALLOWED THE CLAIM DOUBTING THE GENUINENESS O F THE TRANSACTION. NOW WE SHALL DWELL UPON EACH OF THE REASONS ASSIGN ED BY THE ASSESSING OFFICER. 11. THERE IS NO REQUIREMENT UNDER LAW THAT AN AGREEMEN T TO PURCHASE TRADEMARK SHOULD BE IN WRITING ON A STAMP PAPER. AN AGREEMENT IN WRITING IS ENTERED IN ORDER TO REDUCE THE AGREED TERMS AND CONDITIONS IN WRITING SO AS TO AVOID ANY MISUND ERSTANDING IN FUTURE. THEREFORE, THE FACT THAT THE AGREEMENT IS ENTERED ON POST DATED STAMP PAPER IS IMMATERIAL AND NOT GERMANE TO DECIDE WHETHER OR NOT TRANSACTION IS GENUINE. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT SUBSTANCE OF THE TRANSACTION IS SOMETH ING ELSE. THEREFORE THE REASONING OF THE ASSESSING OFFICER, AS WELL AS LD. COMMISSIONER OF ITA NOS.673 TO 675 /2018 :- 8 -: INCOME TAX (APPEALS) THAT THE AGREEMENT IS ENTERED ON POST DATED STAMP PAPER, TRANSACTION IS NOT GENUINE CANNOT BE S USTAINED. 12. AS REGARDS TO THE ALLEGATION THAT IT IS ADOPTED T O AVOID EVADING THE TAXES, FROM THE PERUSAL OF THE ASSESSM ENT ORDER, IT IS CLEAR THAT EVEN AFTER DISALLOWANCE OF CLAIM FOR DEP RECIATION ON THE TRADEMARK STILL THE ASSESSMENT RESULTED IN LOSSES. IT IS AN ADMITTED FACT THAT PAYEE HAD DISCLOSED THIS INCOME IN HIS HANDS AND THEREFORE THERE IS NO MOTIVE OF EVASION OF TAXES, THAT CAN BE ATTR IBUTE TO THIS TRANSACTIONS. FINALLY NECESSITY OF ENTERING INTO AG REEMENT, IT IS A SETTLED PROPOSITION OF LAW THAT IT IS NOT OPEN TO THE ASSE SSING OFFICER TO QUESTION THE NECESSITY OF INCURRING AN EXPENDITURE AND HE CANNOT STEP INTO THE SHOES OF THE ASSESSEE AS HOW TO CONDUCT T HE BUSINESS OF THE ASSESSEE. IN THIS CONNECTION, RELIANCE CAN BE PLA CED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF EASTERN INVESTMENTS LTD. VS. CIT, 20 ITR 1. RECENTLY THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. EKL APPLIANCES LTD, 345 ITR 241 AFTER REFERRING THE ABOVE SAID JUDGMENT OF SUPREME COURT, WHEREIN IT WAS HELD AS FOLLOWS: 19. THERE IS NO REASON WHY THE OECD GUIDELINES SH OULD NOT BE TAKEN AS A VALID INPUT IN THE PRESENT CASE IN JUDGI NG THE ACTION OF THE TRANSFER PRICING OFFICER. IN FACT, THE COMMISSI ONER OF INCOME-TAX (APPEALS) HAS REFERRED TO AND APPLIED TH EM AND HIS DECISION HAS BEEN AFFIRMED BY THE TRIBUNAL. THESE G UIDELINES, IN A DIFFERENT FORM, HAVE BEEN RECOGNIZED IN THE TAX J URISPRUDENCE OF OUR COUNTRY EARLIER. IT HAS BEEN HELD BY OUR COU RTS THAT IT IS NOT FOR THE REVENUE AUTHORITIES TO DICTATE TO THE A SSESSEE AS TO HOW HE SHOULD CONDUCT HIS BUSINESS AND IT IS NOT FO R THEM TO TELL ITA NOS.673 TO 675 /2018 :- 9 -: THE ASSESSEE AS TO WHAT EXPENDITURE THE ASSESSEE CA N INCUR. WE MAY REFER TO A FEW OF THESE AUTHORITIES TO ELUCIDAT E THE POINT. IN EASTERN INVESTMENTS LTD. V. CIT [1951] 20 ITR 1 (SC) IT WAS HELD BY THE SUPREME COURT THAT (PAGE 6) 'THERE ARE USUAL LY MANY WAYS IN WHICH A GIVEN THING CAN BE BROUGHT ABOUT IN BUSINESS CIRCLES BUT IT IS NOT FOR THE COURT TO DECIDE WHICH OF THEM SHOULD HAVE BEEN EMPLOYED WHEN THE COURT IS DECIDING A QUE STION UNDER SECTION 12(2) OF THE INCOME-TAX ACT'. IT WAS FURTHE R HELD IN THIS CASE THAT 'IT IS NOT NECESSARY TO SHOW THAT THE EXP ENDITURE WAS A PROFITABLE ONE OR THAT IN FACT ANY PROFIT WAS EARNE D'. IN CIT V. WALCHAND AND CO. P. LTD. [1967] 65 ITR 381 (SC), IT WAS HELD BY THE SUPREME COURT THAT IN APPLYING THE TEST OF COMM ERCIAL EXPEDIENCY FOR DETERMINING WHETHER THE EXPENDITURE WAS WHOLLY AND EXCLUSIVELY LAID OUT FOR THE PURPOSE OF BUSINES S, REASONABLENESS OF THE EXPENDITURE HAS TO BE JUDGED FROM THE POINT OF VIEW OF THE BUSINESSMAN AND NOT OF THE REV ENUE. IT WAS FURTHER OBSERVED THAT THE RULE THAT EXPENDITURE CAN ONLY BE JUSTIFIED IF THERE IS CORRESPONDING INCREASE IN THE PROFITS WAS ERRONEOUS. IT HAS BEEN CLASSICALLY OBSERVED BY LORD THANKERTON IN HUGHES (INSPECTOR OF TAXES) V. BANK OF NEW ZEALA ND [1938] 6 ITR 636 (HL) THAT 'EXPENDITURE IN THE COURSE OF THE TRADE WHICH IS UNREMUNERATIVE IS NONE THE LESS A PROPER DEDUCTION, IF WHOLLY AND EXCLUSIVELY MADE FOR THE PURPOSES OF TRADE. IT DOES NOT REQUIRE THE PRESENCE OF A RECEIPT ON THE CREDIT SID E TO JUSTIFY THE DEDUCTION OF AN EXPENSE'. THE QUESTION WHETHER AN E XPENDITURE CAN BE ALLOWED AS A DEDUCTION ONLY IF IT HAS RESULT ED IN ANY INCOME OR PROFITS CAME TO BE CONSIDERED BY THE SUPR EME COURT AGAIN IN CIT V. RAJENDRA PRASAD MOODY [1978] 115 ITR 519 (SC), AND IT WAS OBSERVED AS UNDER (PAGE 523) : 'WE FAIL TO APPRECIATE HOW EXPENDITURE WHICH IS OTHERWISE A PROPER EXPENDITURE CAN CEASE TO BE SUCH MERELY BECAUSE THERE IS NO RECEIPT OF INCOME. WHATEVER IS A PROPER OUTGOING BY WAY OF EXPENDI TURE MUST BE DEBITED IRRESPECTIVE OF WHETHER THERE IS RECEIPT OF INCOME OR NOT. THAT IS THE PLAIN REQUIREMENT OF PROPER ACCOUNTING AND THE INTERPRETATION OF SECTION 57(III) CANNOT BE DIFFERE NT. THE DEDUCTION OF THE EXPENDITURE CANNOT, IN THE CIRCUMSTANCES, BE HELD TO BE CONDI TIONAL UPON THE MAKING OR EARNING OF THE INCOME.' IT IS NOTEWORTHY THAT THE ABOVE OBSERVATIONS WERE MADE IN THE CONTEXT OF SECTION 57(III) OF THE ACT WHERE THE LANGUAGE IS SOMEWHAT NARROWER THAN THE LANGUAGE EMPLOYED IN SECTION 37(1) OF THE ACT. THIS FACT IS RECOGNISED IN THE JUDGMENT ITSELF. THE FACT THAT THE LANGUAGE EMPLOYED IN SECTION 37(1) ITA NOS.673 TO 675 /2018 :- 10 -: OF THE ACT IS BROADER THAN SECTION 57(III) OF THE A CT MAKES THE POSITION STRONGER. 20. IN THE CASE OF SASSOON J. DAVID AND CO. PVT. LT D. V. CIT [1979] 118 ITR 261 (SC), THE SUPREME COURT REFERRED TO THE LEGISLATIVE HISTORY AND NOTED THAT WHEN THE INCOME- TAX BILL OF 1961 WAS INTRODUCED, SECTION 37(1) REQUIRED THAT TH E EXPENDITURE SHOULD HAVE BEEN INCURRED 'WHOLLY, NECE SSARILY AND EXCLUSIVELY' FOR THE PURPOSES OF BUSINESS IN ORDER TO MERIT DEDUCTION. PURSUANT TO PUBLIC PROTEST, THE WORD 'NE CESSARILY' WAS OMITTED FROM THE SECTION. 21. THE POSITION EMERGING FROM THE ABOVE DECISIONS IS THAT IT IS NOT NECESSARY FOR THE ASSESSEE TO SHOW THAT ANY LEG ITIMATE EXPENDITURE INCURRED BY HIM WAS ALSO INCURRED OUT O F NECESSITY. IT IS ALSO NOT NECESSARY FOR THE ASSESSEE TO SHOW T HAT ANY EXPENDITURE INCURRED BY HIM FOR THE PURPOSE OF BUSI NESS CARRIED ON BY HIM HAS ACTUALLY RESULTED IN PROFIT OR INCOME EITHER IN THE SAME YEAR OR IN ANY OF THE SUBSEQUENT YEARS. THE ON LY CONDITION IS THAT THE EXPENDITURE SHOULD HAVE BEEN INCURRED ' WHOLLY AND EXCLUSIVELY' FOR THE PURPOSE OF BUSINESS AND NOTHIN G MORE. IT IS THIS PRINCIPLE THAT, INTER ALIA, FINDS EXPRESSION I N THE OECD GUIDELINES, IN THE PARAGRAPHS WHICH WE HAVE QUOTED ABOVE. THUS LAW IS SETTLED TO THE EXTENT THAT IT IS OUTSID E THE DOMAIN OF THE LD. ASSESSING OFFICER TO QUESTION THE NECESSITY OF INCURRING AN EXPENDITURE. THUS THE REASONS ASSIGNED BY THE ASSES SING OFFICER THAT THE TRANSACTION FOR PURCHASE OF TRADEMARK ARE NOT GENUINE CANNOT STAND TEST OF THE LAW. FURTHERMORE, IT IS AN SETTL ED PRINCIPLE OF LAW THAT INTANGIBLE ASSETS SUCH AS TRADEMARK, GOODWILL ARE A LSO QUALIFIES FOR DEPRECIATION AT PRESCRIBED RATES. THEREFORE WE DO NOT CONCUR WITH THE VIEWS OF THE LOWER AUTHORITIES IN DISALLOWING THE C LAIM FOR DEPRECIATION ON TRADEMARK. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND ALLOW THE GROUNDS OF APPEAL FILED BY THE ASSESSEE. HENCE GROUNDS OF APPEAL 3 TO 5 FILED BY THE ASSES SEE ARE ALLOWED. ITA NOS.673 TO 675 /2018 :- 11 -: 13. APPEAL OF THE ASSESSEE IN ITA NO.673/CHNY/2018 FOR ASSESSMENT YEAR 2007-08 IS PARTLY ALLOWED. ITA NOS. 674 & 675/ CHNY/2018 FOR ASSESSMENT YEARS 2008-09 & 2009-10. 14. SINCE, THE FACTS IN THE PRESENT APPEALS ARE I DENTICAL TO THE FACTS IN ITA NO.673/CHNY/2018, FOR THE REASONS MENT IONED THEREIN, WE ALLOW THE APPEALS FILED BY THE ASSESSEE ON THE SAME LINES INDICATED IN APPEAL ITA NO.673/CHNY/2018 SUPRA. HENCE, THE ABOVE CAPTIONED APPEALS FILED BY THE ASSESSEE ARE PARTY ALLOWED. 15. IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON 16 TH DAY OF MAY, 2019, AT CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( -- ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER .) / CHENNAI / / DATED:16TH MAY, 2019. KV 0- $-& *12-32'* / COPY TO: - 1 . # / APPELLANT 3. - ( 4*-56 / CIT(A) 5. 278 -& * 9 / DR 2. &' # / RESPONDENT 4. - ( 4* / CIT 6. 8:-;) / GF