TMI Blog2010 (12) TMI 520X X X X Extracts X X X X X X X X Extracts X X X X ..... ree orders all dated 30/5/2008 of CIT(A)-II, Mumbai relating to assessment year 2001-02, 2002-03 and 2003-04. The assessee has filed a cross objection against the very same orders of the CIT(A). 2. The facts and circumstances under which these appeals and cross objections arise for consideration are as follows: The assessee is a company engaged in the business of retail assets financing, investment and trade finance. For assessment year 2001-02 the assessee filed its return of income on 31/10/2001 declaring a loss of Rs.6,11,93,920/-. The return was processed under section 143(1) of the Act on 3/12/2002. On 29/3/2001 the assessee had entered into an agreement with Birla Global finance Ltd. (BGFL) for acquisition from BGFL of the business of retail finance, hire purchase and consumer durable finance including existing contracts, assets, liability and employees related to the retail finance division of every description, as going concern on slump sale basis. The assessee acquired certain intangible assets as part and parcel of the foregoing agreement which it had reflected in its accounts as "business and commercial brand equity". According to the assessee as part of the acqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act for all three assessment years on the ground that there did not exist any reason to believe that the income of the assessee chargeable to tax has escaped assessment. This plea of the assessee was not accepted by the CIT(A). 9. Aggrieved by the order of the CIT(A) that the assessee is entitled to depreciation on business and commercial brand equity the revenue has filed the appeals before the Tribunal. Aggrieved by the order of the CIT(A) holding that the reassessment proceedings were validly initiated the assessee has filed the cross objections before the Tribunal. 10. At the time of hearing of this appeal it was brought to our notice that the issue with regard to allowing depreciation on intangibles namely business and commercial brand equity had come up for consideration before the Tribunal in ITA No.902/M/08 for A.Y. 2004-05 and this Tribunal held as follows: "5 The remaining issue relate to allowing deprecation of Rs.5,66,01,583/- on intangible assets, namely business and commercial brand equity. 5.1 During the assessment proceedings, the AO noted that the assessee company has claimed depreciation of R. 5,66,01,583/- on intangible assets namely business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f asking by the AO. 6.1 In reply, the ld counsel of the assessee stated that there is no mention of goodwill either in the order of the AO or in the order of the CIT(A). Attention of the Bench was drawn on page 3 of the order of the AO where the AO has mentioned that no details were filed in respect to know-how patents, copy rights, trademarks, licenses, franchises etc. Therefore, there is no question of taking the issue that depreciation was disallowed on account of goodwill. It was further submitted that the contention of the ld DR that no breakup was given is also not correct. Attention of the Bench was drawn on the copy of the agreement and copy of valuation report placed on record. It was explained that in the agreement, there is a clear mention about intangible assets and the valuation obtained from Haribhakti Financial Services P Ltd was in respect to intangible assets only. The details of intangible assets and the value of the intangible assets has been clearly mentioned which is Rs.46.20 crores. It was further submitted that it was a going concern purchased by the assessee from parent company M/s BGFL. In the agreement names of the assets were also mentioned. Attention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the breakup of total consideration paid as disclosed in the audited accounts for the year ended March, 31 st, 2001, includes the tangible at book values and the intangibles having regard to the valuation report. The AO has failed to appreciate this fact. If AO had any doubt regarding the authenticity of the valuation then the AO should have summoned the valuer and obtained clear cut analysis of the valuation and even after that if he was dissatisfied he should have then substantiated the figures with his reasoning and arguments. It is most humbly submitted that the fact that the AO chose not to do this exercise, the opinion of the AO as expressed in the Assessment Order is arbitrary and subjective. It is submitted that there being no valid reason n just brushing aside the valuation report of a reputed valuation firm, the disallowance ought to be deleted." 7.1 Thereafter, the CIT(A) taken into consideration all the aspects and then has given his findings in paras 15 and 16 as under: "15. I have carefully considered the order of the AO and the arguments and written submissions of the appellant. First of all, the agreement relating to the sale of business elaborately defines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of the contracts with all such DSAs was available to the appellant company from day one and it had not to spend any time and efforts in establishing such marketing network on its own. I tend to agree with the contention of the appellant that such business arrangement that is readily available does provide a readymade platform to carry on the business as soon as it is taken over and would therefore, constitute a valuable commercial or business right for the appellant. Further, it is also submitted that the vendor company had 13 branches all over the country and that the benefit of license user of the premises along with necessary infrastructure like telephone lines, fax lines, e-mail connections etc., that were made available to the appellant from day one of its takeover of the business. Indeed, these business rights are off balance sheet items and there can be no two views that these are valuable rights enabling the appellant to carry on the business as a going concern. 16. Having regard to the foregoing facts on record, I am of the considered opinion that the claim of the appellant is in accordance with the law and in the absence of any factual and contrary finding made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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