Aarcee Exports Pvt. Ltd, Kolkata v. DCIT, Circle-11, Kolkata, Kolkata

ITA 882/KOL/2017 | 2005-2006
Pronouncement Date: 29-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 88223514 RSA 2017
Assessee PAN AACCA1180C
Bench Kolkata
Appeal Number ITA 882/KOL/2017
Duration Of Justice 7 month(s)
Appellant Aarcee Exports Pvt. Ltd, Kolkata
Respondent DCIT, Circle-11, Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 29-11-2017
Assessment Year 2005-2006
Appeal Filed On 28-04-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH KOLKATA BEFORE : SHRI P.M. JAGTAP ACCOUNTANT MEMB ER AND SHRI S.S.VISWANETHRA RAVI JUDICIAL MEMBER ITA NO. 882/KOL/2017 A.Y 2005-06 M/S. AARCEE EXPORTS VS. D.C.I.T. CIR-11 KOLKATA PVT. LTD. PAN:AACCA 1180C [APPELLANT ] [RESPONDENT ] APPELLANT/ASSESSEE BY : SHRI AKKAL DUDHWEWAL A ACA LD.AR RESPONDENT/DEPARTMENT BY : SHRI KALYAN NATH LD.SR.DR DATE OF HEARING : 13-09-2017 DATE OF PRONOUNCEMENT : 29-11-2017 ORDER SHRI S.S.VISWANETHRA RAVI JM: THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DT. 22-02- 2017 OF THE CIT-A 7 KOLKATA FOR THE A.Y 2005-06. 2. AT THE OUTSET THE LD.AR SUBMITS THAT THE ASSESS EE IS NOT INTERESTED IN PROSECUTING GROUND NOS. 1 TO 3. THERE FORE HE PRAYED TO DISMISS THE SAME AS NOT PRESSED. ACCORDINGLY GROUN D NOS. 1 TO 3 ARE DISMISSED AS NOT PRESSED. 3. THE LD.AR FURTHER SUBMITS THAT GROUND NOS. 4 & 5 INVOLVING THE SAME ISSUE IN RESPECT OF CLAIM OF DEPRECIATION ON INTANGIBLE ASSET U/S. 32(1)(II) OF THE ACT. HE ALSO SUBMITS THAT THE ISSUE IN HAND IS SQUARELY COVERED BEING IDENTICAL ISSUE IN FAVOUR AS SESSEE BY AN ORDER DT. 27-07-2017 OF THIS TRIBUNAL FOR THE A.Y 2004-05 IN THE CASE OF PADMAVATI PROPERTIES & TRUST PVT. LTD IN ITA NO. 61 2/KOL/2014) AND REFERRED TO PARAS 5 TO 7.5 OF THE SAID ORDER AND AR GUED THAT THIS TRIBUNAL HELD THAT THE ASSESSEE THEREIN IS ENTITLED TO CLAIM ITA NO. 882/KOL/2017 M/S. AARCEE EXPORTS PVT. LTD (MERGED WITH PADMAVATI PROPERTIES & TRUST P.LTD) 2 DEPRECIATION ON INTANGIBLE ASSET AND PRAYED TO ALLO W THESE GROUNDS OF APPEAL. 4. ON THE OTHER HAND THE LD. DR RELIED ON THE ORDE RS OF THE AUTHORITIES BELOW. 5. HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE IN THE PRESENT CASE HAS CLAI MED DEPRECIATION A SUM OF RS.36 40 456/- ON INTANGIBLE ASSET VALUING A T RS.1 45 61 825/- @ 25% U/S. 32(1)(II) OF THE ACT. TH E AO HAS NOT ACCEPTED THE SUBMISSIONS OF ASSESSEE IN RESPECT OF SUCH CLAIM. THE CIT-A CONFIRMED THE ORDER OF AO. BUT HOWEVER KEEP ING IN VIEW OF IDENTICAL ISSUE FOR THE A.Y 2004-05 IN THE CASE OF S UPRA DECIDED BY THIS TRIBUNAL WE FIND THAT THE ISSUE IN HAND IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE SAID ORDER DT. 27-07-2017 IN THE CASE OF SUPRA. THE TRIBUNAL VIDE ORDER DT. 27-07-2017 HELD THAT T HE ASSESSEE THEREIN IS ENTITLED TO CLAIM SUCH DEPRECIATION ON I NTANGIBLE ASSET. RELEVANT PORTION OF THE SAID ORDER DT. 27-07-2017 I S REPRODUCED HEREIN BELOW:- 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PRIVATE LIMITED COMPANY. THE ASSESSEE HAS FILED ITS RETURN OF INCOME DECLARING T OTAL LOSS OF RS.49 40 699/-. THE AO AFTER SCRUTINY ASSESSMENT U/S. 143(3) OF THE ACT AS SESSED LOSS OF RS.2 12 985/-. DURING COURSE OF THE ASSESSMENT PROCEEDINGS THE AO NOTED T HAT THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS.37 59 375/-. THE AO NOTED THAT T HE ASSESSEE AS PER COMPANIES ACT 1956 CLAIMED DEPRECIATION @ 5% OF INTANGIBLE ASSETS WHICH IT ACQUIRED DURING THE RELEVANT FINANCIAL YEAR AMOUNTING TO RS.7 51 875/-. THE AO NOTED THAT AS PER SCHEDULE OF DEPRECIATION UNDER THE I. T. ACT 1961 THE ASSES SEE CLAIMED DEPRECIATION ON THE SAME ASSETS @ 25% AMOUNTING TO RS.37 59 375/- . THE AO CAREFULLY LOOKED INTO THE DETAILS FILED IN SUPPORT OF THE ALLEGED ASSETS ACQUIRED DUR ING THE YEAR AND HE OBSERVED THAT THE ASSESSEE ACQUIRED RIGHTS OF VARIOUS SERVICES RELATE D TO INFRASTRUCTURE ASSETS WHICH ARE INSTALLED AT FORUM MALL OWNED BY TWO COMPANIES VIZ. M/S. MULTIPLEX EQUIPMENTS & SERVICES PVT. LTD. AND M/S. VIDYUT ELECTRICALS & EL ECTRONICS PVT. LTD. (HEREAFTER REFERRED TO AS SERVICE PROVIDER). ACCORDING TO THE ASSESSEE THE AFORESAID RIGHT HAS BEEN OBTAINED FOR A CONSIDERATION OF RS.1 50 37 500/-. THE AO AS KED THE ASSESSEE AS TO EXPLAIN WHY THE DEPRECIATION ON THE INTANGIBLE ASSET AS CLAIMED BY THE ASSESSEE BE ALLOWED. IN REPLY THE ASSESSEE STATED THAT THE COMPANY HAD ACQUIRED R IGHTS OF VARIOUS SERVICE RELATED TO INFRASTRUCTURAL ASSET WHICH ARE INSTALLED AT FORUM MALL SITUATED AT 10/3 LALA LAJPATRAI SARANI KOLKATA ON TRANSFERABLE BASIS FOR COMMERCIA L GAINS AND THAT IT HAD ACQUIRED FROM M/S. VIDYUT ELECTRICALS & ELECTRONICS PVT. LTD. AND M/S. MULTIPLEX EQUIPMENTS & SERVICES PVT. LTD. WHICH HAS BEEN SHOWN IN THE BOOKS OF ACCO UNT UNDER THE HEAD INTANGIBLE ASSET AS A PART OF FIXED ASSET AND DEPRECIATION IS CHARGE D THEREON. IT WAS BROUGHT TO THE NOTICE OF THE AO THAT THESE ASSETS ARE PRESENTLY USED BY M /S. INOX LEISURE LTD. WHO ARE PAYING AMENITY FACILITY AND UTILITY CHARGES OF RS.6 01 50 0/- PER MONTH WHICH IS THE INCOME OF THE COMPANY AND SHOWN IN THE BOOKS OF ACCOUNT ACCOR DINGLY. ACCORDING TO THE ASSESSEE THESE RIGHTS HAVE BEEN ACQUIRED FOR COMMERCIAL EXPE DIENCY AND GENERATING REVENUES FOR THE COMPANY. IT WAS ALSO BROUGHT TO THE KNOWLEDGE OF THE AO THAT THE ASSESSEE TAKING INTO CONSIDERATION THE WORKABLE LIFE OF THE EQUIPM ENTS FOR 20 YEARS THE DEPRECIATION @ ITA NO. 882/KOL/2017 M/S. AARCEE EXPORTS PVT. LTD (MERGED WITH PADMAVATI PROPERTIES & TRUST P.LTD) 3 5% PER ANNUM HAS BEEN CHARGED AND CLAIMED IN THE BO OKS OF ACCOUNT. IT WAS ALSO BROUGHT TO THE NOTICE OF THE AO THAT THE ASSESSEE C OMPANY HAS CLAIMED THE DEPRECIATION AS PER BLOCK-19 OF THE ACT. 6. THE AO THEREAFTER NOTICED THAT THERE IS A MULTI STORIED BUILDING AT 10/3 LALA LAJPATRAI SARANI NAMED FORUM MALL. THE PROMOTER OF THE BUILDING HAD GONE INTO AN AGREEMENT WITH M/S. VIDYUT ELECTRICALS & ELECTRONIC S PVT. LTD. AND M/S. MULTIPLEX EQUIPMENTS & SERVICES PVT. LTD. TO PROVIDE VARIOUS SERVICES/FACILITIES TO THE OWNERS/TENANTS OF DIFFERENT SPACE HOLDERS. THE SPA CE HOLDERS WILL GO INTO SEPARATE AGREEMENT WITH THOSE SERVICE PROVIDERS AND THE SERV ICE PROVIDERS WILL CHARGE THEIR SERVICE CHARGES SEPARATELY ON EACH AND EVERY SPACE HOLDERS. THE AO NOTICED THAT THE SERVICE PROVIDER WHO ARE THE ABSOLUTE OWNER OF ALL PLANT AND MACHINERIES REQUIRED FOR PROVIDING SUCH SERVICES TO THE SPACE OWNERS. THE A O NOTICED THAT THE ASSESSEE COMPANY HAD ENTERED INTO AN AGREEMENT WITH THOSE SERVICE PR OVIDERS ON 26.09.2003. BY VIRTUE OF THIS AGREEMENT THE SERVICE PROVIDERS WILL NOT COLLE CT ANY SERVICE CHARGES FROM THE TENANTS/SPACE HOLDERS OF 4 TH 5 TH AND 6 TH FLOORS OF FORUM MALL. ACCORDING TO AO THE ENTIRE SERVICE VALUE HAS BEEN SETTLED WITH THE ASSESSEE CO MPANY THROUGH A ONE-TIME SETTLEMENT AT A CONSIDERATION RS.1 50 37 500/-. TH E AO NOTED THAT IN VIEW OF THAT ONE- TIME PAYMENT THE ASSESSEE COMPANY WOULD BE ELIGIBL E TO COLLECT ONLY THE SERVICE CHARGES FROM THE TENANTS/SPACE HOLDERS. IT HAS BEE N NOTED BY THE AO THAT THE ASSESSEE COMPANY WOULD NOT ACQUIRE ANY RIGHTS FROM THE ASSET S OWNED BY THE SERVICE PROVIDERS WHICH WERE INSTALLED BY THEM FOR THE PURPOSE OF PRO VIDING SERVICE TO THE TENANTS/SPACE HOLDERS. WITH THE AFORESAID FACTS THE AO HELD AS U NDER: THIS ACQUISITION OF RIGHTS OF OTHER PERSONS I.E. GETTING OF SERVICE FROM ORIGINAL SERVICE PROVIDERS HAS BEEN CLAIMED BY THE ASSESSEE AS ITS I NTANGIBLE ASSETS. ACCORDING1Y THE ASSESSEE CLAIMED DEPRECIATION ON THE INTANGIBLE ASS ETS. ON ENQUIRY IT WAS CONFIRMED THAT THE ORIGINAL SERVICE PROVIDERS ARE AS USUAL C LAIMING DEPRECIATIONS ON THE ASSETS REQUIRED FOR PROVIDING SERVICES TO THE SPACE HOLDER S. IT WILL NOT BE OUT OF PLACE TO MENTION THAT THE ORIGINAL SERVICE PROVIDERS ARE PROVIDING U SUAL SERVICES TO THE SPACE HOLDERS AS PER ORIGINAL TERMS AND CONDITION. THE ONLY EXCEPTIO N IS THAT THE SERVICE CHARGES/FACILITY CHARGES ARE BEING COLLECTED BY THE ASSESSEE SINCE THE ASSESSEE HAD GONE INTO A ONE- TIME SETTLEMENT WITH THE ORIGINAL SERVICE PROVIDERS ABOUT THE RIGHTS OF HAVING SERVICES/FACILITIES OF THE SPACE HOLDERS. IN VIEW OF THE ABOVE FEW POINTS EMERGES:- A) THE ASSESSEE COMPANY IS NOT THE ORIGINAL SERVICE PROVIDER TO THE SPACE HOLDERS. B) WHETHER ONE CAN PURCHASE ANOTHER'S RIGHT OF HAVI NG SERVICE FACILITY WITHOUT INVOLVING THE BENEFICIARIES INTO THE AGREEMENT? C) THE ASSESSEE COMPANY HAS NO RIGHT TO ULTIMATELY MODIFY THE RIGHTS OF THE SPACE HOLDERS. D) THE ASSESSEE COMPANY IS NOT THE OWNER OF PLANT & MACHINERY INSTALLED AT THE PREMISES FOR PROVIDING THE SERVICES TO THE SPACE HO LDERS. E) THE ORIGINAL SERVICE PROVIDER CLAIMING DEPRECIAT ION ON THE PLANT & MACHINERY REQUIRED FOR PROVIDING SERVICES. AND THEREAFTER HE CONCLUDES AS UNDER: IN THIS CASE THIS PURCHASE OF ANOTHER PERSON'S RI GHTS FOR GETTING SERVICES AGAINST PAYMENT WITH ORIGINAL SERVICE PROVIDERS CA NNOT BE SAID TO BE A KNOW- HOW PATENTS COPY-RIGHTS TRADE MARKS LICENSES OR FRANCHISES. MOST IMPORTANT IS 'ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE'. BY VIRTUE OF OBTAINING 'KNOW-HOW' 'PATENTS 'COPYRIGHTS' ''TRA DE-MARKS ' 'LICENSES' 'FRANCHISES' OR 'ANY OTHER BUSINESS OR COMMERCIAL R IGHTS OF SIMILAR NATURE' A ITA NO. 882/KOL/2017 M/S. AARCEE EXPORTS PVT. LTD (MERGED WITH PADMAVATI PROPERTIES & TRUST P.LTD) 4 PERSON CARRIES ON SOME EXCLUSIVE NATURE OF BUSINESS ACTIVITY. THE INTENTION OF THE LEGISLATURE FOR PROVIDING DEPRECIATION ON SUCH INTANGIBLE ASSETS ARE FOR GROWTH OF BUSINESS ACTIVITY. THE ASSESSEE'S ONE TIM E INVESTMENT FOR PERIODICAL COLLECTION OF SERVICE CHARGES AND WITHOUT PROVIDING ANY SERVICES BY IT ACCORDING TO TERMS AND CONDITIONS OF ORIGINAL SERVICE PROVIDE R CANNOT BE SAID TO BE BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE OF KNOW-HOW PATENTS COPY- RIGHTS TRADE-MARKS LICENSES OR SIMILAR NATURE. IN THE LIGHT OF ABOVE DISCUSSION NO DEPRECIATION ON ALLEGED INTANGIBLE ASSETS ARE AL LOWED. AGGRIEVED BY THE AFORESAID DECISION OF THE AO THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO CO NFIRM THE ORDER OF THE AO AND DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVE D BY THE IMPUGNED ORDER THE ASSESSEE IS BEFORE US ON THE FOLLOWING GROUNDS: 1) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN LAW AND ON FACTS IN NOT ALLOWING THE DEPRECIATIO N ON THE 'INTANGIBLE' ASSETS WITHOUT APPRECIATING THE FACTS OF THE APPELLANT'S C ASE IN THE PROPER PERSPECTIVE. 2) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE AUTHORITIES BELOW FAILED TO APPRECIATE AND UNDERSTAND THAT BY M AKING LUMP SUM PAYMENT OF RS.1 50 37 500/ - THE APPELLANT HAD OBTAINED 'LICEN SE' OR 'RIGHT TO RECEIVE' MONTHLY FEES AND THE SAID LICENSE BEING 'COMMERCIAL RIGHT' THE SAME CONSTITUTED INTANGIBLE ASSET U/S 32(1)(I) OF THE I T ACT ON WHI CH DEPRECIATION WAS CLEARLY ALLOWABLE. 3) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE AO BE DIRECTED TO ALLOW DEPRECATION OF RS.37 59 375/- U/S 32(1)(I) OF THE ACT. 4) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND WITHOUT PREJUDICE TO THE PRECEDING GROUNDS THE APPELLANT AL TERNATIVELY PRAYS THAT THE PAYMENT EFFECTED TO VIDYUT ELECTRICALS & ELECTRONIC S PVT. LTD AND MULTIPLEX EQUIPMENTS & SERVICES PVT. LTD AGGREGATING TO RS.1 50 37 500/ - BE ALLOWED AS REVENUE EXPENDITURE. 5) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE APPELLANT HAVING MADE PAYMENT TO THE SAID 2 COMPANIES IN CONN ECTION WITH EARNING INCOME IN THE FORM OF MONTHLY CHARGES FROM INOX TH E EXPENDITURE INCURRED OR LAID OUT WHOLLY AND NECESSARILY FOR THE PURPOSE OF EARNING SUCH INCOME TO BE ALLOWED AS REVENUE EXPENDITURE 6) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND WITHOUT PREJUDICE TO THE PRECEDING TWO GROUNDS THE CIT(A) H AVING HELD THAT THE PAYMENT OF RS.L 50 37 500/- MADE BY THE ASSESSEE TO THE SAID 2 COMPANIES BEING 'DISCOUNTED PRESENT VALUE OF THE RENT TO BE RECEIVED FROM INOX FOR 25 YEARS THE CIT(A) OUGHT TO HAVE DIRECTED THE AO TO EXCLUDE FROM THE TOTAL INCOME THE MONTHLY RENT RECEIVED FROM INOX BECAUSE THE RECOVERY OF THE PRINCIPAL AMOUNT DID NOT HAVE CHARACTER OF INCOME. 7. WE HAVE HEARD LD. AR AND CAREFULLY GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. AR BEFORE DESCRIBING THE FACT S DREW OUR ATTENTION TO PAGE 1 OF PAPER BOOK WHICH SHOWS A CHART IN RESPECT OF THE PO SITION PRIOR TO ACQUISITION OF LICENSE BY THE ASSESSEE AND PAGE 2 WHICH SHOWS THE POSITION OF POST ACQUISITION OF LICENSE BY THE ASSESSEE. BOTH THE CHARTS ARE REPRODUCED HEREUNDER FOR BETTER APPRECIATION OF THE FACTS OF THE CASE. ITA NO. 882/KOL/2017 M/S. AARCEE EXPORTS PVT. LTD (MERGED WITH PADMAVATI PROPERTIES & TRUST P.LTD) 5 ITA NO. 882/KOL/2017 M/S. AARCEE EXPORTS PVT. LTD (MERGED WITH PADMAVATI PROPERTIES & TRUST P.LTD) 6 THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A P RIVATE LIMITED COMPANY WHICH DECLARED LOSS OF RS.49 40 699/-. THEREAFTER THE AO COMPLET ED THE SCRUTINY ASSESSMENT ASSESSING LOSS OF RS.2 12 985/-. THE FACTS AS DESCRIBED BY L D. AR IS THAT M/S. NAMRATA TRADING PVT. LTD. AND HEILGERS DEVELOPMENT CONSTRUCTION CO. PVT. LTD. WERE THE OWNERS OF THE PROPERTY AT 10/3 LALA LAJPATRAI SARANI KOLKATA. THE OWNERS ALONG WITH M/S. SUSNAM PROPERTIES PVT. LTD. (HEREINAFTER THE DEVELOPER) HA VE CONSTRUCTED A BUILDING ON THE SAID LAND WHICH IS KNOWN AS FORUM MALL. THE SAID MALL H AS BEEN DESIGNED TO BE USED AS RETAILING/ENTERTAINMENTS. THE 4 TH 5 TH AND 6TH FLOORS OF THE MALL WERE DESIGNED TO BE UTILIZED AS MULTIPLEX THEATRE FOR EXHIBITION OF FIL MS. IN ORDER TO UTILIZE THE SAID AREA AS MULTIPLEX THEATRE IT WAS NECESSARY TO PROVIDE SUPP LIES INFRASTRUCTURE EQUIPMENTS AMENITIES UTILITIES AND MAINTENANCE SERVICES SO TH AT THE FILM CAN BE VIEWED BY THE CINEGOERS IN THE MOST CONGENIAL AND AESTHETIC ATMOS PHERE. THE OWNERS AND THE DEVELOPERS HAD PROMOTED M/S. MULTIPLEX EQUIPMENTS A ND SERVICES PVT. LTD. AND M/S. VIDYUT ELECTRONICS & ELECTRICALS PVT. LTD. TO PROVI DE REQUISITE EQUIPMENTS FACILITIES UTILITIES AND AMENITIES AT THE SAID FORUM MALL INCL UDING THE AREAS ON THE 4 TH 5 TH AND 6 TH FLOORS OF THE SAID MALL WHERE MULTIPLEX THEATRE WER E LOCATED. IN CONSIDERATION OF USE OF FACILITIES EQUIPMENTS UTILITIES ETC. PROVIDED BY THE SERVICE PROVIDER COMPANIES THE ITA NO. 882/KOL/2017 M/S. AARCEE EXPORTS PVT. LTD (MERGED WITH PADMAVATI PROPERTIES & TRUST P.LTD) 7 OCCUPIERS/SUB-LICENCEES OF THE SAID FORUM MALL HAD OBLIGATION TO PAY MONTHLY CHARGES. THE 4 TH 5 TH AND 6 TH FLOORS OF THE MALL WERE LEASED TO M/S. INOX LEISUR E LTD. (HEREINAFTER INOX). BESIDES PAYING MONTHLY RENT TO THE OWNERS O F THE AREA ON THE 4 TH 5 TH AND 6 TH FLOORS THE SAID INOX ALSO ENTERED INTO SEPARATE AG REEMENTS WITH THE TWO SERVICE PROVIDERS WHEREUNDER IT HAS TO PAY MONTHLY CHARGES TO THE SAID TWO SERVICE PROVIDERS FOR USE OF THEIR EQUIPMENTS AMENITIES FACILITIES AND UTILITIES ETC. WHICH WAS PROVIDED AT THE 4 TH 5 TH AND 6 TH FLOORS. DURING THE YEAR UNDER CONSIDERATION ON 2 2.07.2003 THE ASSESSEE COMPANY GOT INTO AN AGREEMENT WITH THE SERVICE PRO VIDERS WHEREUNDER THE ASSESSEE COMPANY PAID A LUMPSUM AMOUNT OF RS.1 50 37 500/- T O TWO COMPANIES. 7.1. IT IS NOT IN DISPUTE THAT AS A RESULT OF LUMP SUM PAYMENT MADE TO SAID COMPANY THE ASESSEE HAD STARTED RECEIVING MONTHLY PAYMENTS FROM M/S INOX TOWARDS USE OF UTILITIES AMENITIES ETC. HENCE IT COULD BE SAFELY CONCLUDED THAT THE ASSESSEE HAD ACQUIRED LICENCE TO RECEIVE MONTHLY PAYMENTS FOR USE AND EXPLOITATION OF VARIOUS EQUIPMENTS FACILITIES AND UTILITIES. IN OUR CONSI DERED OPINION THE SAME WOULD CLEARLY FALL UNDER THE DEFINITION OF INTANGIBLE ASSETS UNDER T HE AMBIT OF BUSINESS OR COMMERCIAL RIGHTS WITHIN THE MEANING OF SECTION 32 OF THE ACT . FOR THE SAKE OF CONVENIENCE THE DEFINITION OF INTANGIBLE ASSETS IS REPRODUCED BELOW :- EXPLANATION 3 FOR THE PURPOSES OF THIS SUB-SECTIO N THE EXPRESSION ASSETS SHALL MEAN (A) TANGIBLE ASSETS -------------- (B) INTANGIBLE ASSETS BEING KNOW-HOW PATENTS COPYRIG HTS TRADE MARKS LICENCES FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMIL AR NATURE. 7.2. FROM THE FACTS AND PURSUANT TO THE AGREEMENTS ENTERED INTO BETWEEN THE PARTIES IT COULD BE SEEN THAT THE ASSESSEE HAD ACQ UIRED THE RIGHT TO RECEIVE MONTHLY CHARGES IN PLACE AND STEAD OF THE TWO COMPANIES BY PAYING A LUMP SUM CONSIDERATION TO THEM. WE FIND THAT THE TWO COMPANIES WERE UNDER AN OBLIGATION TO PROVIDE EQUIPMENTS AMENITIES FACILITIES AND UTILITIES TO 4 TH 5 TH & 6 TH FLOORS USED AS MULTIPLEX AND CORRESPONDINGLY HAVE THE RIGHT TO RECEIVE THE MONTH LY CHARGES FROM INOX. THE ASSESSEE BY MAKING LUMP SUM PAYMENTS TO THESE TWO C OMPANIES STOOD REPLACED IN PLACE OF TWO COMPANIES AND THEREBY BECOMING ENTITLE D TO RECEIVE THE MONTHLY CHARGES FROM INOX. THE ASSESSEE BY MAKING PAYMENT OF LUMP S UM CONSIDERATION HAD BECOME THE OWNER OF THE LICENSE TO COLLECT MONTHLY CHARGES FROM INOX ON ON-GOING BASIS FOR A PERIOD OF 25 YEARS WHICH CLEARLY SHOWS THAT THE AFO RESAID LICENSE GAVE ENDURING COMMERCIAL RIGHTS TO THE ASSESSEE. WE FIND THAT TH E LD AO HAD ALSO ASSESSED THE MONTHLY CHARGES UNDER THE HEAD INCOME FROM BUSINES S OF THE ASSESSEE WHICH GOES TO PROVE THAT THE SAID LICENSE HAD BEEN USED BY THE AS SESSEE IN THE COURSE OF BUSINESS OF THE ASSESSEE. IN OUR CONSIDERED OPINION THE SAID LICENSE TO COLLECT MONTHLY CHARGES SO ACQUIRED BY PAYING LUMP SUM CONSIDERATION BECOME S AN INTANGIBLE ASSET IN THE HANDS OF THE ASSESSEE COMPANY AND THEREBY ELIGIBLE FOR DE PRECIATION U/S 32 OF THE ACT. 7.3. WE FIND THAT THE LD CITA HAD IN PAGE 20 OF HI S ORDER IN THE FINDING PORTION OF HIS ORDER IN PARA VI) HAD STATED THAT THE PAYMENT OF RS 1 50 37 500/- MADE BY THE ASSESSEE IS NOTHING BUT DISCOUNTED PRESENT VALUE OF THE RENT TO BE RECEIVED BY M/S VIDYUT ELECTRICALS & ELECTRONICS PVT LTD AND MULTIP LEX ENTERTAINMENTS & SERVICES PVT LTD FROM INOX FOR 25 YEARS. HAVING HELD SO THEN THE E NTIRE PAYMENT OF RS 1 50 37 500/- TAKES THE CHARACTER OF PAYMENT OF RENTALS WHICH WOU LD BE ALLOWABLE AS A REVENUE EXPENDITURE IN THE YEAR OF INCURRENCE IN ONE GO. T HE LD CITA DID NOT ALLOW THE CLAIM OF REVENUE EXPENDITURE OF THE ASSESSEE BY PLACING RELI ANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MADRAS INDUSTRIAL INVE STMENT CORPORATION LTD VS CIT REPORTED IN 225 ITR 802 (SC). IN THE FACTS BEFOR E THE HONBLE SUPREME COURT THE ASSESSEE ISSUED THE DEBENTURES FOR A LONGER PERIOD AND THE ACTUAL COST OF ISSUE OF DEBENTURES WAS EQUALLY SPREAD OVER THE LIFE OF DEBE NTURES BY THE ASSESSEE WHICH WAS ACCEPTED BY THE HONBLE SUPREME COURT. WHEREAS IN THE FACTS BEFORE US IN THE IMPUGNED CASE THE FUTURE RENTALS FOR 25 YEARS HAVE BEEN WORKED OUT AT DISCOUNTED PRESENT VALUE AND THE LUMP SUM AMOUNT OF RS 1 50 37 500/- WAS ARRIVED AT AND WAS PAID BY THE ASSESSEE TO THE AFORESAID TWO COMPANIES . IT IS NOT THE ACTUAL RENTALS THAT ARE PAYABLE YEAR ON YEAR WITH OR WITHOUT ANY INCR EASE THEREON WHICH WAS PAID IN ONE SHOT BY THE ASSESSEE IN THE FACTS BEFORE US. HE NCE WE HOLD THAT THE DECISION OF HONBLE APEX COURT SUPRA IS NOT APPLICABLE TO THE F ACTS OF THE INSTANT CASE. HOWEVER THE LD AR FAIRLY STATED THAT THIS CLAIM THOUGH MADE IN THE GROUNDS RAISED BEFORE THIS TRIBUNAL WOULD CREATE ADMINISTRATIVE INCONVENIENCE OF REVISING THE ORDERS OF SEVERAL ASSESSMENT YEARS AND ACCORDINGLY PLEADED THAT THE C LAIM OF DEPRECIATION BE ALLOWED U/S 32 ON THE SAID PAYMENT TREATING IT AS INTANGIBLE AS SET WOULD MEET THE ENDS OF JUSTICE. IN OUR CONSIDERED OPINION THE PAYMENT MADE BY THE ASSESSEE FOR ACQUIRING THE LICENSE TO RECEIVE THE MONTHLY CHARGES FROM INOX CLEARLY FA LLS UNDER THE AMBIT OF BUSINESS OR COMMERCIAL RIGHTS WITHIN THE MEANING OF INTANGIBL E ASSETS AND THEREBY THE ASSESSEE IS INDEED ENTITLED TO CLAIM DEPRECIATION U/S 32 OF THE ACT. 7.4. WE ALSO DRAW SUPPORT IN RESPECT OF THE AFORES AID FINDINGS ON THE FOLLOWING DECISIONS:- ITA NO. 882/KOL/2017 M/S. AARCEE EXPORTS PVT. LTD (MERGED WITH PADMAVATI PROPERTIES & TRUST P.LTD) 8 A) DELHI TRIBUNAL IN THE CASE OF THYSSENKRUPP ELEVA TOR (INDIA) (P) LTD VS ACIT REPORTED IN (2014) 50 TAXMANN.COM 279 (DELHI-TRIB.) DATED 29 .8.2014 THE BRIEF FACTS OF THIS CASE IS THAT THE ASSESSEE H AD ACQUIRED THE ELEVATOR DIVISION BUSINESS OF ECE INDUSTRIES LTD WHICH COMPRISED OF MARKETING SELLING ERECTION INSTALLATION COMMISSIONING SERVICE REPAIR MAINTE NANCE AND MODERNIZATION INCLUDING MAJOR REPAIRS OF PRODUCTS ON SLUMP BASIS. THE ASSE SSEES CLAIM FOR DEPRECIATION IN RESPECT OF ANNUAL MAINTENANCE CONTRACT (AMC) FOR E LEVATOR DIVISION WITHIN THE MEANING OF BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE UNDER SECTION 32(1)(II) WAS REJECTED BY REVENUE AUTHORITIES. HELD 38. FURTHER AS REGARDS 'MAINTENANCE PORTFOLIO' PURCHA SED BY THE ASSESSEE/ APPELLANT BY WAY OF 'SLUMP-SALE' ARRANGEMENT IT IS PERTINENT TO NOTE THAT THE SAME CONSTITUTES THE BASIC INCOME EARNING APPARATUS OF THE ASSESSEE AND CANNOT BE VITIATED OR WATERED DOWN BY CERTAIN RESID UAL CONDITIONALITIES INASMUCH AS CONTINUANCE OF CERTAIN GOVT. CONTRACTS WITH THE ECE DIVISION ETC. IN THE SLUMP-SALE ARRANGEMENT SINCE THE SAME WOULD LAPSE ONCE THE CONTRACT TERM UNDER RESPECTIVE MAINTENANCE CONTRACTS ARE CONCLUDE D. SECONDLY IT WOULD BE PRUDENT TO STATE THAT THESE AMC'S IN TERMS OF VALUE ONLY COMES NEXT TO THE VALUE OF FIXED ASSETS. 39. THUS ON THE BASIS OF ABOVE DISCUSSIONS WE ARE OF THE VIEW THAT AMC'S WOULD NOT FALL UNDER ANY OF THE SPECIFIED INTANGIBL E ASSETS SUCH AS KNOW-HOW PATENTS COPYRIGHTS TRADEMARKS LICENSES AND FRANC HISES LISTED UNDER SECTION 32(1)(II) OF THE ACT. IN THIS REGARD THE LD. AR HA D ARGUED BEFORE US THAT SUCH AMC'S FORM THE VERY ESSENCE OF THE TRANSACTION OF S LUMP-SALE I.E. 'PURCHASE OF THE MAINTENANCE PORTFOLIO BUSINESS' IN THE INSTANT CASE AND ANY TRANSFER OF SUCH AMC'S COULD ONLY BE EFFECTED IN THE FORM OF INTANGI BLE COMMERCIAL RIGHTS ALONE AND NO OTHER FORM. MOREOVER IT IS UNAMBIGUOUSLY CL EAR FROM VARIOUS CLAUSES UNDER THE SAID AGREEMENT AS WELL AS DOCUMENTS AVAIL ABLE ON RECORD THE PRESENT AGREEMENT REPRESENT A BUNDLE OF RIGHTS IN T HE FORM OF 'COMMERCIAL RIGHTS' WHICH EVENTUALLY CONSTITUTE THE BASIC INCOM E EARNING APPARATUS OF THE ASSESSEE. 40. IN THE SAID CIRCUMSTANCES WE FIND FORCE IN THE AR GUMENT OF THE LD AR THAT SINCE SAID AMC'S ARE COMMERCIAL RIGHTS AND THE SAME SHOULD RIGHTLY BE CATEGORIZED AS 'BUSINESS OR COMMERCIAL RIGHTS' FOR THE PURPOSES OF SECTION 32(1)(II) OF THE ACT. THUS BY APPLYING THE PRINCIP LE OF EJUSDEM GENERIS WE HOLD THAT IN THE FACTS AND CIRCUMSTANCES OF THIS CASE S UCH AMC'S SHOULD GET COVERED WITHIN THE EXPRESSION 'BUSINESS OR COMMERCIAL RIGHT S OF SIMILAR NATURE' SPECIFIED UNDER SECTION 32(1)(II) OF THE ACT AND ACCORDINGLY ELIGIBLE FOR DEPRECIATION. IN THE RESULT THIS ISSUE IS ANSWERED IN THE AFFIRMATI VE AND DECIDED IN FAVOUR OF THE ASSESSEE. B) PUNE TRIBUNAL IN THE CASE OF ASHOKA INFO (P) LTD VS ACIT REPORTED IN (2010) 35 SOT 50 (PUNE)(URO) DATED 31.12.2008 WHEREIN THE HEAD NOTES ARE AS UNDER:- SECTION 32 OF THE INCOME-TAX ACT 1961 - DEPRECIATI ON - ALLOWANCE/RATE OF - ASSESSEE-COMPANY WAS ENGAGED IN BUSINESS OF DEVELOP MENT OPERATION AND MAINTENANCE OF INFRASTRUCTURE FACILITIES - IT ENTER ED INTO PROJECT OF CONSTRUCTION AND DEVELOPMENT OF A ROAD WHICH WAS AWARDED BY STAT E GOVERNMENT ON BUILD OPERATE AND TRANSFER [BOT] BASIS WITH TOLL COLLECTI ON RIGHTS FOR A PRESCRIBED PERIOD - ASSESSEE CLAIMED DEPRECIATION ON AN ASSET TERMED AS 'LICENSE TO COLLECT TOLL' - REVENUE AUTHORITIES DISALLOWED ASSESSEE'S C LAIM - WHETHER RIGHT TO COLLECT TOLL WAS A COMMERCIAL RIGHT IN NATURE OF INTANGIBLE ASSET WITHIN MEANING OF SECTION 32(1)(II) AND THEREFORE ASSESSEE'S CLAIM FOR DEPRECIATION WAS TO BE ALLOWED - HELD YES C) MUMBAI TRIBUNAL IN THE CASE OF ACIT VS WEST GUJA RAT EXPRESSWAY LTD REPORTED IN (2015) 57 TAXMANN.COM 384 (MUMBAI-TRIB.) DATED 15.4 .2015 WHEREIN THE HEAD NOTES ARE AS UNDER:- II. SECTION 32 OF THE INCOME-TAX ACT 1961 - DEPREC IATION - ALLOWANCE/RATE OF (RIGHT TO COLLECT TOLL) - ASSESSMENT YEAR 2009-10 - WHETHER AN ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION ON RIGHT TO COLLECT TOLL IN RESPECT OF A PARTICULAR ROAD BEING AN INTANGIBLE ASSET FALLING WITHIN PURVI EW OF SECTION 32(1)(II) - HELD YES [PARA 29] [IN FAVOUR OF ASSESSEE] 7.5. IN VIEW OF THE AFORESAID FACTS AND FINDINGS A ND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE WE HOLD THAT TH E ASSESSEE IS ENTITLED FOR CLAIMING DEPRECIATION ON INTANGIBLE ASSETS FOR PAYMENT OF LU MP SUM CONSIDERATION OF RS 1 50 37 500/- AND ACCORDINGLY THE CLAIM OF DEPRECIA TION THEREON AMOUNTING TO RS ITA NO. 882/KOL/2017 M/S. AARCEE EXPORTS PVT. LTD (MERGED WITH PADMAVATI PROPERTIES & TRUST P.LTD) 9 37 59 375/- IS HEREBY DIRECTED TO BE ALLOWED. ACCOR DINGLY THE GROUNDS RAISED BY THE ASSESSEE IN THIS REGARD ARE ALLOWED. IN VIEW OF ABOVE AND FOLLOWING THE ORDER DT. 27-07- 2017 SUPRA OF THE CO-ORDINATE BENCH ITAT KOLKATA WE SET ASIDE THE IMPUGNED ORDER OF THE CIT-A AND ACCORDINGLY DIRECT THE AO TO DELETE THE IMPUGNED ADDITION MADE ON CLAIM OF DEPRECIATION ON INTANGIBLE ASSET U /S. 32(1)(II) OF THE ACT. GROUND NOS.4 & 5 OF ASSESSEES APPEAL ARE ALLOWED. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED AS STATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 2 9-11-2017 SD/- SD/- P.M. JAGTAP S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29-11-2017 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT/ASSESSEE: M/S. AARCEE EXPORTS PVT. LTD (M ERGED WITH M/S. PADMAVATI PROPERTIES & TRUST PVT. LTD) 60A BENTINC K STREET KOLKATA- 700 069. 2 RESPONDENT/REVENUE : THE DCIT CIR-11 KOLKATA AAY KAR BHAVAN P-7 CHOWRINGHEE SQUARE KOLKATA-700 069. 3 . THE CIT(A) KOLKATA 4. 5. CIT KOLKATA DR KOLKATA BENCHES KOLKATA / TRUE COPY BY ORDER SR.P.S HEAD OF OFFICE ITAT KOLKATA