Dy. Commissioner of Income Tax , Circle-16(2), Hyderabad V. Astrix Laboratories Limited, Hyderabad

ITA 814/Hyd/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4968 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-10-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 02-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SIRI KUMAR
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.814/HYD/2018 ASSESSMENT YEAR: 2013 - 14 DCIT, CIRCLE - 16(2), HYDERABAD. VS. ASTRIX LABORATORIES LIMITED, HYDERABAD. PAN: AAFCA 4120 R (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K.A. SAI PRASAD REVENUE BY: SRI J. SIRI KUMAR, DR DATE OF HEARING: 03.10.2018 DATE OF PRONOUNCEMENT: 24 .10.2018 ORDER PER SMT. P. MADHAVI DEVI, J.M.: THIS IS REVENUES APPEAL FOR THE ASSESSMENT YEAR 2013 - 14 AGAINST THE ORDER OF THE CIT(A) - 4, HYDERABAD DATED 07.02.2018. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF DEDUCTION OF RS. 4,10,05,349/ - TECHNICAL KNOW - HOW AND DRUG MASTER FILES. 2. THE CIT(A) ERRED IN IGNORING THE FACT THAT THE REVENUES APPEALS ON IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR THE A.Y. 2009 - 10 IS PENDING BEFORE HONBLE HIGH COURT. 2. FROM THE GROUNDS OF APPEAL, IT IS EVIDENT THAT THE ISSUE RAISED IN THIS APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY THE 2 DECISION OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009 - 10 AND THE CIT(A) HAS FOLLOWED THE SAME FOR GRANTING RELIEF TO THE ASSESSEE . FOR TH E SAKE OF READY REFERENCE, THE RELEVANT PARAS OF THE ITAT ORDER ARE REPRODUCED HEREUNDER: - 4. LD. CIT(A) ALLOWED THE APPEAL OF ASSESSEE BY STATING AS UNDER: - 5.3. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE ASSESSMENT ORDER. THE A.O. HAS D ISALLOWED THE DEPRECIATION OF RS. 7,28,98,398/ - CLAIMED BY THE APPELLANT ON INTANGIBLE ASSETS WITH A REASON THAT BY FOLLOWING ASSESSMENT ORDER FOR THE A.Y. 2006 - 07 PASSED U/S 143(3) R.W.S 263 WHEREIN PROVISIONS OF EXPLANATION - 3 OF SECTION 43(1) OF THE IT A CT, 1961 AND ADOPTED THE VALUE OF DMFS AND TECHNICAL KNOW - HOW AS NIL IN THE HANDS OF THE ASSESSEE COMPANY STATING THAT M/S. MATRIX LABORATORIES LTD., IS MERELY IMPARTING / SHARING ITS SPECIAL KNOWLEDGE AND EXPERIENCE IN THE FILE OF MANUFACTURING, MARKETING , SELLING AND DISTRIBUTION OF THE ARVS ONLY WITHOUT ACTUAL ALIENATION OF THE PROPERTY ? RIGHTS IN THE DF \ MFS AND TECHNICAL KNOW - HOW. IN THIS REGARD, THE APPELLANTS SUBMISSIONS ARE VERIFIED AND FOUND STRENGTH IN THE APPELLANTS SUBMISSIONS. THE APPELLANT PAID THIS AMOUNT TO M/S. MYLAN LABORATORIES LTD., AND THIS WAS ALREADY DISCLOSED IN THEIR BOOKS OF ACCOUNT. FURTHER, THE ORDER OF 263 FOR THE A.Y. 2006 - 07 WAS QUASHED BY THE HONBLE ITAT VIDE ITS ORDER IN ITA NO.1306/HYD/2014 DATED 20.01.2015. FOR THE A YS 2009 - 10 AND 2010 - 11, THE HONBLE ITAT VIDE ORDER DATED 08.05.2015, HELD AS UNDER: - THE ISSUE INVOLVED IN THIS APPEAL OF THE ASSESSEE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BYU THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2009 - 10 RENDERED VIDE ITS ORDER DATED 25.03.2015 PASSED IN ITA NO.234/H/2014. A COPY OF THE SAID ORDER IS PLACED ON RECORD BEFORE US AND PERUSAL OF THE SAME SHOWS THAT THE ORDER PASSED BY THE LD. CIT U/S 263 FOR A.Y. 2006 - 07 ON THIS ISSUE WAS SET ASIDE BY THE TRIBUNAL VIDE ORDER DATED 16.01.2015 PASSED IN ITA NO. 840/HY/D 2012 AND CONSEQUENTIAL ORDER PASSED BY THE A.O. U/S 143(3) READ WITH SECTION 263 WAS ALSO TREATED BY THE TRIBUNAL AS NON - EST IN THE EYE OF LAW VIDE ITS ORDER DATED 20.01.2015 PASSED IN ITA NO .1306/HYD/2014. TAKING NOTE OF THESE DEVELOPMENTS, THE TRIBUNAL VIDE ORDER DATED 25.03.2015(SUPRA) IN ITA NO.234/H/2014, DELETED THE SIMILAR DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF ASSESSEES CLAIM FOR DEPRECIATION ON INTANGIBLE ASSETS VIDE PARAGRAPH NO.3 WHICH READS AS UNDER: 3 3.AT THE OUTSET, BOTH THE COUNSELS AGREED THAT THE ISSUES ARE COVERED. AS FAR AS THE ISSUE OF DEPRECIATION CONTESTED IN ASSESSEES APPEAL IS CONCERNED, THE ITAT VIDE ITS ORDER IN ITA NO. 840/HYD /2012 FOR THE A.Y. 2006 - 07 DATED 16.01.2015 HAS NOT UPHELD THE PROCEEDINGS U/S 263. CONSEQUENTLY, ASSESSEES CLAIM OF DEPRECIATION BECOMES ELIGIBLE AS IT IS AN INTANGIBLE ASSET ON WHICH ASSESSEE HAS CLAIMED DEPRECIATION ON WDV. IN VIEW OF THIS, WE DIRECT THE A.O. TO ALLOW THE DEPRECIATION AS CLAIMED AS IT IS ONLY A CONSEQUENTIAL CLAIM TO THE CLAIMS IN EARLIER YEARS. 8.1. THE ISSUE INVOLVED IN THE APPEAL OF THE ASSESSEE FOR THE A.Y. 2010 - 11 THUS IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIO N OF THE COORDINATE BENCH OF THIS TRIBUNAL RENDERED VIDE ORDER DATED 25.03.2015 (SUPRA) FOR A.Y. 2009 - 10 AND RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE A.O. TO DELETE THE DEPRECIATION OF RS. 9.71,97,865/ - ON INTANGIBLE ASSETS. ASSESSEES APPEAL IS ACC ORDINGLY ALLOWED. 5.4. T HEREFORE THE APPELLANTS SUBMISSIONS ARE ACCEPTED AND THEREBY RESPECTFULLY FOLLOWING THE HONBLE ITAT DECISIONS, THE APPELLANTS CLAIM OF DEPRECIATION ON INTANGIBLE ASSETS TO BE ALLOWED AND THE ADDITIONS MADE BY THE ASSESSING OFFICE R IS DELETED. 5. AGGRIEVED, REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AN IN LAW, THE CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE OF RS. 2,36,41,520/ - TOWARDS DEPRECIATION CLAIMED ON TE CHNICAL KNOW HOW AND DRUG MASTER FILES. 3. T HE ONLY GROUND RAISED BY THE REVENUE IN THIS APPEAL IS THAT IT HAS FILED AN APPEAL BEFORE THE HONBLE HIGH COURT AND SAME IS PENDING. AS THERE IS NO MATERIAL BROUGHT ON RECORD THAT THE HONBLE HIGH COURT HAS S USPENDED OR SET - ASIDE THE ORDER OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009 - 10, THE ORDER OF THE ITAT DOES NOT LOSE ITS PRECEDENTIAL VALUE. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH ON THE SAME SET OF F ACTS, WE SEE NO REASON TO INTERFERE WITH ORDER OF THE CIT(A). ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 4 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 4 PRONOUNCED IN THE OPEN COURT ON 24 TH OCTOBER, 2018. SD/ - SD/ - (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 24 TH OCTOBER, 2018 OKK COPY TO: - 1) M/S. ASTRIX LABORATORIES LIMITED, PLOT NO.564/A/22, ROAD NO.92, JUBILEE HILLS, HYDERABAD - 34. 2) DCIT, CIRCLE - 16(2), 2 ND FLOOR, B BLOCK, IT TOWERS, AC GUARDS, MASAB TANK, HYDERABAD. 3) THE CIT(A) - 2, HYDERABAD 4) THE PR. CIT - 2, HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE