TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 1394
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....made by treating copyright expenses as revenue in nature. The said ground raised by the Revenue are as under : "2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs,3,57,46,928/- treating the 'copyright expense'-as a revenue expense when the Income Tax Act, 1961 alongwith the Income Tax Rules, w.e.f. A.Y. 1999-2000, has explicitly mentioned copyrights as an intangible asset. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in treating the 'copyright expense' as a revenue expense relying on the decisions of Hon'ble Supreme Court in the case of CIT vs. IAEC (pumps) Ltd. 232 ITR 316(SC) which Was delivered prior to amendments in section 32(1 )(ii) of the Income Tax Act, 1961 and in Rule 5(1) of the Income Tax Rules, 1962 w.e.f A.Y, 1999-2000, whereby intangible assets, inter-alia, copyrights have been included in the appendix 1 prescribing intangible assets as a separate block of assets on which depreciation is applicable @ 25%. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in treating the copyright expense w....
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....in ITA No 1217/Chd/2012 and ITA No 1274/Chd/ 2012. I have perused the order and from the order it is seen that additions on similar issue were made in the case of the appellant in AY 2009-10 which were deleted by Hon,ble ITAT in its order dated 03.07.2005 in ITA No. 1217/Chd/2012 and ITA NO 1274/Chd/2012 wherein it has been held as under: "Para 13. We have considered the rival submissions and we find force in the submission of Ld. Counsel for the assessee. The assessee has merely acquired right to use the copyright. The perusal of the Agreement with M/s Phonographic Performance Ltd. shows that license has been granted only for usage of the copyright. Para 14. The above clearly shows that license was only for usage of copyright held by the licensor. The assessee has not become the owner of the license. Therefore, clearly the payment is of Revenue nature." 9. The issue involved in the present appeal, it has been conceded by both the parties ,is identical and based on identical set of facts as in A.Y 2009-10.No differing set of facts have been brought to our notice. In view of the same, since the identical issue has already been decided in the succeeding year by the ITAT, in favo....
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....g Officer disallowed the assessees claim of 100% depreciation on the temporary structure and also denied claim of the same u/s 37 (1) of the Act and made addition of Rs. 4,38,750/- to the income of the assessee. 14. During appellate proceedings before the Ld. CIT (Appeals), the assessee made submissions which are reproduced in the Ld. CIT (Appeals)'s order at para 7.2 as under: "7.2 Assessee made submissions as under: This was a temporary construction made for providing a Cafeteria space above the office premises and as such do not require any permission from any regulatory body. It was pre fabricated wooden cabin cafeteria with PVC profile, thermocole, MS pipe, glass etc. is installed on top floor of the rented building. That in fact Rs. 3,50,000/- was paid to Tiny Craft on 27.11.2006 and Rs. 88,750/- was paid on 08.11.2007 on which depreciation was claimed during the year as 100% on temporary Structure. The Ld. officer has disallowed the expenditure on the finding that it was and illegal structure and as such the expenditure is disallowed. There is no sanction required for creating this temporary structure but the expenditure of this temporary structure is incidental to busi....
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....p floor of the rented building by the assessee was a temporary structure, has not been disputed by the Revenue. It is also not denied that temporary structures are entitled to 100% depreciation. Further that the structure came into existence and was thus put to use in the impugned year is also not disputed. In view of the same, we concur with the Ld.CIT(Appeals), that the assessee is entitled to depreciation @ 100% on the cost of the temporary structure in the impugned year. The contention of the Ld.DR, that the assessee showed an opening WDV of temporary structure in its chart of fixed assets, we hold, makes no difference to the allowability of the claim of the assessee. The said opening WDV has been satisfactorily explained by the assessee as having been on account of the fact that part of the expenditure was incurred in the preceding year which was shown as opening WDV of the temporary structure and the assessee has rightly claimed depreciation in the impugned year when the said temporary construction was completed and the asset put to use. Moreover, we find that there is no basis with the Revenue to hold that the construction of the said structure was prohibited by law and was ....
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....l in nature. 24. During the appellate proceedings, the assessee submitted that it was engaged in providing value added services to telecommunication operators and that on 18.2.2004 a proprietorship concern of Shri Tarun Mohan, M/s Phoneytunes.com transferred its business to ITIDA Cad Services Private Ltd. (changed to Mobisoft Telesolution Pvt. Ltd.) the assessee, through business sale agreement in which Shri Tarun Mohan was a Director. All the intellectual property rights in the business were transferred, except the brand name of Phoneytunes.com, for the usage of which ITIDA had to pay 2% of gross revenue receipts as royalty. The assessee submitted that Phoneytunes.com was a registered trade mark as well as domain name of website which was the property of Shri Tarun Mohan on the date of Business Sale Agreement and both were not transferred through this sale agreement. A right to use the website was allowed to the assessee on the payment of 2% of gross revenue as royalty. The assessee also submitted that the issue had been decided by the I.T.A.T., Chandigarh Bench in preceding years i.e. assessment years 2006-07 to 2008-09 in its order in ITA Nos.684, 1206 & 1207/Chd/2011 dated 16.....
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....ing to A.Y 2008-09 and which was heard alongwith the present appeal. 30. Since this issue has already been adjudicated upon by us in ITA No.300/Chd/2016, in the earlier part of the order, vide ground Nos.2, 3 and 4 raised by the Revenue, wherein the said expenses had been held to be revenue in nature at paras 8 to 10 and no distinguishing facts have been brought to our notice, the decision rendered therein will squarely apply in the present case also. Following the same, we hold the copyright expenses to be Revenue in nature and thus dismiss the ground Nos.5, 6, & 7 raised by the Revenue. 31. In effect the appeal of the Revenue is dismissed. ITA No.1017/Chd/2016: A.Y 2012-13 32. Ground Nos.1 and 2 raised by the Revenue read as under : 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in treating the 'copyright expenses' as a revenue expense when the Income Tax Act, 1961 [sec. 2(11) & sec. 32(1)(ii)] alongwith the Income Tax Rules, 1962 [Rule 5 read with part B of NEW APPENDIX I] has explicitly mentioned copyright as an depreciable intangible asset. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A)....
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....ence of the same, the assessee filed copy of Form 26A and report of Chartered Accountant. The assessee further submitted that in view of the law on the issue of section 40 (a)(ia) which intends to tax only those payments or expenses which have not been reflected in the return of income by the recipients thereof, the said expenses ought to be allowed to the assessee. The evidences filed by the assessee were also sought to be deemed as additional evidences. The additional evidences submitted were forwarded to the Assessing Officer who did not object to the admission of the same. Further the Assessing Officer in her Remand Report stated that the claim of the assessee ought to be allowed in view of the provisions of section 40 (a)(ia) r.w.s. 201 (1) of the Act. Based on the above report of the Assessing Officer and in view of the decision of the Agra Bench of the I.T.A.T. in the case of Rajiv Kumar Aggarwal Vs. Addl.CIT, reported at 45 Taxman.com 555, wherein it was held that insertion of second proviso to section 40 (a)(ia), which states that no disallowance is to be made in cases where taxes have been paid by the payees, is declaratory and curative in nature and it has retrospective ....