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II. Direct Tax Case Laws:
1. CIT Vs. Mis Bharti Teletech Ltd, I.T.A. No. 496/Delhi/2014, Date of Order: 15.04.2015, High Court of Delhi
The
act of A.O of disallowing depreciation claimed on commercial right
merely considering the accounting treatment in books, where the same was
allowed in earlier years, is not justified.
Held_Yes
In
brief, the assessee acquired share of a company (STL) at consideration
which included the sum for the marketing, customer support, distribution
& associate set up. The Ld. AO disallowed the depreciation by
holding that what has been acquired is not the ownership right but an
arrangement for use of such network. In view of this, no depreciation
can be allowed on such payment which has euphemistically been termed as
goodwill. On a different note, it can always be said that goodwill never
depreciates; on the contrary, it only appreciates.
The
claim which the Court would necessarily have to consider is whether the
item claimed to be eligible for depreciation confirms to “other business
or commercial rights of similar nature”. In this case, the
consideration was a specific value but for which the network would not
have been transferred which constitutes that it is a commercial right
similar to intangible asset and hence claimed depreciation. The Hon’ble
High Court has held that “in the present case, though termed as
goodwill, what was actually parted with by STL was a commercial right,
i.e., exclusivity to the network which would not have been otherwise
available but for the terms of the arrangement.”
No substantial question of law arises; the appeal is consequently dismissed.
(Please click here for judgment)
2. ITO Vs. M/s Staunch Marketing Pvt. Ltd., I.T.A. No. 1643/DEL/2008, Date of Order: 12.05.2015, ITAT - Delhi
Re-assessment proceedings concluded us/ 147 of Income Tax Act, 1961 are invalid if the notice u/s 143(2) is not issued.
Held- Yes
In
brief, the A.O initiate re-assessment proceedings vide issuing notice
u/s 148. Further, a notice u/s 142(1) was issued to the assessee
company. However, the Ld. A.O. has failed to issue notice u/s 1432) of
the Act and completed assessment ex-party.
The
Hon’ble Supreme Court has held in case of ACIT & Anr. V. Hotel Blue
Moon (2010) 321 ITR 362 in which it was held that "It is mandatory for
the AO to issue notice u/s 143 (2). The issuance and service of notice
u/s 143 (2) is mandatory and not procedural. If the notice is not served
within the prescribed period, the assessment order is Invalid”.
Therefore, the ITAT allowed the asessee’s cross objection and held that
in the absence of notice u/s 143(2) the reassessment order is not
sustainable.
(Please click here for judgment)
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