VENKATESH NAIK MOHANDAS & SONS,CALICUT V. THE ACIT, KOZHIKKODE

ITA 561/COCH/2023

AI Insights

The case involves Venkatesh Naik Mohandas & Sons, who appealed against the order of the National Faceless Appeal Centre (NFAC), which upheld the disallowance of depreciation claimed on a trademark amounting to Rs. 50,17,781. The trademark was transferred by a partner, Mr. Rajeev Mohandas, and was argued to be a business asset, not a personal one. The appellant contended that the payment of Rs. 24 crore related to a High Court order and was for business purposes, including the retention of trademarks. The Tribunal found that the lower authorities had not adequately considered the evidence presented, including judicial proceedings and other relevant documents, and thus restored the matter to the Assessing Officer for a detailed examination.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 23496 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 31-07-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: V.SWARNALATHA
• Assessee Lawyers: BALRAM R. RAO
• Keywords: Depreciation
• Section: 250

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Satbeer Singh Godara, Judicial Member and Shri Amarjit Singh, Accountant Member ITA No. 561/Coch/2023 (Assessment Year: 2016-17) Venkatesh Naik Mohandas & Sons 10/993, Sri Venkatesh Palayalam Road, Palayam Calicut 673001 [PAN: AABFV9069R] vs. ACIT, Circle 1(1) & TPS Aayakar Bhavan Mananchira Kozhikode 673001 (Appellant) (Respondent) Appellant by: Shri Balram R. Rao, CA Respondent by: Smt. V. Swarnalatha, Sr. D.R. Date of Hearing: 22.08.2024 Date of Pronouncement: 23.10.2024 O R D E R Per Bench This assessee’s appeal for A.Y. 2016-17 arises against the National Faceless Appeal Centre, Delhi [CIT(A)]’s DIN & Order No. ITBA/NFAC/S/250/2023- 24/1053688394(1) dated 13.06.2023 in proceedings u/s. 250 of the Income Tax Act, 1961 (the Act). Heard both the parties at length. Case file perused. 2. The assessee pleads and following substantive grounds in the instant appeal: - “1. On the facts and in the circumstances of the case, the Ld. CIT(A), NFAC erred in upholding the order of the Assessing Officer in the manner in which he did. 2. On the facts and circumstances of the case, the Ld. CIT (A), NFAC erred in upholding the disallowance of depreciation claimed on Trademark amounting to 50,17,781/-. 2 ITA No. 561/Coch/2023 Venkatesh Naik Mohandas & Sons 3. The Ld. CIT(A) as well authorities below failed to appreciate that the intangible assets being Trademark, which was transferred by the Partner, Mr. Rajeev Mohandas were business assets and by no stretch of imagination could be treated as a personal asset, since intangible asset always arise in course of business. 4. The Ld. CIT(A) as well as the authorities below failed to appreciate that the payment of 24 crore was made in pursuance of order of the High Court of Kerala dated 5.1.2016 and therefore it was not right on the part of the CIT(A) as well as the AO to misinterpret the payment as one of \"personal nature\". 5. The Ld. CIT (A) failed to appreciate that Mr. Ravinath Mohandas had made his claims including 'right to trademark' during the mediation proceedings itself and also the High Court of Kerala had directed the Partnership Firm 'M/s VNM and Sons' to pay an amount of 4 crore to Ravinath Mohandas from the date of order in settlement of all claims including Trademark claims. Hence the amount paid was for retention of Trademarks and all his claims including other business and commercial rights of the Appellant Firm. 6. For these and such other grounds that may be urged at the time of hearing the Appellant prays that the Appeal may please be allowed to meet the ends of justice.” 3. Suffice to say, the assessee’s sole substantive ground raised during the course of hearing in the instant appeal challenges correctness of both the lower authorities action disallowing its depreciation claim of Rs.50,17,781/- pertaining to trademark, i.e. an intangible asset u/s. 32(1)(ii) of the Act. 4. Learned Sr. D.R. vehemently submits that the assessee had not filed any evidence on record during assessment and in the lower appellate proceedings explaining acquisition of the alleged trademark rights in dispute. 5. Learned counsel refers to the assessee’s paper book running into 63 pages; and more particularly, page No.6 involving judicial proceedings before the hon'ble jurisdictional high court dated 05.01.2016. Both the lower authorities have admittedly not considered all these facts in their respective proceedings. We accordingly deem it appropriate to restore the assessee’s instant sole substantive ground back to the learned Assessing Officer for his afresh appropriate adjudication 3 ITA No. 561/Coch/2023 Venkatesh Naik Mohandas & Sons and necessary verification preferably within three effective opportunities of hearing, subject to the rider that it shall be the taxpayer’s onus and responsibility only to file and prove all the relevant facts in consequential proceedings. Ordered accordingly. 6. This assessee’s appeal is allowed for statistical purposes in above terms. Order pronounced in the open court on 23rd October, 2024 under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (Amarjit Singh) Accountant Member (Satbeer Singh Godara) Judicial Member Cochin, Dated: 23rd October, 2024 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File By Order Assistant Registrar ITAT, Cochin "