9911796707
TMI Blog2021 (12) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, in relation to block of assets, it is not possible to segregate the each trademark from the block for the purposes of granting depreciation and thereby restricting the claim thereof. Once it is found that the assets are used for business purpose out of particular block, it is not necessary that all the item falling within that block have to be simultaneously used for being entitled to depreciation . In view of this, we are of the opinion that lower authorities are not justified in rejecting the claim of depreciation on the block of these assets and the assessee to be granted depreciation at the prescribed rate for this block of assets. Accordingly, we allow this ground of appeal of the assessee. - ITA No.82/Bang/2018 (Assessment year : 2006-07) - - - Dated:- 17-11-2021 - SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER Assessee by: Shri L Bharath, C.A Revenue by: Shri Priyadarshi Mishra, Addl.CIT(DR) ORDER Per Chandra Poojari, Accountant Member This appeal by the assessee is directed against the order of CIT(A)-12 dated 28.01.2009. The relevant assessment year is 2006-2007. 2. The assessee raised following gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law in re-working the actual cost of the trademark acquired by the Appellant without satisfying any of the conditions of Explanation 3 to section 43(1) of the Income-tax Act, 1961 ('the Act'). 3. For the above and other grounds that may be urged at the time of the hearing of the appeal the appeal may be allowed and justice rendered. 4. The assessee filed petition for admitting additional grounds and placed reliance on the judgment of Hon ble Supreme Court in the case of National Thermal Power Company Ltd., Vs. CIT, 229 ITR 383 (SC) and prayed that the additional grounds may be admitted, as these grounds do not involve any investigation of facts, otherwise on the records of the department and are also pure questions of law, which goes into the very root of the matter of jurisdiction and validity of impugned addition and, therefore, the assessee prayed that additional grounds may be admitted and adjudicated on merits. 5. We have heard the rival submissions and perused the materials on record on the admissions of additional grounds. In our opinion, the issue raised by the assessee which being legal issue and it does not require any investigation of facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mention in its audited financials that trademarks of 1.25 crore were only towards Jealous. d. The fact that the jealous trademark is used by the Appellant even today, approximately 15 years of since its acquisition also demonstrates that the primary consideration for acquiring the trademarks was towards Jealous. 3. All of the above have been brushed by the LAO in the Ld. CIT(A) without any basis. It is held without basis that these are afterthoughts. The least that the LAO and CIT(A) could have done was to cross check with the buyer on the contentions of the Appellant. 4. Without prejudice to the above, the LAO has apportioned an equal amount to all the 4 trademarks i.e., ₹ 31.25 lakhs. There is no basis for this equal bifurcation when the contract was driven by the Jealous trademark. Neither the LAO nor the CIT(A) have given any basis. The LAO and CIT(A) cannot substitute their judgment for the business facts of the Appellant as demonstrated by the assessee by way of evidence. The least that the LAO and the CIT(A) could have done was to call for a valuation report from a specialist in the interest of natural justice although no such provision is contemplat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t block of asset is used for the purposes of appellant business and there is no finding as to whether the block of assets or for that matter any asset falling in the block of asset is used for other business purposes proportionate disallowances of depreciation is not warranted. This is contrary to the positions of section 32 as has been held in the Delhi High Court in CIT v. Oswal Agro Mills Ltd (341 ITR 467). Reliance is also placed on the following rulings: a. CIT v. Bharat Aluminium Co. Ltd. (187 taxman 111) (p. , para 31-32 of the case law compilation volume 2); b. CIT v. Sonal Gum Industries (322 ITR 542) (p.197, para 5 of the case law compilation volume 2); c. E-City Entertainment (India) (P.) Ltd. v. ACIT (39 taxmann.com 120); (p.208-211 , para 25-28 of the case law compilation volume 2). 7. Without prejudice to the above, proportionate disallowance of depreciation can be undertaken only when there is a finding that the business assets have been used for other than business purposes. This is contemplated under section 38 of the Act. No such restriction is contemplated with respect to intangible assets. When this is not the claim of the AO, the AO cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n various case laws. We find force in the arguments of ld.Counsel for the assessee. In our opinion, it is not the case of the AO that the assets were not put to use at all. The contention of the ld.DR is that only the brand Jealous was put to use in the asst. year under consideration, as such, only this brand is entitled for depreciation and not other 3 brands. All these 4 brands falling under one block of assets and even one of the brads is put to use, it is not possible to restrict the depreciation on the said brand only by stating that a portion of block assets only has been put to use. In our opinion, in relation to block of assets, it is not possible to segregate the each trademark from the block for the purposes of granting depreciation and thereby restricting the claim thereof. Once it is found that the assets are used for business purpose out of particular block, it is not necessary that all the item falling within that block have to be simultaneously used for being entitled to depreciation . In view of this, we are of the opinion that lower authorities are not justified in rejecting the claim of depreciation on the block of these assets and the assessee to be granted dep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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