INDIA CAPITAL MARKETS P.LTD ( FORMELRY KNOWN AS NICHE BROKERAGE P.LTD), MUMBAI v. ADDL CIT RG 4(2), MUMBAI

ITA 4131/MUM/2012 | 2009-2010
Pronouncement Date: 31-07-2013 | Result: Partly Allowed

Appeal Details

RSA Number 413119914 RSA 2012
Assessee PAN TOVER3709C
Bench Mumbai
Appeal Number ITA 4131/MUM/2012
Duration Of Justice 1 year(s) 1 month(s) 18 day(s)
Appellant INDIA CAPITAL MARKETS P.LTD ( FORMELRY KNOWN AS NICHE BROKERAGE P.LTD), MUMBAI
Respondent ADDL CIT RG 4(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted I
Tribunal Order Date 31-07-2013
Assessment Year 2009-2010
Appeal Filed On 12-06-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH MUMBAI .. !'# $ $ $ $ ! % & !'# !' BEFORE SHRI P.M. JAGTAP AM AND SHRI SANJAY GARG J M !./ I.T.A. NO. 4131 /MUM/2012 ( &) % $*% &) % $*% &) % $*% &) % $*% / / / / ASSESSMENT YEAR : 2009-10) M/S INDIA CAPITAL MARKETS P. LTD. (FORMERLY KNOWN AS NICHE BROKERAGE P. LTD. INDIA CAPITAL HOUSE OFF DATTAPADA RD. DATTAPADA BORIVALI (E) MUMBAI 400 066. ) )) ) / VS. THE ADDL. COMMISSIONER OF INCOME TAX RG. 4(2) MUMBAI. #+ !./ PAN : AABCNO802B ( + / // / APPELLANT ) .. ( -.+ / RESPONDENT ) + / 0 ! / APPELLANT BY : SHRI PRIYESH VIRA -.+ / 0 ! / RESPONDENT BY : SHRI O.P. SINGH !)$ / / // / DATE OF HEARING : 10-07-2013 12* / / DATE OF PRONOUNCEMENT : 31-07-2013 '3 / O R D E R PER P.M. JAGTAP A.M . : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A) 8 MUMBAI DTD. 04-04-2012 AND THE GROUNDS RAISED THEREIN BY THE ASSESSEE READ AS UNDER:- ITA 4131/MUM/2012 2 GROUND NO. 1: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE HONBLE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION ON INTANGIBLE ASSET AMOUNTING TO RS. 26 36 719/- (BEIN G 25% OF RS. 1 05 46 875/-PAID TO M/S ASHMAVIR FINANCIAL CONSULT ANTS P. LTD ON WDV BASIS). THE APPELLANT PRAYS THAT THE DEPRECIATI ON ON INTANGIBLE ASSET MAY KINDLY BE ALLOWED. GROUND NO. 2: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE U/S. 14A AMOUNTING TO RS. 7 29 498. THE APPELLANT PRAYS THAT APPELLANT HAS NOT INCURRED ANY EXPENDITURE FOR EARNING DIVIDEND INCOM E AND ACCORDINGLY IT IS PRAYED THAT NO DISALLOWANCE U/S. 14A R.W.R 8D IS CALLED FOR IN FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE. GROUND NO. 3: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE HONBLE CIT (A) ERRED IN CONFIRMING THE DISALLOWANC E OF RS. 95 242/- TOWARDS PRIOR PERIOD EXPENDITURE. THE LEARNED AO AS WELL AS THE HONBLE CIT (A) FAILED TO CONSIDER THAT THE AMOUNT WAS ALREADY DISALLOWED BY THE APPELLANT WHILE FILING ITS RETURN OF INCOME. THE APPELLANT PRAYS THAT THE ADDITION MAY KINDLY BE ORD ERED TO BE DELETED. 2. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS T HE ISSUE RAISED IN GROUND NO. 1 RELATING TO THE ASSESSEES CLAIM FOR DEPRECIA TION ON INTANGIBLE ASSET THE LD. REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED T HAT THE SAME IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL DATED 12-12-20 12 PASSED IN ASSESSEES OWN CASE FOR A.Y. 2006-07IN ITA NO. 2948/MUM/2010 W HEREIN A SIMILAR ISSUE HAS BEEN DECIDED BY THE TRIBUNAL FOR THE FOLL OWING REASONS GIVEN IN PARA NO. 11 TO 21:- 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES. WE HAVE ALSO GONE THROUGH TH E COPY OF THE DEED OF ASSIGNMENT OF BUSINESS SALE OF GOODWILL AND MAS TER SERVICES AGREEMENT. BY VIRTUE OF CLAUSE (1) OF THE SAID DEED IT IS PROVIDED AS UNDER (1) ASSIGNMENT AND CONSIDERATION : ITA 4131/MUM/2012 3 (A) THAT IN CONSIDERATION OF THE SUM OF RS.2 50 00 000/- (RS. TWO CRORE AND FIFTY LACS ONLY) PAID BY THE ASSIGNEE TO THE ASSIGNOR-1 ON THE EXECUTION OF THESE PRESENTS RECEIPT WHEREOF THE ASSIGNOR- 1 DO HEREBY ADMIT THE ASSIGNOR-1 AS BENEFICIAL OWN ER IRREVOCABLY ASSIGNS CONVEYS SELLS GRANTS AND TRA NSFERS ONTO THE ASSIGNEE WITHOUT LIMITATION AND IN PERPETUAL ALL THE SAID RETAIL CLIENTELE OF THE ASSIGNOR-1 IN STOCK BROKING BUSINE SS INCLUDING THE EXISTING BUSINESS ASSOCIATES (A LIST OF RETAIL CLIENTELE/BUSINESS ASSOCIATES IS ENCLOSED AS ANNEXU RE-A) TOGETHER WITH THE GOODWILL ATTACHED THERETO WITH AL L THE RIGHTS AND BENEFITS BELONGING THERETO TO HOLD THE SAME AND ALL THE SAID RETAIL CLIENTELE HEREBY ASSIGNED ON TO THE ASSIGNEE ABSOLUTELY; AS ON 1 ST SEPTEMBER 2005. (B) THE ASSIGNOR-1 HEREBY COVENANTS WITH THE ASSIGN EE THAT HE HAS FULL RIGHT AND ABSOLUTE AUTHORITY TO ASSIGN THE SAID RETAIL CLIENTELE TOGETHER WITH THE GOODWILL ATTACHED THERE TO AND THAT HE HAS NOT ASSIGNED OR AGREED TO ASSIGN THE SAME IN FA VOUR OF ANY OTHER PERSON OR CREATED ANY ENCUMBRANCES THEREON AN D THAT THE ASSIGNEE WILL BE ENTITLED TO USE THE SAID RETAIL CL IENTELE TOGETHER WITH THE GOODWILL ATTACHED THERETO OF THE ASSIGNOR- 1 WITHOUT ANY OBJECTION AND OR INTERRUPTION BY THE ASSIGNOR-1 OR ANY PERSON CLAIMING UNDER HIM INCLUDING THAT OF THE ASSIGNOR-2 AND THAT THE ASSIGNORS WILL AT THE REQUEST AND COSTS OF THE ASSI GNEE AT ANY TIME EXECUTE ANY DOCUMENT AS MAY BE REQUIRED FOR BE TTER AND MORE PERFECTLY ASSURING THE SAID ASSIGNMENT OF CLIE NTELE AND THE GOODWILL ATTACHED THERETO UNTO THE ASSIGNEE. 12. IT IS NOT IN DISPUTE THAT BY VIRTUE OF THIS AG REEMENT M/S.AFC HAS TRANSFERRED ITS ENTIRE RETAIL CLIENTELE TO THE ASSE SSEE FOR A CONSIDERATION OF RS.2.50 CRORES. THE ONLY ISSUE TO BE DECIDED IS WH ETHER THIS CONSTITUTES OR CREATES AN INTANGIBLE ASSET ELIGIBLE FOR DEPRECIATI ON UNDER SECTION 32 (1) (II) OF THE ACT ? LET US FIRST SEE THE PROVISIONS OF SECTION 32 (1) (II) OF THE ACT. 32. DEPRECIATION.--(1) IN RESPECT OF DEPRECIATION O F (I) BUILDINGS MACHINERY PLANT OR FURNITURE BEING TANG IBLE ASSETS ; (II) KNOW-HOW PATENTS COPYRIGHTS TRADE MARKS LI CENCES FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1ST DAY OF APRIL 1998 OWNED WHOLLY OR PARTLY BY THE ASSESSEE AND USED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION THE FOLLOWING DEDUCTIONS SHA LL BE ALLOWED-- (I) IN THE CASE OF ASSETS OF AN UNDERTAKING ENGAGED IN GENERATION OR GENERATION AND DISTRIBUTION OF POWER SUCH PERCENTA GE ON THE ACTUAL COST THEREOF TO THE ASSESSEE AS MAY BE PRESC RIBED. ITA 4131/MUM/2012 4 (II) IN THE CASE OF ANY BLOCK OF ASSETS SUCH PERCE NTAGE ON THE WRITTEN DOWN VALUE THEREOF AS MAY BE PRESCRIBED. 13. A PERUSAL OF THE ABOVE PROVISION SUGGESTS THAT CERTAIN INTANGIBLE ASSETS ON WHICH DEPRECIATION COULD BE CLAIMED ARE KNOW HOW PATENTS COPY RIGHTS TRADE MARKS LICENSES FRANCHISE OR ANY OTHER BUSIN ESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE. THIS EXPRESSION ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE BY ITSELF WOULD MEAN TO INCLUDE ALL KINDS OF COMMERCIAL RIGHTS. THE LANGUAGE IN SECTION 32 (1) (II) CLEARLY INVITES THE APPLICATION OF THE RULE OF EJUSDEM GENERIS WHICH MEANS THAT WORDS OF A GENERAL NATURE FOLLOWING SPECIFIC AND PARTICULAR WORDS SHOULD BE CONSTITUTE AS LIMITED TO THINGS WHICH ARE OF SAME NATURE AS THOSE SPECIFIED. THE SPECIFIC WORDS IN SECTION 32 OF THE ACT REVEAL THE SIMILARITY IN THE SENSE THAT ALL THE INTANGIBLE ASSETS SPECIFIED ARE TOOLS OF THE TRADE WHICH FACILITATES THE ASSESSEE T O CARRY ON THE BUSINESS. THEREFORE . THE EXPRESSION ANY OTHER BUSINESS O R COMMERCIAL RIGHTS OF SIMILAR NATURE WOULD INCLUDE SUCH RIGHTS WHICH CA N BE USED AS A TOOL TO CARRY ON THE BUSINESS. THIS VIEW FINDS SUPPORT FROM THE DECISION OF THE TRIBUNAL IN THE CASE OF SKYLINE CATERERS P LTD V/S ITO 306 ITR [AT] 369 MUMBAI. 14. IN THE LIGHT OF THESE OBSERVATIONS IT CANNOT B E DENIED THAT BY GETTING A RIGHT OVER 3709 CLIENTS OF M/S. AFC SUCH RIGHT IS USED AS A TOOL TO CARRY ON THE BUSINESS BY THE ASSESSEE. MERELY BECAUSE THE ASSESS EE SHOWED THE PAYMENT TO BE ON ACCOUNT OF GOODWILL IN THE BOOKS OF ACCOUNT NO ADVERSE INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE. 15. EVEN ASSUMING THAT THE PAYMENT HAS BEEN MADE FO R THE PURCHASE OF GOODWILL OF M/S. AFC IT HAS TO BE ACCEPTED THAT IN THIS LINE OF BUSINESS THE GOODWILL OF THE BROKER IS PARAMOUNT . BECAUSE OF CE RTAIN STRAY INCIDENCES WHICH HAVE TAKEN PLACE IN THE STOCK MARKET WHICH HAVE SHA KEN THE CONFIDENCE OF THE PUBLIC AT LARGE IN THE PAST THE INVESTORS ALWAYS D EPEND UPON THE GOODWILL OF THE BROKER BECAUSE NO INVESTOR WOULD LIKE TO BURN H IS FINGERS BY THE UNSCRUPULOUS ACTIVITIES UNDERTAKEN BY CERTAIN FRAUD ULENT BROKER. M/S. AFC HAD A STRONG CLIENTELE BASE OF 3709 PERSONS WHICH I TSELF SHOW THAT M/S. AFC WAS HOLDING A STRONG REPUTE IN THE EYES OF ITS CLIE NTS. UNDOUBTEDLY BY PURCHASE OF RIGHTS TO DO THE BUSINESS WITH THESE 3709 CLIENT S THE ASSESSEE HAS ACTUALLY PURCHASED THE GOODWILL OF M/S. AFC. 16 LORD MACNAGHTEN MARK IN IRC VS. MULLER & CO. MAR GARINE LTD. (1901) AC 217 HL REMARKED THAT ALTHOUGH GOODWILL WAS EASY TO DESCRIBE IT WAS DIFFICULT TO DEFINE. IN A PROGRESSING BUSINESS GOODWILL TENDS TO SHOW PROGRESSIVE INCREASE AND IN A FAILING BUSINESS IT MAY BEGIN TO WANE. ITS VALUE MAY FLUCTUATE FROM ONE MOMENT TO ANOTHER DEPENDING ON CHANGES IN THE REPUT ATION OF THE BUSINESS. IT IS EFFECTED BY EVERYTHING RELATING TO THE BUSINESS THE PERSONALITY AND BUSINESS RECTITUDE OF THE OWNERS THE NATURE AND CHARACTER O F THE BUSINESS ITS NAME AND REPUTATION ITS LOCATION ITS IMPACT ON THE CONTEMP ORARY MARKET THE PREVAILING SOCIO ECONOMIC ECOLOGY OR INTRODUCTION TO OLD CUSTOMERS AND AGREED ABSENCE OF COMPETITION. ITA 4131/MUM/2012 5 17. COMMERCIAL RIGHTS GAIN SIGNIFICANCE IN THE COM MERCIAL WORLD AS THEY REPRESENT A PARTICULAR BENEFIT OR ADVANTAGE OR REPU TATION BUILT OVER A CERTAIN SPAN OF TIME AND THE CUSTOMER ASSOCIATE WITH SUCH A SSETS. 18. IT WOULD NOT BE OUT OF PLACE TO HIGHLIGHT THE VIEWS EXPRESSED BY THE HONBLE HIGH COURT OF DELHI IN THE CASE OF AREVA T & D INDIA LTD. VS. DCIT (2012) 345 ITR 421. IN THE PRESENT CASE APPLYING THE PRINCIPLE OF EJU SDEM GENERIS WHICH PROVIDES THAT WHERE THERE ARE GENERAL WORDS FOLLOWI NG PARTICULAR AND SPECIFIC WORDS THE MEANING OF THE LATTER WORDS SHA LL BE CONFINED TO THINGS OF THE SAME KIND AS SPECIFIED FOR INTERPRET ING THE EXPRESSION 'BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE' S PECIFIED IN SECTION 32(1)(II) OF THE ACT. IT IS SEEN THAT SUCH RIGHTS N EED NOT ANSWER THE DESCRIPTION OF 'KNOW-HOW PATENTS TRADE MARKS LIC ENCES OR FRANCHISES' BUT MUST BE OF SIMILAR NATURE AS THE SPECIFIED ASSE TS. ON A PERUSAL OF THE MEANING OF THE CATEGORIES OF SPECIFIC INTANGIBL E ASSETS REFERRED TO IN SECTION 32(1)(II) OF THE ACT PRECEDING THE TERM 'BU SINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE' IT IS SEEN THAT THE AFOR ESAID INTANGIBLE ASSETS ARE NOT OF THE SAME KIND AND ARE CLEARLY DISTINCT F ROM ONE ANOTHER. THE FACT THAT AFTER THE SPECIFIED INTANGIBLE ASSETS THE WORDS 'BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE' HAVE BEEN ADDI TIONALLY USED CLEARLY DEMONSTRATES THAT THE LEGISLATURE DID NOT I NTEND TO PROVIDE FOR DEPRECIATION ONLY IN RESPECT OF SPECIFIED INTANGIBL E ASSETS BUT ALSO TO OTHER CATEGORIES OF INTANGIBLE ASSETS WHICH WERE N EITHER FEASIBLE NOR POSSIBLE TO EXHAUSTIVELY ENUMERATE. IN THE CIRCUMST ANCES THE NATURE OF 'BUSINESS OR COMMERCIAL RIGHTS' CANNOT BE RESTRICTE D TO ONLY THE AFORESAID SIX CATEGORIES OF ASSETS VIZ. KNOW-HOW PATENTS TRADE MARKS COPYRIGHTS LICENCES OR FRANCHISES. THE NATURE OF ' BUSINESS OR COMMERCIAL RIGHTS' CAN BE OF THE SAME GENUS IN WHIC H ALL THE AFORESAID SIX ASSETS FALL. ALL THE ABOVE FALL IN THE GENUS OF INTANGIBLE ASSETS THAT FORM PART OF THE TOOL OF TRADE OF AN ASSESSEE FACIL ITATING SMOOTH CARRYING ON OF THE BUSINESS. IN THE CIRCUMSTANCES IT IS OBS ERVED THAT IN THE CASE OF THE ASSESSEE INTANGIBLE ASSETS VIZ. BUSINESS CLAIMS ; BUSINESS INFORMATION ; BUSINESS RECORDS ; CONTRACTS ; EMPLOY EES ; AND KNOW-HOW ARE ALL ASSETS WHICH ARE INVALUABLE AND RESULT IN CARRYING ON THE TRANSMISSION AND DISTRIBUTION BUSINESS BY THE ASSES SEE WHICH WAS HITHERTO BEING CARRIED OUT BY THE TRANSFEROR WITHO UT ANY INTERRUPTION. THE AFORESAID INTANGIBLE ASSETS ARE THEREFORE COM PARABLE TO A LICENCE TO CARRY OUT THE EXISTING TRANSMISSION AND DISTRIBU TION BUSINESS OF THE TRANSFEROR. IN THE ABSENCE OF THE AFORESAID INTANGI BLE ASSETS THE ASSESSEE WOULD HAVE HAD TO COMMENCE BUSINESS FROM S CRATCH AND GO THROUGH THE GESTATION PERIOD WHEREAS BY ACQUIRING T HE AFORESAID BUSINESS RIGHTS ALONG WITH THE TANGIBLE ASSETS THE ASSESSEE GOT AN UP AND RUNNING BUSINESS. THIS VIEW IS FORTIFIED BY THE RATIO OF THE DECISION OF THE SUPREME COURT IN TECHNO SHARES AND STOCKS LT D. [2010] 327 ITR 323 (SC) WHEREIN IT WAS HELD THAT INTANGIBLE ASSETS OWNED BY THE ASSESSEE AND USED FOR THE BUSINESS PURPOSE WHICH EN ABLES THE ASSESSEE ITA 4131/MUM/2012 6 TO ACCESS THE MARKET AND HAS AN ECONOMIC AND MONEY VALUE IS A 'LICENCE' OR 'AKIN TO A LICENCE' WHICH IS ONE OF TH E ITEMS FALLING IN SECTION 32(1)(II) OF THE ACT. IN VIEW OF THE ABOVE DISCUSSION WE ARE OF THE VIEW THAT THE SPECIFIED INTANGIBLE ASSETS ACQUIRED UNDER SLUMP SALE AGREEME NT WERE IN THE NATURE OF 'BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE' SPECIFIED IN SECTION 32(1)(II) OF THE ACT AND WERE ACCORDINGLY ELIGIBLE FOR DEPRECIATION UNDER THAT SECTION. 19. THE I.T.A.T. MUMBAI G BENCH IN THE CASE OF D CIT VS. WEIZMAN FOREX LTD. IN ITA.NO.3571/MUM/2011 OBSERVED THAT THE DEFI NITION OF THE ASSET WHICH IS A SUBJECT MATTER OF THE TRANSFER CONSISTS OF ALL CONTRACT LICENSES FRANCHAISE DISTRIBUTION NET WORK CUSTOMER LISTS MARKETING STRATEGIES AND SOFTWARE AND WHEN THE INTANGIBLE ASSET BEING COMMER CIAL/BUSINESS RIGHTS DIMINISHED IN VALUE OR PHYSICAL WEAR AND TEAR IS NO T AN ESSENTIAL CONDITION FOR ADMISSIBILITY FOR DEPRECIATION IF THE ASSET IS USE D AS A BUSINESS TOOL FOR EARNING INCOME. 20. IN THE LIGHT OF THE ABOVE DISCUSSION IT IS NO T IN DOUBT OR DISPUTE THAT PURCHASE OF THE CLIENTELE BUSINESS BY THE ASSESSEE FROM M/S. AFC IS A RIGHT WHICH CAN BE USED AS A TOOL TO CARRY ON THE BUSINES S. IT CAN ALSO BE SEEN FROM THE ANGLE OF PURCHASE OF ENTIRE MARKETING NET WORK BY THE ASSESSEE FROM M/S. AFC EVEN IF CONSIDERED FROM THIS ANGLE THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION AS HELD BY THE TRIBUNAL. IN ITA.NO.181/MUM/2008 IN THE CASE OF M/S. JYOTI INDIA METAL INDUSTRIES PVT. LTD. VS. ACIT. THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. SMIFS SECURITIES LTD. (2012) 24 TAX MANN.COM 222 HAS HELD THAT GOODWILL IS AN ASSET ELIGIBLE FOR DEPRECIATION . 21. IN OUR CONSIDERATE VIEW AFTER CONSIDERING THE ENTIRE GAMUT OF FACTS OF INSTANT CASE WE HAVE NO HESITATION TO HOLD THAT TH E ASSESSEE IS ENTITLED FOR DEPRECIATION ON PAYMENT OF RS.2.50 CRORES @ 25% WHI CH COMES TO RS.62 50 000/- AS CLAIMED BY THE ASSESSEE. THE ASSE SSING OFFICER IS ACCORDINGLY DIRECTED TO ALLOW THE DEPRECIATION. GRO UND NO.1 IS ACCORDINGLY ALLOWED. 3. THE AFORESAID DECISION RENDERED IN A.Y. 2006-07 HAS BEEN SUBSEQUENTLY FOLLOWED BY THE TRIBUNAL TO DECIDE A SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE VIDE ITS ORDER DATED 20 TH FEBRUARY 2013 PASSED IN ITA NO. 7301/MUM/2010 FOR A.Y. 2007-08. RESPECTFULLY FOLLOWING THESE DEC ISIONS OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL PASSED IN ASSESSEES OWN CAS E IN THE EARLIER YEARS ON THE SIMILAR ISSUE WE DIRECT THE A.O. TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ON INTANGIBLE ASSET. GROUND NO. 1 IS ACCORDINGLY ALLOWED. ITA 4131/MUM/2012 7 4. AS REGARDS THE ISSUE RELATING TO DISALLOWANCE O F 7 29 498/- MADE U/S 14A OF THE ACT AS RAISED IN GROUND NO. 2 IT IS OBS ERVED THAT THE SAME MADE BY THE A.O. AS PER RULE 8-D OF THE INCOME TAX RULES 1 962 WAS COMPRISING OF DISALLOWANCE ON ACCOUNT OF INTEREST AMOUNTING TO RS . 5 25 751/- AND DISALLOWANCE ON ACCOUNT OF OTHER EXPENSES AMOUNTING TO RS. 3 27 500/-. AS REGARDS THE DISALLOWANCE ON ACCOUNT OF OTHER EXPENS ES AMOUNTING TO RS. 3 27 500/- THE LD. COUNSEL FOR THE ASSESSEE HAS NO T RAISED ANY ARGUMENT TO DISPUTE THE SAME. AS REGARDS THE DISALLOWANCE ON A CCOUNT OF INTEREST HE HOWEVER HAS INVITED OUR ATTENTION TO THE BALANCE S HEET AS ON 31-3-2009 PLACED AT PAGE 3 OF HIS PAPER BOOK TO SHOW THAT SUF FICIENT OWN FUNDS OF RS. 62.90 CRORES WERE AVAILABLE WITH THE ASSESSEE IN TH E FORM OF SHARE CAPITAL AND RESERVE & SURPLUS TO MAKE THE INVESTMENT OF RS. 6.0 2 CRORES IN THE SHARES ON WHICH THE DIVIDEND INCOME EXEMPT FROM TAX WAS EARNE D. HE HAS RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S WEIZMAN N LTD. VS. ACIT RENDERED VIDE ORDER DATED 21-10-2011 IN ITA NO. 4751/MUM/201 0 WHEREIN IT WAS HELD RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COUR T IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. 313 ITR 340 THAT THE ASSE SSEE HAVING SUFFICIENT OWN FUNDS TO MAKE INVESTMENT IN SHARES AND SECURITIES IT COULD NOT BE SAID THAT INTEREST EXPENDITURE INCURRED BY THE ASSESSEE ON BO RROWED FUNDS WAS IN RELATION TO EARNING OF EXEMPT DIVIDEND INCOME SO AS TO WARRANT ANY DISALLOWANCE ON ACCOUNT OF INTEREST EXPENDITURE U/S 14A OF THE ACT. KEEPING IN VIEW THE SAID DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL AND HAVING REGARD TO THE FACT THAT SUFFICIENT OWN FUNDS WERE A VAILABLE WITH THE ASSESSEE AT THE RELEVANT TIME TO MAKE INVESTMENT IN THE SHAR ES WE ARE OF THE VIEW THAT NO DISALLOWANCE U/S 14A OF THE ACT ON ACCOUNT OF IN TEREST EXPENDITURE CAN BE MADE. WE THEREFORE SUSTAIN THE DISALLOWANCE OF R S. 7 29 498/- MADE U/S 14A OF THE ACT TO THE EXTENT OF RS. 3 27 500/- AND ALLOW PARTLY GROUND NO. 2 OF THE ASSESSEES APPEAL. ITA 4131/MUM/2012 8 5. AS REGARDS THE ISSUE RAISED IN GROUND NO. 3 REL ATING TO THE DISALLOWANCE OF RS. 95 242/- ON ACCOUNT OF PRIOR PERIOD EXPENSES THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE COMPUTATI ON OF TOTAL INCOME OF THE ASSESSEE PLACED AT PAGE 2 OF HIS PAPER BOOK TO POIN T OUT THAT THE DISALLOWANCE OF PRIOR PERIOD EXPENSES WAS OFFERED BY THE ASSESSE E SUO MOTU. HE HAS CONTENDED THAT THE DISALLOWANCE OF THE SAME AMOUNT AGAIN BY THE A.O. HAS RESULTED IN DOUBLE ADDITION. WE ACCORDINGLY DIRECT THE A.O. TO VERIFY THE STAND OF THE ASSESSEE AND ALLOW APPROPRIATE RELIEF ON THI S ISSUE TO THE ASSESSEE IF IT IS FOUND THAT THE DISALLOWANCE ON ACCOUNT OF PRIOR PERIOD EXPENSES WAS ALREADY OFFERED BY THE ASSESSEE. GROUND NO. 3 OF AS SESSEES APPEAL IS ACCORDINGLY TREATED AS ALLOWED. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. 4 5 &) %4 / 63 #$ 7 / 89 ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY 2013. . '3 / 12* :')5 31/07/2013 2 / SD/- SD/- (SANJAY GARG) (P.M. JAGTAP ) & !'# JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI ; :') DATED 31-07-2013. $.&).!./ RK SR. PS '3 / -&6; <;* '3 / -&6; <;* '3 / -&6; <;* '3 / -&6; <;*/ COPY OF THE ORDER FORWARDED TO : 1. + / THE APPELLANT 2. -.+ / THE RESPONDENT. 3. = () / THE CIT(A)- XVI MUMBAI 4. = / CIT XVI MUMBAI 5. ;$@ -&&) / DR ITAT MUMBAI I BENCH 6. A% B / GUARD FILE. '3)! '3)! '3)! '3)! / BY ORDER !.; -& //TRUE COPY// C C C C/ // /!8 !8 !8 !8 ( DY./ASSTT. REGISTRAR) / ITAT MUMBAI