DCIT, Kakinada V. Arthos Breweries Ltd, Ramachandrapuram

ITA 76/VIZ/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7241 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 05-01-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 13-02-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Keywords: Depreciation; Revenue expenditure; Capital expenditure; Set aside
• Section: 32

Judgement Text

ITA NO.76/VIZ/09 ARTHOS BREWERIES LTD., RAMACHANDRAPURAM IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 76 /VIZAG/ 20 09 ASSESSMENT YEAR : 2002 - 03 DCIT CIRCLE - 1 KAKIN ADA ARTHOS BREWERIES LTD RAMACHANDRAPURAM (APPELLANT) VS. (RESPONDENT) GIR NO.A - 11 APPELLANT BY: SHRI D.S. SUNDER SINGH, SR. DR RESPONDENT BY: SHRI G.V.N. HARI, CA ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER : - THIS APPEAL IS PREFERRED BY THE RE VENUE AGAINST THE ORDER OF THE CIT(A) ON A SOLITARY GROUND WHICH IS AS UNDER: THE LEARNED CIT(A) ERRED IN ALLOWING ROYALTY & TECHNICAL KNOW - HOW FEES PAD TO THE TUNE OF RS.30,48,953/ - WHICH WAS RIGHTLY TREATED BY THE ASSESSING OFFICER AS CAPITAL EXPENDITUR E AND IN THE LIGHT OF AMENDMENT TO SECTION 32 OF THE I.T. ACT WITH EFFECT FROM 1.1.1999 WHERE IN THE KNOW - HOW, PATENTS, COY RIGHTS, TRADE MARKS, LICENSES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE ACQUIRED ON OR AFTER 1.4.1998 ARE TREATED AS INTANGIBLE ASSETS. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 1992 - 93 TO 1995 - 96 IN WHICH THE TRIBUNAL HAS TREATED THIS EXP ENDITURE TOWARDS ROYALTY AND TECHNICAL KNOW - HOW AS REVENUE EXPENDITURE. COPY OF THE TRIBUNAL ORDER IS PLACED ON RECORD. 3. THE LD. D.R. ON THE OTHER HAND HAS ALSO INVITED OUR ATTENTION TO THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 1998 - 99 TO 200 1 - 02 WITH THE SUBMISSION THAT WHILE ADJUDICATING THIS ISSUE, THE TRIBUNAL HAS OBSERVED THAT BY VIRTUE OF AMENDMENT U/S 32 OF THE I.T. ACT, THE INTANGIBLE ASSETS LIKE ROYALTY AND KNOW - HOW ARE ALSO ELIGIBLE FOR DEPRECIATION. THEREFORE, THE EXPENDITURE IN CUR RED TOWARDS THEM IS A CAPITAL EXPENDITURE AND IN THE LIGHT OF ITA NO.76/VIZ/09 ARTHOS BREWE RIES LTD., RAMACHANDRAPURAM 2 THESE FACTS, THE TRIBUNAL HAS RESTORED THE MATTER TO THE FILE OF THE A.O. WITH THE DIRECTION TO EXAMINE THIS ISSUE AFRESH IN THE LIGHT OF THE AMENDMENTS BROUGHT IN SECTION 32 OF THE ACT. A COPY OF THE TRIBUNALS ORDER IS ALSO PLACED ON RECORD. WHILE DEALING WITH THE ISSUE, THE TRIBUNAL HAS FOLLOWED THE ORDER OF THE TRIBUNAL FOR THE YEAR 1998 - 99 BEFORE THE AMENDMENT BROUGHT IN SECTION 32 OF THE ACT. NOW THE IMPUGNED ASSESSMENT YEAR IS 2002 - 03. THEREFORE, THIS ISSUE REQUIRES A FRESH ADJUDICATION BY THE A.O. IN THE LIGHT OF THE ORDER OF THE AMENDMENT IN SECTION 32 OF THE ACT FOLLOWING THE ORDER OF THE TRIBUNAL FOR A.Y. 1999 - 2000 TO 2000 - 01. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY P ERUSED THE ORDER OF THE AUTHORITIES BELOW AND THE ORDER OF THE TRIBUNAL AND WE FIND THAT IDENTICAL ISSUE WAS RAISED BEFORE THE TRIBUNAL IN A.Y. 1998 - 99 TO 2001 - 02 AND TRIBUNAL HAS TAKEN A COGNIZANCE OF THE EARLIER ORDER OF THE TRIBUNAL AND THE AMENDMENTS B ROUGHT IN SECTION 32 OF THE ACT AND KEEPING IN VIEW OF THESE FACTS, THE TRIBUNAL HAS REMITTED THE MATTER BACK TO THE A.O. FOR RE - ADJUDICATION OF THE ISSUE IN THE LIGHT OF AMENDMENTS BROUGHT IN SECTION 32 OF THE ACT. SINCE THE TRIBUNAL HAS TAKEN A PARTICUL AR VIEW IN A SIMILAR SET OF FACTS, WE FIND NO REASON TO TAKE A CONTRARY VIEW. WE , ACCORDINGLY , FOLLOWING THE SAME , SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE A.O. WITH THE DIRECTION TO RE - ADJUDICATE THE ISSUE AFRESH IN THE LIGHT OF AMENDMENT BROUGHT IN SECTION 32 OF THE I.T. ACT. 5 . IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 2.2 .20 1 1 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBE R JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 2 ND FEBRUARY , 20 1 1 ITA NO.76/VIZ/09 ARTHOS BREWE RIES LTD., RAMACHANDRAPURAM 3 COPY TO 1 DCIT CIRCLE - 1, KAKINADA 2 M/S. ARTHOS BREWERIES LTD., NEAR CHANDANA BROTHERS, MAIN ROAD, KAKINADA 3 THE CI T, RAJAHMUNDRY 4 THE C IT (A) , RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM