TaxTMI 
TaxTMI 
2019 (5) TMI 1590
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....inst the revenue by the Tribunal in assessee's case in A. Y. 2003-04 in favour of the assessee and against the revenue. The DR could not bring any distinguishing decision in favour of the revenue. 5. We have carefully considered the orders of the authorities below qua the issue. We find force in the contention of the Counsel a similar dispute was considered by the coordinate bench in ITA No.5293/Del/2011 and 2922/Del/2011 for A. Y. 2003-04. The relevant findings of the coordinate bench read :- 25. Brief facts apropos ground nos. 2 & 3 are that assessee had claimed depreciation amounting to Rs. 41511312/- which included depreciation of Rs. 2 500/- on goodwill and Rs. 1,53,70,313/- on patent and trade marks @ AO had disallowed the assesse's claim in regard to depreciation on ill observing that the same was not covered under intangible assets r the Income-tax Rules. As regards depreciation on patent and marks, the AO denied the assessee's claim, inter alia, observing that t, trade marks were required to be registered under the Trademarks ion Act and only the company in whose name the same had been , was entitled to use the same. 26. Ld. CIT(A) noted that d....
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....ts, therefore, eligible for depreciation under section 32 of the Income-tax Act as intangible assets. He further pleaded that the exclusive business rights as defined in the agreement were represented as carrying on the business as successor to Usha International Ltd. which include all records of business including records of suppliers and customers; the benefit of the current orders; the benefit of all bids and proposals that have been made by Usha International Ltd. and all rights to Usha International Ltd. distribution network for the business excluding Usha International Ltd.'s company shop. The consideration for exclusive business rights was payable of Rs.l,73,00,000/-. For other business and commercial rights Rs. 27,00,000/- was paid. These amounts were capitalized as goodwill in books of accounts. These amounts were paid to Usha International Ltd. during the period relevant to assessment year 2001-02. These amounts were capitalized as Goodwill in the books of account. F or computing the taxable income, depreciation was claimed @ 250/0 as prescribed in schedule of depreciation rates in respect of the intangible assets. The depreciation in the year 2001-02 was cla....
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....t of Rs. 27,00,000 is confirmed." Ld. AR pleaded that the facts are same and there is no change in the circumstances, therefore, the order of the CIT (A) may be upheld: 6. We have heard both sides and perused the material on record. Since the assessee has got the relief f from ITAT in the preceding year, on the same facts. The issue remains the same, therefore, respectfully following the decision of ITA'T, we dismiss this ground of revenue's appeal." 28. No change in facts, for the assessment year in question, have been brought to our notice. Therefore, respectfully following the earlier orders of the Tribunal in assessee's own case, we uphold the order of CIT(A). Ground is dismissed. 29. As regards depreciation on WDV of patent, trademark and intellectual property rights paid to Cyel Aircon Ltd. is concerned, Id. CIT(A) noted that assessee company vide business purchase agreement entered on 8.8.2000 purchased the manufacturing business of Siel Aircon Ltd. and the consideration for the Intellectual Property Rights, paid by the assessee was Rs. 109,300,000 to SAL. The assessee pointed out that as per provision of Trademark Act, 1999, a....
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....per the provisions of section 32 (1) (ii) of the Act. It is also undisputed that the 'assessee has used the intellectual property rights in its business and there has been no claim against the assessee for the use of the said trademarks. In fact as per the agreement in clause 8.1 (a)(i) it has been specifically agreed that on completion duly executed instruments of transfer, assignment etc. as the assessee may reasonably be required to complete the transfer, assignment and conveyance of the asset in accordance with the provisions of this agreement shall be delivered to the assessee at a place nominated by the assessee. This clearly shows that once the completion of the agreement is done by payment of the consideration as on the completion date specified in the agreement the assessee would be in possession of the duly executed instruments of transfer, assignment and Conveyances of the assets as specified in the agreement which are basically the intellectual property' rights and the fixed assets. This being so, as also the principles as laid down by the Hon'ble Supreme Court in the case of Mysore Minerals Ltd. referred to supra and reaffirmed the decision of Dalmia cement....
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.... has erred in not appreciating that the comparable companies held to be not functionally comparablefor the purposes of RPM, were on the contrary functionally not comparable at an entity level for benchmarking using TNMM, being engaged in the business of manufacturing and trading of electrical goods. Notwithstanding and without prejudice: 3 That on the facts and circumstances of the case and in law, the CIT(A) has erred in not adjudicating the grounds raised in the appeal memo in relation to reduction of nonoperating extra ordinary expenses, namely, expenses incurred on discontinuation of assembling / manufacturing; interest on working capital loan; forex loss; and provision for doubtful debts, doubtful receivables, doubtful advances and advances written off. 3.1 That on the facts and circumstances of the case and in law, the CIT(A) has erred in upholding the action of the AO / TPO and further erred in not directing to reduce the following extra ordinary non-operative expenses while computing the margin using TNMM: Extraordinary expenses incurred for discontinuation of assembly / manufacturing function amounting to INR 4,70,30,905; Interest on wor....
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....531,513 Admn & Ors 125,041,751 Selling & Dist 150,459,432 Intt on WC 45,469,460/- Depreciation 142,762,316 Misc. Exp 76,116,961 Total (A) 1,653,335,887 Less : Extraordinary Expenditure Goodwill w/ off 20,000,000 Patents w/ off 109,300,000 Misc Exp w/off 53,770,131 Loss on Fixed Assets 901,084 Fixed Assets scrapped 3,322,911 Total (B) 187,294,126 Operational Expenditure (A-B) 1,466,041,761/- Operating Loss -175,393,453/- OP/ Sales -13.59% 12. The bifurcation of the sales can be understood from the following chart:- 13. From the above chart only airconditioners are imported from AE and water cooler plus air cleaners are manufactured and no sales are made to the AE. 14. We are of the considered view that the bench marking done by the TPO is on erroneous facts. Unless a proper bench marking is done the dispute cannot be decided. 15. Moreover, we find that the TPO has adopted TNMM as the most appropriate method by....