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TMI Blog2015 (7) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of assessee Amount paid on infringement of copyright - revenue or capital expenditure - Held that:- The Plaintiff’s i.e. Shri Ram Sampat has assigned his musical works/composition “THUMP” to the Defendant one of which is assessee. It can also be seen that the payment has been made after deducting tax at source. The most relevant clause is clause (4) which clearly says that the Plaintiff i.e. Shri Ram Sampt shall not have any right of any nature whatsoever in the said work “THUMP”. A perusal of these relevant clauses of the Consent Terms leaves no ambiguity to hold that the assessee has infact acquired the copy right of the musical composition “THUMP”. The AO has therefore rightly treated the same as intangible asset and allowed permissible rate of depreciation. Since this act of the AO has been rightly confirmed by the Ld. CIT(A), we decline to interfere. Disallowance made u/s. 14A r.w.r 8D - Held that:- It is a well settled proposition of law that Rule 8D has been held to be constitutionally valid by the Hon’ble High Court of Bombay in the case of Godrej & Boycee Manufacturing Co. Ltd. Vs DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] and the method has been found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dt. 30.11.2011. The assessee replied as under: So far as sale of Machinery Equipment is concerned, the block of Plant Machinery has always been shown as comprising Plant Machinery, Motor Cars etc since the said block prescribes the same rate of depreciation i.e. 15% which is duly certified in the audited financial statements by the tax auditors. Since the financial statements are duly audited and the computation of income finalized accordingly, the assessee company has adopted the audited accounts while filing its Income Tax return. Since the rate of depreciation prescribed is the same for the Block which includes Plant Machinery and Motor Cars, the question of giving a separate treatment for Machinery Equipments does not arise. Hence, no addition be made u/s. 50 in respect of machinery sold during the year. 4. The submission of the assessee was rejected by the AO. The AO was of the firm belief that the block of asset pertaining to plant and machinery cannot be set off against the WDV of motor cars. Since both are different blocks and the profits earned in selling an asset in one block can be set off against the WDV in the same block but not against another b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression block of assets means group of assets falling within the assets enumerated in clauses (a) and (b). Clause (a) refers to tangible assets, including building, machinery plant and clause (b) refers to intangible assets like copyright, know how, trade mark, etc. The aforesaid section does not make any distinction between different units or different type of business, which may be carried on by the assessee. The term business mentioned above refers to different type of business activities carried on by the assessee. The only requirement is that in respect of assets which form the block of assets, same percentage of depreciation should be prescribed. The work same percentage shows that the block of assets refers to same rate of depreciation which is prescribed under the Rules. All assets, which may be of different types, but in respect of which same percentage of depreciation is prescribed, are to be treated and form part of the block of assets. 10. Considering the facts in the light of the decision of the Delhi High Court (supra), we set aside the findings of the Ld. CIT(A) and direct the AO to delete the addition of ₹ 33,75,231/-. Ground No. 1 is accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities claiming ₹ 2 crores as revenue expenditure. 14. Per contra, the Ld. Departmental Representative relied upon the order of the First Appellate authority. 15. We have carefully perused the orders of the authorities below. We have also considered the relevant documentary evidences brought on record before us. Let us first understand the Consent Terms which read as under: 1. The Plaintiff hereby assigns his musical work/composition THUMP TO Defendant Nos.2 and 3 for a sum of Rs. Crores (Rupees Two Crores Only). In consideration of Defendant Nos. 2 3 paying a sum of ₹ 2,00,000/- (Rupees Two Crores Only) to the Plaintiff, the Plaintiff do hereby assign the Plaintiff s musical work /composition THUMP to Defendant No.2 and 3 the assignment becoming effective only on the encashment of the cheque referred to below. 2. Defendant Nos. 2 and 3 have tendered the sum of ₹ 1,77,34600/- (Rupees One Crore Seventy Seven Lakhs Thirty Four Thousand Sex Hundred Only) to Plaintiff (i.e. 2,00,00,000/- (Rupees Two Crores Only) less TDS By Cheque dated 10.04.2008 bearing No.600612 drawn on Oriental Bank of Commerce, Stantacruz Branch, Mumbai the receipt wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 2.5 crores for the year ending 31.3.2008. The AO proceeded by computing the disallowance as per the formula given in Rule 8D and the disallowance was computed at ₹ 10,53,961/- and after deducting the disallowance already made by the assessee at ₹ 4,81,914/-, the AO added ₹ 5,72,047/-. 18. The assessee carried the matter before the Ld. CIT(A) but without any success. 19. Before us, the Ld. Counsel for the assessee reiterated what has been stated before the lower authorities. 20. The Ld. Departmental Representative strongly supported the order of the Revenue authorities. 21. We have carefully perused the orders of the authorities below. It is a well settled proposition of law that Rule 8D has been held to be constitutionally valid by the Hon ble High Court of Bombay in the case of Godrej Boycee Manufacturing Co. Ltd. Vs DCIT 328 ITR 01 and the method has been found to be reasonable. Therefore, there is no error in the computation of the disallowance. The AO has already deducted the amount suo moto disallowed by the assessee. The disallowance is only for the balance amount. The claim of the assessee that it has not incurred any expenditure for earnin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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