TMI Blog2022 (10) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... is firstly a question of fact, which objection is not borne out from the record and secondly, Assessee has stated that the said agreement was executed under the aegis of BIFR, since SAL was a sick company and there was no doubt raised by Revenue with respect to the payment of consideration. The ownership of the IP rights of the Assessee stands proved on record, its use by the Assessee is also not disputed and therefore the appellate authorities have rightly held that the Assessee is entitled to claim deprecation u/s 32(1)(ii) of the Act on the said IP rights. The facts as well as the law were properly and correctly assessed by the CIT(A) and the ITAT. We, therefore, answer the question of law framed in these appeals against the Revenue and in favour of the Assessee. - ITA 905/2010 and ITA 130/2013 - - - Dated:- 17-10-2022 - HON'BLE MR. JUSTICE MANMOHAN AND HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA Appellant Through : Mr. Puneet Rai, Senior Standing Counsel for Revenue along with Ms. Adeeba Mujahid, Junior Standing Counsel for Revenue and Mr.Nikhil Jain, Advocate. Respondent Through : Mr. C.S. Aggarwal, Senior Advocate with Mr.Ravi Pratap Mall, Mr. Uma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000/- was claimed on this account for AY 2002-03. 5. The Assessee also seperately purchased the manufacturing business of M/s SIEL Aircon Ltd. ( SAL ) vide an agreement dated 08th August, 2000, which included intellectual property rights such as brand name, logo, patents and trademarks (IP rights) for a sum of Rs. 10,93,00,000/-. The Assessee for AY 2001-02 claimed depreciation of Rs. 2,73,25,000/- at the rate of 25% as prescribed in this schedule of rates in respect of intangible assets. Depreciation of Rs. 2,04,93,750/- was claimed on this account for the AY 2002-03. 6. The Assessing Officer ( AO ) rejected the aforesaid claim for depreciation on account of purchase of business rights under the agreement dated 1st May, 2000 on the ground that goodwill is not covered under the definition of intangible assets under the provisions of the Act. The Commissioner of Income Tax (Appeals) [ CIT(A) ] after considering the terms of the agreement dated 01st May 2000 and the nature of exclusive business rights purchased by the Assessee held that the said rights are valuable and therefore, the consideration paid by the Assessee to UIL is capital in nature and the same is entitled t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding of the ITAT with respect to the agrrement with UIL reads as under:- 7. We have considered the rival submissions. A perusal of the consideration paid as extracted above clearly shows that in regard to the purchase of the business rights, the purchase price has got 3 components, first for the exclusive business rights for an amount of Rs.1,73,00,000/- and the second for Rs.27,00,000/- and the third towards the amount of transferable deposits. A perusal of the business purchase agreement also clearly shows that UIL as agreed to sell to the assessee and the assessee agreed to purchase the business and the goodwill and the other assets thereof. A perusal of the consideration also clearly shows that the agreement is for selling 3 items, first one being the business, second goodwill and third other assets. The purchase consideration also shows the computation of such 3 items being the exclusive business rights for a consideration of Rs.1,73,00,000/-, 27,00,000/- without any specifications and I the transferable deposits which would have to be considered as other assets. This being so, as the amount of Rs.27,00,000/- as shown in the purchase price has not been shown to be in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee as such in its return or before the assessing authority nor before the CIT(A)s and the assessee has not been able to demonstrate before us as to the business expediency or provision under which the claim is being made. (Emphasis supplied) 10. Similarly, the ITAT also concurred with the finding of the CIT(A) and held that with respect to the agreement dated 8th August, 2000 with SAL, the Assessee had acquired ownership of the IP rights on payment of valuable consideration and it was therefore, an intangible asset as per Section 32(1)(ii) of the Act on which the Assessee was entitled to claim depreciation. The relevant finding of the ITAT reads as under:- 10. We have considered the rival submissions. A perusal of the purchase price consideration as per the business purchase agreement entered into between the assessee and SAL shows that the consideration has been paid for the intellectual property rights. Intellectual property rights are immovable asset. It is also an intangible asset as per the provisions of section 32 (1) (ii) of the Act. It is also undisputed that the assessee has used the intellectual property rights in its business and there has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e being vests the dominion over the building and who is entitled to use it in his own right and is using the same for the purposes of his business or profession. Assigning any different meaning would not subserve the legislative intent In our considered view, the ITAT and the CIT(A) has rightly placed reliance on the ratio in Mysore Minerals (supra) which was subsequently followed in Dalmia Cements (supra). 12. In the present appeals, during the course of arguments, the learned counsel for the Appellant, Revenue, has only contended that the payment of the consideration by the Assessee to SAL is not recorded in the agreement dated 08th August, 2000. In reply, the learned Senior Counsel for the Respondent, Assessee, has drawn our attention to the order of the CIT(A) which categorically records at paragraph No.6 that SAL was a sick company registered with BIFR and with the approval of BIFR, the Assessee entered into an agreement with SAL for the purchase of IP rights for valuable consideration. He states that the consideration of Rs. 10.93 crores was paid by the Assessee to SAL for the purchase of the intellectual property rights under supervision of BIFR. He states that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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