C.I.T. Kolkata-I v. LCC Infotech Ltd - 2014-LL-0916-48

Citation	2014-LL-0916-48
Appellant Name	C.I.T. Kolkata-I
Respondent Name	LCC Infotech Ltd.
Court	HIGH COURT OF CALCUTTA
Relevant Act	Income-tax
Date of Order	16/09/2014
Assessment Year	2000-01
Judgment	View Judgment
Keyword Tags	intangible asset • stock-in-trade
Bot Summary:	For appellant : Mr.M.P.Agarwal,Advocate For respondent/assessee: Mr.S.Biswas,Advocate Mr.Ejaz Khan,Advocate The Court : This appeal has been filed under section 260A of the Income Tax Act, 1961 against order dated 28.2.2005 passed by Income Tax Appellate Tribunal, D Bench, Kolkata in ITA Nos.2355 2593 of 2003 relating to assessment year 2000-01 on the following questions : 1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in holding that goodwill is an intangible asset entitled to depreciation within the meaning of section 2(11), read with section 32(1)(ii) and Explanation 3 to section 43(1) of the Income-tax Act, 1961. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in setting aside the assessment order treating the gains arising on sale of shares held as stock-in-trade, converted into investment shares with effect from 2 1.4.1999, sold during the year, as short term capital gains as the shares were held as investment shares for less than one year under proviso to section 2(42A) of the Income-tax Act, 1961. So far as the second question is concerned, it is submitted on behalf of the respondent that since pursuant to the impugned order of the learned Tribunal, the assessment order was passed by the assessing officer on 27th February, 2006 and notice of demand under section 156 of the Income Tax Act 1961 has been issued, the second question need not be gone into which is not disputed by Mr.Agarwal. We find that the question before the Hon ble Supreme Court was, whether goodwill is an asset within the meaning of section 32 of the Income Tax Act, 1961 and whether depreciation on goodwill is allowable under the said section. The Hon ble Supreme Court after considering the provisions contained in Explanation 3(b) to section 32 of the Act held that goodwill is an asset under Explanation 3(b) under section 32(1) of the Act. So far as the second question is concerned, since the assessing officer has given effect to the order of the Tribunal, in our view, it is not a substantial question of law.

ORDER SHEET ITA 267 of 2005 IN HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) ORIGINAL SIDE C.I.T. KOLKATA-I Versus LCC INFOTECH LTD BEFORE: Hon'ble JUSTICE SOUMITRA PAL Hon ble JUSTICE DEBANGSU BASAK Date : 16th September, 2014. For appellant : Mr.M.P.Agarwal,Advocate For respondent/assessee: Mr.S.Biswas,Advocate Mr.Ejaz Khan,Advocate Court : This appeal has been filed under section 260A of Income Tax Act, 1961 against order dated 28.2.2005 passed by Income Tax Appellate Tribunal, D Bench, Kolkata in ITA Nos.2355 & 2593 (Kol) of 2003 relating to assessment year 2000-01 on following questions : 1. Whether, on facts and in circumstances of case, Income-tax Appellate Tribunal is correct in holding that goodwill is intangible asset entitled to depreciation within meaning of section 2(11), read with section 32(1)(ii) and Explanation 3 to section 43(1) of Income-tax Act, 1961. 2. Whether, on facts and in circumstances of case, Income-tax Appellate Tribunal is correct in setting aside assessment order treating gains arising on sale of shares held as stock-in-trade, converted into investment shares with effect from 2 1.4.1999, sold during year, as short term capital gains as shares were held as investment shares for less than one year under proviso to section 2(42A) of Income-tax Act, 1961. It is submitted by Mr.Biswas, learned advocate appearing on behalf of respondent/assessee that first question is covered by judgement of Hon ble Supreme Court in CIT v. SMIFS SECURITIES LIMITED : (2012) 13 SCC 488 in favour of assessee which is not disputed by Mr.Agarwal, learned advocate for appellant/revenue. So far as second question is concerned, it is submitted on behalf of respondent that since pursuant to impugned order of learned Tribunal, assessment order was passed by assessing officer on 27th February, 2006 and notice of demand under section 156 of Income Tax Act 1961 has been issued, second question need not be gone into which is not disputed by Mr.Agarwal. Heard learned advocates for parties. We find that question before Hon ble Supreme Court was, whether goodwill is asset within meaning of section 32 of Income Tax Act, 1961 and whether depreciation on goodwill is allowable under said section. Hon ble Supreme Court after considering provisions contained in Explanation 3(b) to section 32 of Act held that goodwill is asset under Explanation 3(b) under section 32(1) of Act. 3 Since we find that first question is covered by judgement in case of SMIFS SECURITIES LTD (supra), it is answered in affirmative, in favour of assessee and against revenue. So far as second question is concerned, since assessing officer has given effect to order of Tribunal, in our view, it is not substantial question of law. Therefore, application and appeal are dismissed. No order as to costs. Urgent certified copy of this order, if applied for, be furnished to parties on priority basis. (SOUMITRA PAL, J.) (DEBANGSU BASAK,J.) ssaha AR(CR) C.I.T. Kolkata-I v. LCC Infotech Ltd

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