M/s EAC Industrial Ingredients India P. Ltd., New Delhi V. DCIT, New Delhi

MA 215/DEL/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2711 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-09-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-08-2022
• Assessment Year: 2006-2007
• Appeal Filed On: 08-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 32; 201; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’, NEW DELHI Before Sh. Kul Bharat, Judicial Member Dr. B. R. R. Kumar, Accountant Member MA No. 215/Del/2018 (in ITA No. 1801/Del/2011 : Asstt. Year : 2006-07) EAC Industrial Ingredients India P. Ltd., B-174, First Floor, West Patel Nagar, New Delhi Vs DCIT, Circle-11(1), New Delhi (APPELLANT) (RESPONDENT) PAN No. AABCE5086G Assessee by : None Revenue by : Sh. Amit Shukla, Sr. DR Date of Hearing: 05.08.2022 Date of Pronouncement: 23.09.2022 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The Miscellaneous Application has been filed by the assessee arising out of the order in ITA No. 1801/Del/2011 vide order dated 28.12.2017. 2. The MA of the assessee is as under: “MA Y I T P L EAS E YO UR H O N OUR S Pres ent Mi s c ell an eous Ap pli cat ion, i s bei ng f il ed in v okin g pow ers v est ed Secti on 2 54(2 ) of the In c om e T ax A ct , 1961 ( “th e Act”) an d requ esting for app rop ria t e m odif ic ati on of d irect i ons / rect ifi c ati on of a ppa rent mi sta k e on rec ord in ord er dat ed 28 .1 2. 201 7 p as s ed b y th e Hon ’b le In c om e Ta x App ell at e T ri bunal a t Del hi, “B ”- B ench (“T ribuna l” or “ I TAT ”) b ea ri ng I TA N o. 180 1 /D el /201 1 (c op y of I TA T ord er d at ed 28 .12 .20 1 7 is enc l os ed in “Ann exu re A”) , rec ei v ed b y th e R esp ond ent s on 0 5. 01. 2018 , d et ail s of whi ch a re as foll ow s : MA No. 215/Del/2018 EAC Industrial Ingredients India Pvt. Ltd. 2 1. Dep a rtm en t had rais ed g round s b ef ore th e H on ’bl e I nc om e Ta x App ell at e T ribun al ( “I TA T”) , int er a lia , obj ectin g t o all owan c e of d educ ti on of R s. 44 ,7 8, 750 by Ld . C omm is si on er of In c om e Ta x ( App ea ls ) (herein af t er ref erred to a s “ Ld . CI T( A)”) all ow ing d ep reciat i on of n on - c omp ete f ees un der Secti on 3 2 of th e Ac t. 2. That Ap pli can t/R esp ond ent c om m enc ed its op erat i ons on pu rcha s e of the trading a rm of Nit rex Ch emi cal I ndia Lim it ed ( ‘Nit rex’) at a t ota l c ons id erat i on of Rs . 244.0 6 mill ion as a going c on cern on s lump s al e ba si s vid e Bu sin es s T ra nsf er Ag reem ent (‘B TA ’) dat ed 14th Oct ob er 2 005 , ent ered int o b et w een EA C S inga pore an d Nit rex . T h e ag reemen t contain ed a non- c om p et e c la us e, h ow ev er n o s peci fi c va lu e wa s a s sign ed a s n on- c omp ete f ees . N on -c om p et e f ees w as d et ermin ed s epa rat ely by w ay of valu ati on of In tangi ble a s s et s at R s. 3 5.8 3 mill ion out of the s lump sal e c ons id erat i on of Rs . 244 .06 mill i on, app lic ant/ respond ent s ought d edu cti on on th e valu e of non-c om p et e f ees , a s non- c omp et e f ees is an in tangi bl e as s et a cq ui red b y the appl ic ant/ res pon dent in th e na ture of v a ri ous c om m erci al and bu s ines s ri ght s m enti oned und er S ecti on 32(1)( ii) of th e Act . 3. L d. A s s ess ing O f f ic er (“ Ld . A O” ) vid e ord er dat ed 10 .12 . 2008 di s all ow ed ded uct i on on th e ground th at n o int angibl e a s s et has been c reat ed in fa v our of th e ap pli c ant/ res p ond ent a s busin es s of appli c a nt is sp ecial iz ed in natu re and th ere a re n ot man y ot her pla y ers wh o c a n ent er int o it s busin es s bec aus e of it s c ompl exit y, ( c op y of ord er dat ed 10 .12 .2 008 i s en cl os ed a s “Ann ex ure B ”) 4. App lic ant/ resp onden t fil ed an a p peal b ef ore th e C om mi ss i on er of Inc om e Ta x (App eal s) (“ Ld . C IT( A)” ) in t er-a lia c ontesting: a. G round N o. 4: Tha t on th e f act s and c ircum st an ces of th e ca s e a nd in la w, th e A s s es si ng O f fi c er ha s erred in di s all owing d eprecia ti on under s ec ti on 32 of the A ct a m ountin g to Rs 4 4, 78 ,75 0 on non- c omp ete f ees p aid a s a result of ac qui si tion of runni ng bus i nes s f rom Nit rex Ch emi c al Indi a Ltd . MA No. 215/Del/2018 EAC Industrial Ingredients India Pvt. Ltd. 3 b. G round N o. 4 .1: Th at on th e fa ct s and in ci rcu mst anc es of th e ca s e and in law , th e As s es si ng O ff ic er ha s erred in ob s ervin g that the as s ess e ha s n ot a cq uired a ny int angibl e a s s et out of t h e p a ym ent . c. G round N o. 4. 2: Th at on th e fa ct s and in th e c ircu ms tan c es of th e ca s e an d in l aw , t he A s s ess ing Of fi c er ha s erred in di s rega rd ing alt ernati v e cla im of th e Ap p ell ant reg arding t reatment of n on- c omp ete f ees as rev enu e exp en ditu re on th e ba si s of S ma rt ch em T ech nol ogi es Ltd . v . I T O [ 97 T TJ 8 18] (I TA T A hma dabad) (2 006) d. G round N o. 4. 3: Th at on th e fa ct s and in th e c ircu ms tan c es of th e ca s e and in l aw , th e A ss es sing offi c er has erred in di s reg arding th e alt ernati v e cl aim of th e Ap p ellan t t o t rea t th e n on-c omp et e f ees a s def erred rev en ue exp endi tu re su bj ec t to a t otal limit of 5 y ea rs on the b asi s of d eci si on of Ad st eam Ag en c y (Indi a) Lt d. v. DC IT , [20 07] 16 S OT 41 4( MUM ). 5. Ld . CI T(A) , vid e ord er dat ed 01 .0 2. 201 1, h eld that th e n on c omp et e f ee is an int angibl e a s s et simi la r in natu re to th e ot her bu sin es s or c om m erci al right s m enti on ed in S ecti on 32(i)( ii) and th eref ore d ep reci ati on is all owab l e on p ay men t of non c om p et e f ee. Ac c ordingl y , a dditi on mad e f or Rs . 44 , 78, 750 wa s direct ed t o b e d el et ed . Th e C IT (A) als o h el d that sin c e g round s 4 and 4 .1 were a l low ed in fa v ou r of app li cant/ resp on dent , g roun ds 4. 2 and 4 .3 w ere not requi red t o b e adjudi ca ted up on . ( Copy of CI T( A) ord er dat ed 01 .0 2. 201 1 i s en cl os ed i n “Ann exu re C") 6. During th e cours e of h ea ri ng b ef ore H on’ bl e T ribunal , appli cant sub mitt ed th at Ld CI T(A) , wh il e pa s si ng ord er da t ed 01 . 02. 201 1 did n ot adjudi ca te u p on G round s 4 .1 4 .2 an d 4.3 wh erein th e Appli cant h ad sub mitt ed that t h e Ld . A O erred in ob s ervin g tha t th e a s s es s ee h ad n ot acqu i red an y intang ibl e a ss et out of th e pa ym en t f or s lum p sal e, an d that Ld . A O erred in di sreg arding th e a lt ern at e clai m of th e Ap plic ant reg a rding trea tm ent of n on- c om p et e f ee a s rev enue ex p enditu re. C IT( A) held that sin c e th e g round 4 and 4 .1 ha v e b een all ow ed in f avou r of th e a ppli can t, thes e g round a re not requi red t o b e adjudi cat ed up on . Con s equ en tly G round s 4 .1 , 4 .2 , 4 .3 w ere n ot a djudi c at ed up on in enti rety t o d etermin e MA No. 215/Del/2018 EAC Industrial Ingredients India Pvt. Ltd. 4 wh eth er any a s s et was c reat ed in f av ou r of App li cant or wh eth er th e exp endi tu re sh ould be rev enu e in na tu re. 7. That , du ring th e c ou rs e of h ea ring , a ppli cant/ resp on d ent submi tt ed that i f Id . A O d id not ag ree that t he exp endi tu re wa s m ad e t ow a rd s pay m ent of n on- comp et e f ees , th en t he un all ocat ed as sets n eed ed t o b e trea t ed a s g oodwi ll in light of th e d eci si on of H on’bl e Sup reme C ou rt in CI T v. Smi f s S ecu rit ies [348 I TR 3 02] . Thu s it ca nn ot be sa id th at th e appli ca nt/ resp ond en t did n ot a cqui re any int angib l e a s s et out of th e pay m ent whi ch w as rai s ed as G round 4 . 1 b ef ore CI T(A) . 8. Furth er, it w a s a ls o sub mitt ed th at if th e p ay ment is n ot all ow ed dep reci ati on un d er Secti on 32 of th e Act , it ma y b e t rea ted a s rev enu e exp endi tu re in th e hand s on th e ap plic ant/ resp on d ent . Thi s w as al s o rai s ed as g round 4 . 2 b ef ore CI T(A) . 9. The H on ’b l e T ri b unal in i ts ord er dat ed 28. 12 .20 1 7 ha s n ot adjudi ca ted up on th e al t ernat e p l ea of t he a ppli cant/ res p on dent . I n vi ew of the ab ov e mi st ak e app aren t c record , H on ’bl e T ribunal ma y kin dly b e plea s ed t o ap p rop ri at ely m odi fy th e order in t h e larg er in terest of ju st ic e and to p rev ent ina d v ert ent mi s ca rria g e of ju sti c e. 10. Appli cant res p ect f ully p ra ys f or rec a ll of order dat ed 2 8.1 2. 201 7 and t o kindl y pa s s s uitabl e d irect ions a f ter ad judicat ing up on the a f ores aid alt ernat e pl ea of th e ap pli cant/ resp on d ent . 11. The a ppli c ant al s o stat es and c onf i rms th at it ha s not fil ed an y Mi sc el lan eou s Appl i cat ion under S ecti on 254(2) ea rli er b ef ore th e H on’ bl e T ribun al aga ins t th e su bj ec t ord er.” 3. In this case the appeal has been filed by the revenue on the sole issue of depreciation which has been duly adjudicated. 4. The MA filed by the respondent took up a plea that the Tribunal has not adjudicated the alternate plea of the respondent taken before the ld. CIT(A) and also that the MA No. 215/Del/2018 EAC Industrial Ingredients India Pvt. Ltd. 5 ld. CIT(A) did not adjudicate on the issues taken up before him. 5. During the hearing, none appeared on behalf of the assessee. 6. We find that the plea taken up by the respondent cannot be treated as mistake apparent from record as per the provisions of Section 254(2) of the Income Tax Act and hence dismissed. 7. In the result, the MA of the assessee is dismissed. Order Pronounced in the Open Court on 23/09/2022. Sd/- Sd/- (Kul Bharat) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 23/09/2022 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR