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TMI Blog2019 (10) TMI 828X X X X Extracts X X X X X X X X Extracts X X X X ..... bashri, IRS, JCIT ORDER PER INTURI RAMA RAO, ACCOUNTANT MEMBER These three appeals have been filed by the assessee directed against different orders of the learned Commissioner of Income Tax (Appeals)-13, Chennai (hereinafter called as CIT(A) ) dated 10.11.2017, 10.11.2017 and 22.11.2017 for the assessment years 2007-08, 2008-09, and 2009-2010. 2. Since, the identical facts and issues are involved in these appeals, we proceed to dispose the same vide this common order. 3. For the sake of convenience and clarity, the facts relevant in ITA No.673/Chny/2018 for assessment year 2007-2008 are stated herein. 4. The Assessee raised the following grounds of appeal: 1. For that the order of the Learned Commissioner of Income Tax (Appeals) is contrary to law, facts an circumstances of the case. Re-opening of assessment:- 2. For that the Learned Commissioner of Income Tax (Appeals) erred in confirming the validity f the reassessment proceedings u/s 147 despite the assessment originally completed u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was no scrutiny assessment proceedings. Subsequently, during the course of assessment proceedings for assessment year 2010-2011, ld. Assessing Officer found that the claim of depreciation on intangible asset was not correct and therefore initiated the reassessment proceedings by issuing notice u/s.148 of the Income Tax Act, 1961 (in short the Act ) on 13.03.2013 to the appellant. In response to notice u/s.148 of the Act, the appellant had filed reply vide letter dated 11.04.2013 stating that to treat the income originally filed as return in response to notice issued u/s.148 of the Act. Subsequently, assessee had sought reasons for reopening the assessment and the same was provided by l Assessing Officer through his letter dated 08.07.2013. Finally assessment was completed at a total loss of ₹ 57,83,182/- by disallowing the depreciation on intangible assets being trade mark acquired from M/s. Univercell Telecommunications India Pvt. Ltd at a cost of ₹ 3,48,00,000/-. While denying the claim for depreciation on intangible assets, ld. Assessing Officer had questioned the genuineness of agreement of assignment of trade mark right entered between the appellant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o relevance, in as much as, the substance of the transaction remaining the same, therefore he submitted that the orders of the lower authorities cannot be sustained. 9. On the other hand, the ld. Sr. Departmental Representative placed reliance on the orders of lower authorities. 10. We heard the rival submissions and perused the material on record. The short issue involved in this appeal is whether or not the transaction of purchase of trademark from one Shri. D. Satish Babu for a consideration of ₹ 3,48,00,000/- is genuine. There is no dispute that Shri. D. Satish Babu is a owner of trademark Univercell as the trademark Univercell is registered under the name of Shri. D. Satish Babu by the Government of India and this trademark was purchased by the appellant for a consideration of ₹ 3,48,00,000/- , and the said consideration was paid on 15.02.2007. Ld. Assessing Officer had doubted the genuineness of the transaction primarily for following reasons namely:- ( i) the agreement entered between the parties on 01.02.2007 was on stamp paper which is post dated. ( ii) It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. There is no reason why the OECD guidelines should not be taken as a valid input in the present case in judging the action of the Transfer Pricing Officer. In fact, the Commissioner of Income-tax (Appeals) has referred to and applied them and his decision has been affirmed by the Tribunal. These guidelines, in a different form, have been recognized in the tax jurisprudence of our country earlier. It has been held by our courts that it is not for the Revenue authorities to dictate to the assessee as to how he should conduct his business and it is not for them to tell the assessee as to what expenditure the assessee can incur. We may refer to a few of these authorities to elucidate the point. In Eastern Investments Ltd. v. CIT [1951] 20 ITR 1 (SC) it was held by the Supreme Court that (page 6) There are usually many ways in which a given thing can be brought about in business circles but it is not for the court to decide which of them should have been employed when the court is deciding a question under section 12(2) of the Income-tax Act . It was further held in this case that it is not necessary to show that the expenditure was a profitable one or that in fact any p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired that the expenditure should have been incurred wholly, necessarily and exclusively for the purposes of business in order to merit deduction. Pursuant to public protest, the word necessarily was omitted from the section. 21. The position emerging from the above decisions is that it is not necessary for the assessee to show that any legitimate expenditure incurred by him was also incurred out of necessity. It is also not necessary for the assessee to show that any expenditure incurred by him for the purpose of business carried on by him has actually resulted in profit or income either in the same year or in any of the subsequent years. The only condition is that the expenditure should have been incurred wholly and exclusively for the purpose of business and nothing more. It is this principle that, inter alia, finds expression in the OECD guidelines, in the paragraphs which we have quoted above . Thus law is settled to the extent that it is outside the domain of the ld. Assessing Officer to question the necessity of incurring an expenditure. Thus the reasons assigned by the Assessing Officer that the transaction for purchase of tradem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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