TaxTMI 
TaxTMI 
2018 (12) TMI 631
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.... 2. The learned CIT erred in setting aside the assessment order. He erred on facts and in law in holding that, order of Assessing officer is erroneous and prejudicial to the interest of the revenue. 3. He further erred in directing the Assessing officer to pass assessment order afresh on the issues that have been raised in the order u/s 263 of the Act. 4. The learned CIT failed to appreciate that. Assessing officer after proper enquiry in this respect had correctly not added as income the employee's contribution to PF of Rs. 4,86,601 and contribution to ESIC of Rs. 28,539, deposited by the appellant well before the due date for filing of return of Income and also correctly allowed depreciation of Rs. 27,50,000 u/s 32 o....
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....d and, second that the payment is made to Hindustan Unilever Ltd., the owner of the brand (Lakme) and is in respect of non competition in Lakme brand itself. Also, Hindustan Unilever Ltd. is a group concern and holding Company. That therefore, to think of competition from this Company is nothing but an eye-wash. That therefore, prima facie there is no question of any expenditure either in the form of non compete fees itself or in the form of depreciation on the amount of non compete fee. That in view of the same, a Show Cause Notice u/s.263 of the Act was issued to assessee proposing to revise the assessment. 5. The ld. CIT noted the response of the assessee on the notice issued as under: Employees' contribution towards PF a....
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.... According to him, this right so acquired is a commercial right duly covered by the definition of intangible asset defined in Section 32(l)(ii) of the Act. It is claimed that assessee is accordingly entitled to depreciation and therefore revision u/s.263 should not be done. 6.2 He has also claimed that the fact of payment of non compete fee and claim of depreciation was known to A.O. at the time of making assessment and therefore revisions at this stage would tantamount to 'change of opinion' which is not permissible u/s.263 of the Act. ie has, therefore pleaded that the proposed revision should be dropped. 6. However, the ld. CIT was not convinced. He directed the A.O. to consider the issue afresh in accordance with his....
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....of the Act. 7.3 I find that A.O. has totally misunderstood the provisions of the Act and therefore order of assessment is erroneous. An item of expenditure which should have been disallowed u/s.36(l)(va) has been allowed by A.O. The order is therefore prejudicial to interest of revenue. The provisions of Section 263 of the Act are squarely attracted. 8. Non compete fee 8.1 The issue of non compete fee has not been analyzed by A.O. in its correct perceptive. It is true that submissions of assessee were available on record. It is also true that A.O. has supposedly looked into these submissions. However, A.O. has not gone into the critical facts of the agreement. In particular, A.O. has ignored the fact that Hindusta....
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....rcial right which is being talked about, already exists with assessee, the right to run the Lakme Show rooms. There is no augmentation to that right. There is no increase in assesssee's gamut for doing that particular business. It remains the same. As far as assessee is concerned, nothing has changed whatsoever. For the purpose at hand what is important is that the A.O. has failed to look into these critical facts necessarily required to decide the issue, in particular, A.O. failed to understand, even think of, whether an asset as at all is being created. Therefore, the order of assessment is erroneous and is prejudicial to the interest of revenue because the possibility of disallowing depreciation has been totally missed. 9. I....
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....DR submitted that the A.O. has not made any enquiry whatsoever. He referred to the ITAT decision in the case of Sify Software Ltd. vs. Asst. CIT [2017] 50 taxmann.com 273 (Chennai-Trib). He submitted that the ld. CIT(A) has only remitted the matter for examination before the A.O. Hence, he claimed that no prejudice will be cause to the assessee. 13. Upon careful consideration, we find that as regards the issue of allowance of provident fund and ESIC dues are concerned, the same issue is covered in favour of the assessee by the decision of the Hon'ble jurisdictional High Court. 14. Accordingly, we are of the opinion that the ld. CIT(A) has no justification to exercise the jurisdiction u/s.263 on this issue. 15. As regards the de....