TMI Blog2011 (1) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... vertisement, on account of interest advances given to M/s. Ezeego, making an addition on account of sundry balances written off, sundry creditors of software development, etc., He disallowed as capital expenditure, software expenses and also disallowed depreciation of intangible assets. Adjustment was made under section 92CA(3) of the Act. He assessed income at Rs. 6,10,77,830. 3. Aggrieved, assessee carried the matter in appeal. The first appellate authority granted part relief. On the issues where the first appellate authority has granted part relief, the Revenue has filed appeal and on the issues where the CIT(A), confirmed the Order of the Assessing Officer, the assessee has filed an appeal. We take-up the issues in seriatim. 4. We have heard Mr. Rajan R. Vora along with MS. Sheetal Shah on behalf of the assessee and Shri Narendra Singh learned CIT-DR on behalf of the Revenue. On careful consideration of the facts and circumstances of the case and on perusal of papers on record and the orders of the authorities below as well as the case laws cited we hold as follows. 5. Assessee s Appeal ITA. No. 3751/Mum/2007 : Ground Nos. 1 and 2 pertains to part disallowance of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue pertains to disallowance of interest on advances to associate company amounting to Rs. 33,64,187. This Bench of the Tribunal in the earlier year orders cited above, in assessee s own case on the same issue for the assessment year 2002-2003 at para 24 held as follows : 24 "On rival submissions, we find that this issue needs reconsideration. Though the assessee has taken a plea that on commercial expediency, advances were given to M/s Ezeego which is a subsidiary company of the assessee and also business sharing agreement with the assessee company. The assessee has also taken a plea that the advances were made from interest bearing funds. We are not in agreement with the assessee; as admittedly, the assessee has paid huge amount of interest on the borrowings; but at the same time, we consider it fit to restore this issue to the file of the AO for fresh adjudication to examine afresh whether there was commercial expediency for making payments/advances on behalf of M/S Ezeego as relevant evidence is not before us. Accordingly, the relevant ground Nos. 11 to 13 are allowed for statistical purpose". 7. Consistent with the view taken therein, we set aside the matter to the fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erly verified. We, therefore, set aside the issue to the file of the Assessing Officer for fresh adjudication. 14. The next issue is adjustment made under section 92CA. Both the parties submitted that similar issue has come up before this Bench of the Tribunal in assessee s own case for the assessment year 2002-2003 and the Bench has set aside the matter to the file of the Assessing Officer for fresh adjudication. The Tribunal at para 11 held as follows : "11 The ld CIT ( A ) has observed that the TPO has wrongly calculated the weighted average period of 100 days that is enjoyed by the unrelated parties and this fact remain uncontroverted. Moreover, as per the facts on record, weighted average credit period in case of Cox Kings UK is at 74 days, Cox Kings, USA is at 103.5 days and Cox Kings Japan is at 194 days. Hence, working made by the TPO at least in respect of AE, UK and AE USA is less than 12 days than unrelated AE of Germany. But so far as the AE, Japan is concerned, the assessee has allowed excess period of 74 days as the ld CIT ( A ) has worked out the average period at 12 days. We, therefore, of the opinion that the excess average credit period determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee also took over various other intangible assets like business database etc. and the consideration over and above the physical assets was paid towards such intangible assets. The assessee has shown this asset specifically in the fixed asset schedule under the head "customer database". ( Copy of fixed asset schedule is enclosed at page No. 41 of the paper book ) . 8.6. It is submitted that assessee has received the valuable information in the form of customer database and other related information which was essential for assessee to carry on the business. Hence, the customer database purchased by the assessee is a business or commercial rights taken over to run its business effectively and profitably. It is to be noted that customer database is an intangible asset for the assessee to carry on the business. Section 32 (1)(ii) of the Act defines intangible asset as:- "Know-how, patent, copyright, trademark, licenses, franchises or any other business or commercial rights of similar nature." 8.7 it is be evident from the above definition that intangible asset includes any other business or commercial rights. It is submitted that customer database is a business right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove the excess of assets over liabilities. Piem Hotels Ltd. 45 DTR 313 ( Mum. ) ( Copy of decision is enclosed at page Nos. 241 to 243 of paper book ) ( Approvals/registration taken from Government bodies are goodwill ) . CLC Global Ltd. ( ITA. No.2288/Del/2008 ) dated 27/3/2009 ( Copy of decision is enclosed at page Nos.244 to 251 of the paper book ) ( Excess consideration over and above assets and liabilities ) . B. Raveendran Pillai 47 DTR 81 ( Ker. ) ( Assessee purchased hospital with its land, building, equipments, staff, name, trademark and goodwill as a going concern ) . 8.11. In view of the above legal and factual submissions, we humbly requested your Honour to kindly direct the Assessing Officer to allow the depreciation as intangible asset on the customer database purchased by the assessee". 17. In our considered view the factual issues, have not been properly examined by the lower authorities. Thus, we set aside the matter to the file of the Assessing Officer for fresh adjudication in accordance with law, after considering all the factual aspects as well as the arguments advanced as recorded above on the matter, in the correct persp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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