ELDER IT SOLUTIONS P.LTD,MUMBAI vs. PR CIT 4, MUMBAI

आयकर अपीऱीय अधिकरण, म ुंबई न्यायपीठ ‘ई’, म ुंबई । IN THE INCOME TAX APPELLATE TRIBUNAL “E”, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN, JM आमकय अऩीर सं./ITA No.2461/Mum/2015 (नििाारण वषा / Assessment Year :2010-2011) Elder IT Solutions Pvt. Ltd., 6 Vs. The Principal Ground Floor, Hanumanta Commissioner of Income Apartment, Bamanwada, Nr. Tax-4, Mumbai. Chakala Cigarette Factory, Andheri (East), Mumbai-400099 स्थामी रेखा सं./ जीआइआय सं./ PAN/GIR No. : AABCE 9586 F (अऩीराथी /Appellant) (प्रत्मथी / Respondent) .. ननधाारयती की ओर से /Assessee by : Shri A.V.Sonde याजस्व की ओर से /Revenue by : Manjunatha R.Swamy सुनवाई की तायीख / Date of Hearing : 21/10/2015 घोषणा की तायीख/Date of Pronouncement 17/12/2015 आदेश / O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT-4, Mumbai, for the assessment year 2010-2011, in the matter of order passed u/s.263 of the I.T.Act. 2. In this appeal the assessee is aggrieved by the action of CIT for holding that the order passed by the AO is erroneous as well as prejudicial to the interest of revenue. 3. Rival contentions have been heard and record perused. The CIT in his order u/s.263 observed that the assessee company had received commercial income of Rs.6.56 crores and consultancy fee of Rs.1 lakh. He further observed that assessee has debited an amount of amortization

2 ITA No.2461/M/15 of commercial rights amounting to Rs.162.33 crores and has also claimed depreciation on this right. It is also observed that this issue was not examined by the AO while passing the assessment order. Accordingly, a show cause notice u/s 263 of the Income Tax Act, 1961 was issued in the case of the assessee, seeking to revise the assessment order passed u/s.143(3) by the Assessing Officer for the said assessment year. 4. In the order passed u/s.263 it was stated that the assessee replied to the show cause notice on various dates, which is kept on record, and was thoroughly examined by him. The objection of the Assessee Company is regarding the jurisdiction of the CIT to revise the assessment, wherein the assessee has contested that the assessment framed by the AO was neither erroneous nor prejudicial to the interest of the revenue. 5. After considering the objection, the CIT held as under :- a) Non examination of the amortization of the commercial rights as well as the depreciation; genuineness of the share application money and unsecured loans is pre-judicial to the interest of revenue. b) By allowing the wrong claim of the .assessee of amortization of commercial rights and depreciation as well as non invoking of the provision u/ s 68 of the Income Tax Act, 1961 is an erroneous assessment. c) The said issuance of the notice u/s 263 and its validity of the proceedings u/ s 263 were also challenged by the assessee, when the issues were supposed by the AO during the assessment proceedings. The assessee has filed a letter dated 16.02.2015, in which it is stated that the AO had issued the following notices on the issue of the amortization of the commercial rights and depreciation which was subsequently examined: (i) Notice dated 27.09.2011 in which the reason for selection of the case for scrutiny was given which included the aspect of the depreciation.

3 ITA No.2461/M/15 (ii) Notice dated 27.12.2012 in which justification of charging depreciation as intangible right was called for and an explanation was asked as to why it is not an asset but an actionable claim. (iii) Notice dated 29.01.2013, wherein the details regarding the revival subscribers was called for. The CIT in his order observed that on the issue of amortization and depreciation which are filed by the assessee before the AO are letters dated 07.12.2012 and an undated letter [received in the office of Addl.CIT Rg.4(1) on 11.02.2013]. It is stated therein by the assesee that: "As stated in our submission filed on 07.12.2012, the company has entered into an Agreement towards appointment of Company as an "Exclusive Reviving Agent" of Reliance Communication Ltd (RCL) for undertaking services of revival of dormant subscribers. Pursuant to the aforesaid Agreement, the Company is entitled to earn Revenue share called Commission from RCL at varying percentages based on the revenue generated by RCL from dormant subscribers over a number of years as specified in the aforesaid Agreement. The copy of Agreement is already filed with your goodself. The payment made by the Company for aforesaid Commercial Right is thus an Intangible Asset capable of generating revenue over the years." The crux of the submission before the AO is that since the actionable claim on the reviving customer was made by the assessee as the assessee has paid substantive amount of money to M/ s Reliance Communication Ltd, and thus it has resulted into an intangible right on which depreciation can be claimed as well as the payment can be amortized. As per CIT the AO without delving into further details, has merely accepted the proposition of the assessee without taking into consideration the provision of section 32(1)(ii), which is reproduced below:- "know-how, patents, copyrights, trade marks, licenses, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed."

4 ITA No.2461/M/15 On the issue of share capital money and unsecured loans, the assessee filed a chart in which it is shown that except one loan of Rs. 196 crore from M/s Black Stone Corporate Services Ltd, no other loan was received during the year. However, this was not examined by the AO in totality. It is stated by the assessee company that in respect of unsecured loans, the company has filed the following letters before the AO on 16.11.2011: a) Confirmation b) Acknowledgement of return of income c) Annual Report Regarding the share application money of Rs.68 cr received from Kent IT Solutions Pvt Ltd, the assessee company has filed the following document:- a) Confirmation b) Acknowledgement of return of income c) Annual Report The CIT did not convince with the assessee‟s reply and held that the AO has acted in mechanical fashion failing to conduct any independent enquiry. Accordingly, the CIT held that the order passed by the AO is erroneous and pre-judicial to the interest of revenue. 6. Against this order of CIT u/s.263 of the Act, the assessee is in further appeal before us. 7. It was vehemently argued by ld. AR that in the course of assessment proceedings u/s.143(3), the AO had made various inquiries vide notices dated 27.12.2012 & 29.1.2013, wherein AO asked for justification of charging depreciation on the plea that „intangible‟ right to receive is not an asset but an actionable claim only. As per ld. AR, the

5 ITA No.2461/M/15 assessee has made various submissions on the issue raised by the AO. Our attention was invited to replies filed in respect of receipt of income of Rs.6.56 corers from revival of customers, claim of depreciation and receipt of share capital and unsecured loans through various letters in the course of the assessment proceedings which are as under:- i) Letter dated 16.11.2012 ii) Letter dated 07.12.2012 iii) Letter dated 11.02.2013 iv) Letter filed on 05.03.2013 v) Letter filed on 11.03.2013 vi) Letter dated 14.3.2013 The replies of the assessee submitted on the above dates before the AO are as follows :- (i) Vide letter dated 16.11.2012 : “Elder Infotech Private Limited was incorporated on November 16, 2007 as a Private Limited Company under Companies Act, 1956. The Company is engaged inter alia in the business of providing market research, sales promotion, consulting, advisory and such other services in various fields and is in position to acquire requisite expertise to cater to the telecom industry. Reliance Communications Limited ("RCom") a company engaged in the business of providing telecommunication services has identified certain dormant subscribers. It was desirous to take services for reviving these identified subscribers so as to re-activate the availment of services offered by RCom to the said revived subscribers with a view to augment its revenue. During the year under review, the Company rendered services to RCom as in the earlier year by approaching the subscribers with a view to create the potential for RCom to revive the relationship with such dormant subscribers and to augment the revenue to RCom. The Company earned Commission of Rs. 65,600,0001- from RCom during the year under review Copy of Agreement with RCom is enclosed. - Annexure "9" (ii) Vide letter dated 07.12.2012 "1. The Company had entered into an Agreement for Revival of Dormant Subscribers dated 0110812008 as amended vide letters dated 01110108 and 18103109 with Reliance

6 ITA No.2461/M/15 Communications Ltd. (RCL) which is engaged in the business of telecommunication. The main intention of the Agreement was that RCL had identified certain subscribers which had become inactive 1 dormant on its network for the reason that RCL either has restricted or discontinued its telecom services in full or in part. RCL decided to revive these subscribers, render them from voice 1 data services and thereby increase its revenue in the course of time. Copy of Agreement together with addendum is submitted herewith for your ready reference. - Annexure "1 ". As per the Original Agreement dated 0110812008, the Company has to make one time payment of Rs. 320.40 crs. As per the amended Agreements referred to above, the Company has to make further payment of Rs. 115.50 crs. and Rs. 41.25 crs. respectively. As a result, the Company has made payment aggregating to Rs. 4,77,16,48,200/- towards appointment of Company as an "Exclusive Reviving Agent" of RCL for undertaking services of revival of dormant subscribers. The aforesaid payment is for handing over by RCL 51,83,816 identified subscribers into becoming active subscribers of RCL @ 825 per subscriber aggregating to Rs. 4,77,16,48,200/-. Apart from the above, the Company has also paid for purchase of talk time (recharge vouchers) from Reliance Communications Infrastructure Ltd. (RCIL) to be given to revive customers free of charge, sample copy of Invoices (nos. 2) enclosed.-Annexure "2" The Company has made total payment of Rs.6, 75,20,43,4011- to RCL 1 RCIL. Out of the said sums, Rs. 25, 89, 70,0001- was written off leaving balance of Rs.6,49,30,73,4011- during the year ending 31/0312009 (A.Y. 2009-10). The aforesaid balance payment for acquiring Commercial Rights for revival of dormant subscribers has been capitalized as "Commercial Rights" in Books of Accounts and depreciation at the rate of 25% (being intangible asset) has been claimed there on. The aforesaid Commercial Rights enables the Company to earn revenue share called Commission from RCL at varying percentages based on the revenue generated by RCL from dormant subscribers over number of years as specified in the aforesaid Agreement. 3. As stated in our earlier submission, the Company has been merged with Elder IT Solutions Pvt. Ltd. w.ef 01/0412010. On merger, the Commercial Rights have been continued to be disclosed as Intangible Asset by Elder IT Solutions Pvt. Ltd. and depreciation has been claimed thereon. "

7 ITA No.2461/M/15 (iii) Vide letter dated 11.02.2013 "1. As stated in our submission filed on 07112112, the Company has entered into an Agreement towards appointment of Company as an "Exclusive Reviving Agent" of Reliance Communications Ltd. (RCL) for undertaking services of revival of dormant subscribers. Pursuant to the aforesaid Agreement, the Company is entitled to earn Revenue share called Commission from RCL at varying percentages based on the revenue generated by RCL from dormant subscribers over a number of years as specified in the aforesaid Agreement. The copy of Agreement is already filed with your goodself The payment made by the Company for aforesaid Commercial Right is thus an Intangible Asset capable of generating revenue over the years. As per Concise Oxford English Dictionary the word, "actionable" means "law giving sufficient reason to take legal action" and as per Webster's New Dictionary & Thesaurus it means "a subject to a lawsuit". Accordingly, actionable claim means right to receive money and a claim on which you can file a suit. As can be seen from the Agreement referred to above and the details filed with your goodself, the Company does not have any right to receive any amount from dormant subscribers or RCL. The right to a revenue share will arise from year to year if dormant subscribers get activated and use the connection. Even then RCL would have an actionable claim against the subscriber - the Company would not have such claim. After RCL confirms the amount, if any, due to the Company as "Revenue Share" the Company will have an "actionable claim" for such agreed amount against RCL. But, the Agreement itself, does not give rise to any actionable claim against RCL. Hence, question of treating it as "actionable claim" does not arise. We reiterate that depreciation is correctly claimed on the aforesaid Commercial Right being an Intangible Asset. 2. Certified true copy of Minutes of the Board Meeting held on 20/10/08 authorizing the directors to borrow funds.-Annexure "1" (iv) Assessee Reply vide letter dated 05.03.2013 I Re: Commercial Rights - Revival of Dormant Subscribers 1. The assessee has clarified vide letters dated 07.11.2012 and 11.02.2013, that the assessee has acquired Commercial Rights for the conduct of its business activity of reviving dormant subscribers by virtue of the Agreement for Revival of Dormant Subscribers dated 01/08/2008 as amended from time to time.

8 ITA No.2461/M/15 2. Section 55 of the Income Tax Act has been amended from time to time, thereby widening the concept of property for inclusion in the tax net under the head "Capital Gain". W.e.f 0110411988, Finance Act 1987 has included tenancy rights, room permits and loom hours as capital assets in sec. 55(2)(a) of the Act. The Finance Act 2002 has brought in definition of capital asset "right to carry on any business ". 3. "Capital Asset" has been defined in Sec. 2(14) of the Act to mean property of any kind, except those specifically excluded. Thus, property is a word of widest import and signifies every possible interest which a person can hold or enjoy except those specifically excluded. Hence, property of any kind includes tangible, intangible, fixed, floating, movable and immovable properties. 4. In the case of Bafna Charitable Trust vs. ClT (1998) 230lTR 864 (Born), it was held by the Hon 'ble Bombay High Court that property includes ownership, estate and interest in corporeal things and also rights in personem capable of transfer or transmission, such as debts, and signifies a beneficial right to or thing considered as having a money value. 5. The word "property" includes every conceivable thing, right or interest of liability. The wide amplitude of meaning imported into this word has been clearly brought out by various judicial authorities, few of which are as under: • Right to obtain conveyance of immovable property is capital asset. [ClT v. Tata Services Ltd. (1980) 122ITR 594 (Born)]. • Share in a Partnership is a capital asset. [V. Rangaswamy Naidu v. ClT (1957) 31 lTR 711 (Madras)]. • Trees standing on agricultural lands are capital assets. [Travancore Tea Estates Co. Ltd. v. ClT (1974) 93 ITR 314 (Ker)]. • Industrial Licenses are capital assets. [Seshasayee Brothers Ltd. v. Addl. ClT (1961) 42lTR 568 (Mad)]. • Business undertaking as a whole is a capital asset. [Syndicate Bank Ltd. v. Addl. ClT (1985) 155lTR 681 (Kar)]. • Goodwill of a business is held as capital asset. [Devidas Vithaldas & Co. v ClT (1972) 84lTR 277 (S.C.)]. • Fixed deposits with Banks or Companies held as Capital Asset. [ClT v. East India Charitable Trust (1994) 206lTR 152 (Cal)].

9 ITA No.2461/M/15 • Contractual right: Leasehold Rights held as Capital Asset. [R. K. Palshikar, HUF v ClT (1988) 172 lTR 311 (SC)]. • Route Permits are held as capital asset. [N. Ramasamy Udaiyar v. ClT (1979) 116 lTR 493 (Mad)]. • The right to subscribe to the shares held as capital asset. [Hari Bros (P) Ltd. v. lTO (1964) 52 lTR 399 (Punj)]. • Foreign Exchange kept in a foreign bank for acquiring machinery is a capital asset. [Kirloskar Asea Ltd. v. CIT (1979) 117ITR 82 (Kar)j. 6. In view of the above definition, the acquisition of right by the assessee for Revival of Dormant Subscribers of Reliance Communications Ltd. is a capital asset within the meaning of sec. 2(14) of the Act. 7. According to Explanation 3, the expression "asset" and 'block of assets' shall mean both tangible and intangible asset. The intangible assets specified therein, are know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature. The Hon'ble Supreme Court, in the case of Smifs Securities Ltd. (348 ITR 302), copy of which is enclosed - Annexure "1 ", has held, that membership right of Stock Exchange Card and goodwill would fall under the expression "any other business or commercial right of a similar nature ", included in clause (b) of Explanation 3, applying the principle of ejusdem generis while interpreting the said expression. 8. In the instant case, the assessee has acquired an exclusive right to revive the dormant subscribers for an amount of Rs. 675.20 crs. Applying the principle of ejusdem generis while interpreting the said expression "any other business or commercial right of a similar nature ", included in clause (b) of Explanation 3, as held by the Hon'ble Apex Court (supra), such exclusive commercial right is an intangible assets and therefore, eligible for claim of depreciation u/s 32 of the Act. 9. We may add that, by virtue of the Agreement for Revival of Dormant Subscribers, the assessee has not acquired any actionable claim. The actionable claim has been defined u/s 3 of Transfer of Property Act, 1882 which is as under: "Actionable Claim is a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in possession either actual or

10 ITA No.2461/M/15 constructive, of the claimant, which the civil courts recognise as affording grounds of relief whether such debt or beneficial interest be existent, accruing or conditional or contingent. " The actionable claim is restricted to unsecured debts and the right to recover debts can be acquired by assignee. "Section 3 of Transfer of Property 1882 defines "Actionable claim ". As per Mulla 's T.P. Act an actionable claim is a claim to any unsecured debt. Such a debt should be other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property (because these are not transfers of claim but of the property itself) or a claim to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant. The claim should be such as Civil Court would recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent; Such transfer of an actionable claim shall be effected only by execution of an instrument is writing by the assignor to the assignee. 10. Sec 130 of the Transfer of Property Act provides for transfer of such actionable claim which is reproduced hereunder for reference: "(1) The transfer of an actionable claim whether with or without consideration shall be effected only by the execution of an instrument in writing signed by the transferor or his duly authorized agent, shall be complete and effectual upon the execution of such instruments, and thereupon all the rights and remedies of the transferor, whether by way of damages or otherwise, shall vest in the transferee, whether such notice of the transfer as is hereinafter provided be given or not: Provided that every dealing with the debtor other actionable claim by the debtor or other person from or against whom the transferor would, but for such instrument of transfer as aforesaid, have been entitled to recover or enforce such debt or other actionable claim, shall (save where the debtor or other person is a party to the transfer or has received express notice thereof as hereinafter provided) be valid as against such transfer. (2) The transferee of an actionable claim may, upon the execution of such instrument of transfer as aforesaid, sue or institute proceedings for the same in his own name without obtaining the transferor's consent to such suit or proceeding and without making him a party thereto. Exception: Nothing in this section applies to the transfer of a marine or fire policy of insurance or affects the provisions of section 38 of the Insurance Act, 1938 (4 of 1938).

11 ITA No.2461/M/15 Illustrations (i) A owes money to B, who transfers the debt to C. B then demands the debt from A, who, not having received notice of the transfer, as prescribed in section 131, pays B. The payment is valid, and C cannot sue A for the debt. (ii) A effects a policy on his own life with an insurance company and assigns it to a bank for securing the payment of an existing or future debt. If A dies, the bank is entitled to receive the amount of the policy and to sue on it without the concurrence of A 's executor, subject to the proviso in sub-section (1) of section 130 and to provisions of section 132. " 11. As can be seen from the definition of "actionable claim ". it has 2 parts. The first part defines actionable claim as a claim of Unsecured Debt recoverable in money. In the assessee's case, the assessee has no right to recover any amount paid for acquiring commercial rights. The second part of the definition talks of beneficial interest in moveable property not in possession either actual or constructive. The right to revive the dormant subscriber is not a property like motor car or equipment where there can be beneficial interest not in possession of claimant. The assessee has only right to recover Revenue Share which will arise from year to year if dormant subscribers get activated and use connection. The Hon'ble Supreme Court in the case of Comm. of Commercial Taxes & Another v/s Vikas Sales Corporation (2002-TIOL-60B-SC-CT) has in a similar case, has held that, Import License is not an actionable claim. The same is again re-affirmed by the Hon'ble Supreme Court in the case of Yasha Overseas v/s Comm. of Sales Tax (2008-TIOL-97-SC- CT). Copy of the judgements enclosed- Annexure "2" & "3" 12. In the instant case, by virtue of the agreement, the assessee has acquired the commercial right and in turn, is entitled to revenue share from RCOM for the services provided to them which is the revenue earned. The assessee has not secured any right over the any sort of debt from such dormant / revived subscribers. The right of debt from these subscribers vests only with RCOM Thus, the right acquired by the assessee cannot be termed as a transfer of an actionable claim. II. Soft copy of the list of subscribers for revival as identified by Reliance Communications Ltd. is submitted in pen drive - Annexure "4". The printouts of the list are running into several thousands of pages. We enclose herewith around 1000 pages in 2 box files - Annexure "5". III. The billing record of these subscribers for the past, as provided to the assessee, by Reliance Communications Ltd is as

12 ITA No.2461/M/15 available in their billing system. Being old records, these ledgers of the customers form part of the archives maintained in the system. Considering the number of subscribers and the volume of transactions involved, as can be seen from the Annexure "4" above, collating such data from the system is a herculean task and is a difficult proposition. IV. We are informed that these dormant subscribers have been acquired by Reliance Communications Ltd. during FY 2003-04 to 2005-06 and the revenue from such subscribers for the period they have remained active, has been part of their income during the relevant years. We are also informed by them that they have complied with requirement of reporting subscribers' base as per the TRAI guidelines issued from time to time. We may add that Reliance Communications Ltd. is a Public Listed Company and is regularly assessed by Addl. CIT - 10(3) and has PAN: AACCR7832C. (v) Vide letter dated 11.03.2013 "1. Annual Report of Reliance Communications Ltd. for Financial Years 2008-09 & 2009-10. =Annexure "1a" & "1b" 2. Copy of Letters dated 22/04/09 & 19/04/10 addressed by Reliance Communications Ltd. to Department of Telecommunication (DOT) regarding their subscriber base for March 2009 March 2010-Annexure-2a & 2b” INQUIRY DURING ASSESSMENT PROCEEDINGS ON ISSUE OF UNSECURED LOAN A. ASSESSING OFFICER ACIT 4(1) Mumbai vide notice dated 29.06.2012 asked for following details: 27. Please submit confirmation of unsecured loan of all parties including that of squared up loans - giving name of the shareholder, address, PAN and confirmation. 28. Please submit complete details of increase in share capital, if any, giving name of the shareholder, address, PAN and confirmation. B. ASSESSEE'S REPLIES (i) Vide letter dated 16.11.2012 "3. d. Details of Share Application Money received from Kent IT Solutions Pvt. Ltd. alongwith - Annexure 1/4"

13 ITA No.2461/M/15 • Confirmation • Ack. of Return of Income • Annual Report "4. Details of Unsecured loans giving Names, Addresses, PAN, Opening Balance, Repayment & Closing Balance. -Annexure "5" In respect of Unsecured Loans (Nos. 7), - Annexure "6" • Confirmation • Ack. of Return of Income • Annual Report for the year ending 31103110 of parties from whom loans have been taken by the Company." 8. It was further submitted by ld. AR that assessee has filed this returned income at current loss of Rs.1,55,76,12,616/- under normal provisions, however, the AO has assessed the total income at Nil after considering the letter of the assessee dated 14.3.2013 pointing that there has been a change of shareholding in the amalgamating company and due to operation of section 79, no loss will be allowed to be carried forward. The result of the above order is that the Assessing Officer has allowed claim of expenses and depreciation to the extent of Rs.6,57,00,000 which is the revenue income credited to profit and loss account out of the total claim of expenses and depreciation. As per ld. AR there was complete inquiry into the question of allowability of depreciation on commercial rights and the Assessing Officer has applied his mind in totality before he allowed the claim of depreciation and restricted the same in the manner in which he has done in the assessment order. As regards the genuineness of share application money and unsecured loans, the ld. AR submitted that there was only one new loan taken during the year i.e. from Blackstone Corporate Services Pvt. Ltd. of Rs.196 crores share application money received during the year was Rs.68

14 ITA No.2461/M/15 crores from Kent IT Solutions Pvt. Ltd. Ld. AR further submitted that they had filed documents in respect of share application money and unsecured loans. Ld. AR drew our attention to the documents filed before the AO in respect of unsecured loans from Blackstone Corporate Services Pvt. Ltd. vide letter dated 16-11-2012. Our specific attention was invited to the confirmation , acknowledgement of return of income and annual report of M/s Balckstone Corporate Services Pvt. Ltd. filed before the AO during the course of scrutiny assessment proceedings. With regard to share application money of Rs.68 crs. received from Kent IT Solutions Pvt. Ltd., ld. AR drew our attention to the letter dated 16.11.2012 filed along with assessee has filed confirmation, acknowledgement of return of income and annual report of M/s Kent IT Solutions Pvt. Ltd.. It was vehemently argued by ld. AR that on both the issues of claim of depreciation and share capital/unsecured loan, the assessee has filed detailed submissions which has been considered by the AO. Thus, it is not a case of lack of application of mind as laid down by the CIT. Ld. AR further invited our attention to the order of the Tribunal in assessee‟s own case for the assessment year 2009-2010, wherein on the same issue the CIT has passed the order u/s.263, which has been set aside by the Tribunal vide order dated 12-12-2014 in ITA No.3325/Mum/2014. 9. On the order hand, it was argued by ld. CIT DR that the AO has not made any enquiry and that there was a lack of application of mind on the part of the AO with regard to assessee‟s claim of depreciation and receipts of share application/unsecured loans, which rendered the order

15 ITA No.2461/M/15 of the AO erroneous as well as prejudicial to the interest of revenue. Reliance was placed on the following decisions reported at 208 ITR 465 (Kol), R.V. International, 81 ITD 422, 255 ITR 147, 266 ITR 1, 306 ITR 52. As per ld. DR there is no whisper in the assessment order with regard to justification of assessee‟s claim of depreciation and in respect of share capital/unsecured loans. As per ld. DR the AO is a quashi judicial authority, therefore, he is supposed to undertake full enquiry before allowing any claim of the assessee or while accepting share capital/unsecured loans. As per ld. DR there is no discussion by the AO in the assessment order with regard to allowing assessee‟s claim of depreciation or acceptance of share capital unsecured loans. 10. In reply to the DR‟s contention, it was argued by ld. AR that it is the duty of the department to train its officers as to how to write the proper order. He contented that in respect of various issues found by the AO in the return of income and for which he is satisfied, there is no need to mention the same in the assessment year. Only the item for which the AO is not satisfied and he proceeded to make addition are found in the assessment year. If the AO after examining the replies filed by assessee are satisfied with assessee‟s claim and the same is not mentioned/objected in the assessment year, under these circumstances assessee cannot be penalized. With regard AO‟s action in allowing claim of depreciation on intangible asset, ld. AR contended that there is direct decision of Hon‟ble Supreme Court in the case of Smif Securities Ltd. 348

16 ITA No.2461/M/15 ITR 302, wherein it was held that intangible assets like goodwill is also entitled for depreciation. 11. We have considered rival contentions, carefully gone through the orders of the authorities below and also deliberated on the judicial pronouncements referred by the CIT in his order u/s.263 as well as judicial pronouncements cited by ld. CITDR and ld. AR during the course of hearing before us in the context of factual matrix of the case. We had also gone through the order passed by the Tribunal in assessee‟s own case in the immediately preceding assessment year 2009-2010, order dated 12-12-2014, wherein both the issues on which the CIT has invoked his power u/s.263 has been dealt with in great detail. The Tribunal in his order had arrived at conclusion after having deliberated on both the issues and held that there was no error or irregularity in the order of AO and the CIT has travelled beyond the jurisdiction as prescribed u/s.263. Accordingly the impugned revision order was set aside. From the record we found that in this year also the assessee challenged the order of the Commissioner setting aside the order of the Assessing Officer dated 30.11.2012 on the ground that the order of the Assessing Officer is erroneous and prejudicial to the interest of the revenue. The Commissioner has held so on the ground that there is lack of application of mind in examining the facts and circumstances of the case and therefore the Commissioner held that she was compelled to set aside the case and directed the Assessing Officer to frame the assessment after examining all issues. With regard to allegation of CIT regarding non-

17 ITA No.2461/M/15 application of mind by AO, we found that with regard to issue of commercial rights and the depreciation thereon, the Assessing Officer had issued following notices through which the issue of the amortization of commercial rights and depreciation was enquired into:- a) Notice dated 27.9.2011 in which the reason for selection of the case for scrutiny was given which included the aspect of the depreciation.

b) Notice dated 27.12.2012 in which justification of charging depreciation on intangible right was called for and explanation was asked as to why it is not an asset but an actionable claim.

c) Notice dated 29.1.2013 wherein the details regarding the revival subscribers was called for.”

18 ITA No.2461/M/15 13. After considering the above reply the AO has taken the income at Nil as against declared loss of Rs.1,55,76,12,616/-. 14. Along with letter dated 16-11-2012, the assessee has also supplied details of names and address of equity shareholders along with their PAN and shareholding as per Anexure-2, names and address of preference shareholders along with their PAN and shareholding as per Annexure-3. Details of share application money received from Kent IT Solutions Pvt. Ltd. along with confirmation, acknowledgment of return of income and annual report was also filed as per Anexure-4. Details of unsecured loans giving names, addresses, PAN, opening balance, repayment & closing balance was also furnished before the AO as per Annexure-5. 15. In respect of unsecured loans, the assessee has filed detailed as per Annexure-6 along with confirmation, acknowledgment of return of income and annual report for the year ending 31-3-2010 of parties from whom loans have been taken by the company. The assesse has also furnished details of sundry creditors and details of other liabilities as per Annexure-7 & 8. It was also explained that there are no loans and advances given by the company during the year under review. The advances represents TDS claim of the company. It was also submitted before the AO that the assessee company is engaged inter alia in the business of providing market research, sales promotion, consulting, advisory and such other services in various fields and is in position to acquire requisite expertise to cater to the telecom industry. Reliance Communications Limited (“RCom”) is a company engaged in the business

19 ITA No.2461/M/15 of providing telecommunication services has identified certain dormant subscribers. It was desirous to take services for reviving these identified subscribers so as to re-activate the availment of services offered by RCom to the said revived subscribers with a view to augment its revenue. It was also submitted that assessee company rendered services to RCom as in the earlier year by approaching the subscribers with a view to create the potential for RCom to revive the relationship with such dormant subscribers and to augment the revenue to RCom. It was also submitted that the company earned commission of Rs.6.56 crores from RCom during the year under review. 16. From the record we also found that vide letter dated 7-12-2012 filed before the ACIT-4(1), the assessee has filed Agreement for revival of dormant subscribers dated 1-8-2008 as amended vide letters dated 1-10- 2008 and 18-3-2009 with Reliance Communications Ltd.(RCL) which is engaged in the business of telecommunication. The main intention of the agreement was that RCL had identified certain subscribers which had become inactive/dormant on its network for the reason that RCL either had restricted or discontinued its telecom services in full or in part. RCL decided to revive these subscribers, render them from voice/data services and thereby increase its revenue in the course of time. It was also clarified through the letter dated 7-12-2012 as placed at page 27 of the paper book that as per the Original Agreement dated 1-8-2008 the company has to make one time payment of Rs.320.40 crs. As per agreements the company has to make further payment of Rs.115.50 crores, and Rs.41.25

20 ITA No.2461/M/15 crores respectively. As a result, the company has made payment aggregating to Rs.4,77,16,48,200/- towards appointment of company as an Exclusive Reviving Agent of RCL for undertaking services of revival of dormant subscribers. The aforesaid payment is for handing over by RCL 51,83,816/- identified subscribers into becoming active subscribers of RCL @825 per subscriber aggregating to Rs.4,77,16,48,200/-. 17. In reply to the AO‟s query, it was submitted that the assessee company has paid for purchase of talk time (recharge vouchers) from Reliance Communications Infrastructure Ltd.(RCIL) to be given to revive customers free of charge, as per Annexure-2. 18. With regard to the acquisition of commercial rights, its capitalization and claim of depreciation on such commercial rights, it was also explained that the assessee company has made total payment of Rs.6,75,20,43,401/- to RCL/RCIL. Out of the said sums, Rs.25,89,70,000/- was written off leaving balance of Rs.6,49,30,73,401/- during the year ending 31-03-2009(AY 2009-2010). The aforesaid balance payment for acquiring Commercial Rights for revival of dormant subscribers has been capitalized as Commercial Rights in Books of Accounts and depreciation at the rate of 25% (being intangible asset) has been claimed thereon. As per the reply so filed by the assessee before the AO, we found that the aforesaid commercial rights enabled the company to earn revenue share called commission from RCL at varying percentages based on the revenue generated by RCL from dormant

21 ITA No.2461/M/15 subscribers over number of years as specified in the aforesaid agreement. 19. Assessee‟s claim of depreciation on such commercial right is supported by the ruling of Hon‟ble Supreme Court in the case of Smif Securities Pvt. Ltd., 348 ITR 302. 20. As per Annexure-3a, the assessee has also filed details of other liabilities along with nature, dates, payment details etc. As per Annexure- 3b, the assessee has filed confirmation, acknowledgment of return of income and annual report of Unistar Telecom Services Pvt. Ltd. 21. As per Annexure-4 the assessee company has also filed details of Sundry Debtors along with date of transaction, amount etc. 22. With regard to the claim of depreciation it was submitted that the assessee company has been merged with Elder IT Solutions Pvt. Ltd. w.e.f.01-04-2010. On merger, the Commercial Rights have been continued to be disclosed as Intangible Asset by Elder IT Solutions Pvt. Ltd. and depreciation has been claimed thereon. 23. Vide letter dated 11-2-2013 filed before Additional Commissioner of Income Tax-4(1), it was further explained that the Company has entered into an Agreement towards appointment of Company as an "Exclusive Reviving Agent" of Reliance Communications Ltd. (RCL) for undertaking services of revival of dormant subscribers. Pursuant to the aforesaid Agreement, the Company is entitled to earn Revenue share called Commission from RCL at varying percentages based on the revenue generated by RCL from dormant subscribers over a number of years as

22 ITA No.2461/M/15 specified in the aforesaid Agreement. It was further explained that the payment made by the Company for aforesaid Commercial Right is thus an Intangible Asset capable of generating revenue over the years. Through the letter dated 11-2-2013, duly acknowledged by the Additional Commissioner-4(1), it was explained that the Company does not have any right to receive any amount from dormant subscribers or RCL. The right to a revenue share will arise from year to year if dormant subscribers get activated and use the connection. Even then RCL would have an actionable claim against the subscriber - the Company would not have such claim. After RCL confirms the amount, if any, due to the Company as “Revenue Share" the Company will have an “actionable claim" for such agreed amount against RCL. But, the Agreement itself, does not give rise to any actionable claim against RCL. Hence, question of treating it as “actionable claim" does not arise. It was further reiterated that depreciation was correctly claimed on the aforesaid commercial rights being an intangible assets. Certified true copy of Minutes of the Board Meeting held on 20-10-2008 authorising the directors to borrow funds was also filed as per Annexure-1. Certified true copy of Minutes of the Board Meeting held on 30-11-2010 for amalgamation of company with Elder IT Solutions Pvt. Ltd. was also filed as per Annexure-2. Vide letter dated 5- 3-2013, which was explained that “Capital Asset" has been defined in Sec. 2(14) of the Act to mean property of any kind, except those specifically excluded. Thus, property is a word of widest import and signifies every possible interest which a person can hold or enjoy except

23 ITA No.2461/M/15 those specifically excluded. Hence, property of any kind includes tangible, intangible, fixed, floating, movable and immovable properties. Before the AO the assessee has also placed reliance on the decision of Hon‟ble Bombay High Court in the case of Bafna Charitable Trust Vs. CIT(1998) 230 ITR 864(Bom), wherein it was held that property includes ownership, estate and interest in corporeal things and also rights in personem capable of transfer or transmission, such as debts, and signifies a beneficial right to or thing considered as having a money value. Further reliance was also placed on the decision of Hon‟ble jurisdictional High Court in the case of Tata Services Ltd., 122 ITR 594, wherein it was held that right to obtain conveyance of immovable property is capital asset. Further reliance was placed on the decision of Hon‟ble Supreme Court in the case of Devidas Vithaldas & Co., 84 ITR 277, wherein goodwill of a business was held as capital asset. Further reliance was placed on the decision of Hon‟ble Supreme Court in the case of R.K.Palshikar, HUF, 172 ITR 311, wherein it was held that contractual right, leasehold rights are capital asset. Further reliance was placed on the decision of Hon‟ble Punjab & Haryana High Court in the case of Hari Brothers Private Limited, 52 ITR 399, wherein it was held that right to subscribe the shares are capital assets. 24. In view of the above judicial pronouncements, it was submitted before the AO that acquisition of right by the assessee for Revival of Dormant Subscribers of Reliance Communications Ltd. is a capital asset within the meaning of sec. 2(14) of the Act. Reliance was also placed on

24 ITA No.2461/M/15 the decision of Hon‟ble Supreme Court in the case of Smifs Securities Ltd., 348 ITR 302, wherein it was held that goodwill would fall under the expression “ any other business or commercial right of a similar nature", included in clause (b) of Explanation 3, applying the principle of ejusdem generis while interpreting the said expression. By taking support of above judicial pronouncements it was submitted before the AO that assessee has acquired an exclusive right to revive the dormant subscribers. Applying the principle of ejusdem generis while interpreting the said expression "any other business or commercial right of a similar nature", included in clause (b) of Explanation 3, as held by the Hon'ble Apex Court in case of Smifs Securities (supra), such exclusive commercial right is an intangible assets and therefore, eligible for claim of depreciation u/ s 32 of the Act. It was also clarified that by virtue of the Agreement for Revival of Dormant Subscribers, the assessee has not acquired any actionable claim. It is further substantiated that this right was not in the nature of actionable claim. It was submitted that the actionable claim' has been defined u/s. 3 of Transfer of Property Act, 1882 which is as under: "Actionable Claim is a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of moveable property, or to any beneficial interest, in moveable property not in possession either actual or constructive,' of the claimant, which the civil courts recognise as affording grounds of relief whether such debt or beneficial interest be existent, accruing or conditional or contingent.” 25. It was further clarified that the actionable claim is restricted to unsecured debts and the right to recover debts can be acquired by assignee.

25 ITA No.2461/M/15 “Section 3 of Transfer of Property Act 1882 defines “Actionable claim”. As per Mulla‟s T.P.Act an actionable claim is a claim to any unsecured debt. Such a debt should be other than a debit secured by mortgage of immovable property or by hypothecation or pledge of movable property (because these are not transfers of claim but of the property itself) or a claim to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant. The claim should be such as Civil Court would recognise as affording grounds for relief whether such debt or beneficial interest be existent, accruing, conditional or contingent; Such transfer of an actionable claim shall be effected only by execution of an instrument is uniting by the assignor to the assignee.” After clarifying the amendment of actionable claim as given in Section 130 of Transfer of Property Act, 1882, it was submitted that actionable claim", has 2 parts. The first part defines actionable claim as a claim of Unsecured Debt recoverable in money. In the assessee's case, the assessee has no right to recover any amount paid for acquiring commercial rights. The second part of the definition talks of beneficial interest in moveable property not in possession either actual or constructive. The right to revive the dormant subscriber is not a property like motor car or equipment where there can be beneficial interest not in possession of claimant. The assessee has only right to recover Revenue Share which will arise from year to year if dormant subscribers get activated and use connection. The Hon'ble Supreme Court in the case of Comm. of Commercial Taxes & Another v/s Vikas Sales Corporation (2002- TIOL-608-SC-CT) has in a similar case, has held that, Import License is not an actionable claim. The same is again re-affirmed by the Hon'ble Supreme Court in the case of Yasha Overseas v/s Comm. of Sales Tax (2008-TIOL-97-SC-CT).

26 ITA No.2461/M/15 26. In the instant case we found that by virtue of the agreement, the assessee has acquired the commercial right and in 'turn, is entitled to revenue share from RCOM for the services provided to them which is the revenue earned. The assessee has not secured any right over the any sort of debt from such dormant / revived subscribers. The right of debt from these subscribers vests only with RCOM. Thus, the right acquired by the assessee cannot be termed as a transfer of an actionable claim. Vide letter dated 14-3-2013, the assessee has filed Shareholding Pattern of Elder IT Solutions Pvt. Ltd. As per the said details, the shareholders of the Company do not hold more than 51% shares in Elder IT Solutions Pvt. Ltd. Through this letter also assessee has conceded that due to change in shareholding, the assessee was not entitled to carry forward losses as the shares of the Company, carrying not less than 51 % of the voting power were beneficially held by persons who beneficially held shares of the Company carrying not less than 51 % of the voting power on the last day of the year or years in which the loss was incurred. 27. From the record, we found that the shareholding pattern, the loss though correctly determined and carried forward. Assessee company has also filed confirmation letter of Kent IT Solutions Pvt. Ltd. mentioning therein PAN for the period 1-4-2009 to 31-3-2010, which is placed at page 44 of the paper book. The assessee company has also filed copy of the return of income of Kent Solutions Pvt. Ltd. for the A.Y.2010-2011 filed with department on 22-9-2010 having PAN AAGPB 9942 R. The Directors‟ report of Kent IT Solutions Ltd. was also filed which is placed at

27 ITA No.2461/M/15 page 46 to 48 of the paper book along with auditor‟s report and audited profit and loss account and balance sheet, which are placed at page 49 to 59 of the paper book. The confirmation of accounts of ICD-Blackstone Corporate Services Pvt. Ltd. for the period 1-4-2009 to 31-3-2010 was also filed which is placed at page 60 of the paper book. Copy of the IT return of Blackstone Corporate Services Ltd. was also filed, having deposited along with department on 9-9-2010, having PAN AAAGPB 9942 R, which is placed at page 59 of the paper book. Directors‟ report and auditor‟s report along with annexures were also filed before the AO which are placed at page 60 to 72 of the paper book. As per query of the AO the assessee has also filed copy of the agreement for revival of the dormant subscribers which is placed at page 73 to 84 of the paper book. 28. After considering all the above replies of the assessee, the AO has declined carry forward loss as per provisions of Section 79 of the Act. Since the assessee company has merged with another company, there has been a change of shareholding in the marketing company. Accordingly, assessee was not entitled to carry forward loss. Thus, income of the assessee was assessed by the AO at Nil. 29. It is not in dispute that various queries/letters were issued to the assessee by the AO and for which due compliance was made by the assessee. Even the CIT in his order u/s.263 had mentioned regarding all the notices/query letters issued by AO and the replies filed by the assessee. The AO in his assessment order u/s.143(3) has also mentioned that assessee has filed commercial agreement, loan confirmations and

28 ITA No.2461/M/15 subscribers data basis(two volumes + soft copy), which have been made part of the record. The AO has also acknowledged detailed filed by the assessee which has been verified on check date basis and kept on record. Accordingly, it cannot be said that the AO has not applied his mind or not enquired in regard to the objection raised by the CIT in his order u/s.263. We found that on both issues the Assessing Officer has raised queries and considered the details filed by the assessee and submissions made and that this is not the case of lack of inquiry or lack of application of mind as made out by the Commissioner in his order u/s.263. Hon‟ble Delhi High Court in the case of Sunbeam Auto Ltd., 332 ITR 167 held that the AO is not required to give detailed reasons in respect of each and every item on deduction in his assessment order. Once the CIT in his order accepted the fact regarding enquiry having made by the AO and assessee has furnished its explanation, then it cannot be said that it is a case of “lack of enquiry”. Hon‟ble Bombay High Court in the case of Gabrial India Ltd., 203 ITR 108, held that where the AO has allowed certain expenditure as revenue expenditure after making enquiries, the Commissioner initiating proceedings u/s.263, setting aside assessment and directing the AO to re-examine the matter as to whether the expenditure was revenue or capital, is illegal. Hon‟ble Madras High Court in the case of Smt. D.Valliammal, 230 ITR 695 held that invocation of revisional jurisdiction by CIT on the ground that verification of account was needed after obtaining clarification from the assessee without

29 ITA No.2461/M/15 recording ay finding that the ITO‟s order was erroneous and prejudicial and even after accepting the explanation of the assessee was invalid. 30. In the instant case, it was also explained before the CIT that similar proceeding u/s.263 were also initiated in the assessee‟s case for the earlier year i.e. A.Y.2009-10 and the Tribunal in their order in ITA No.3325/M/2014 has held that the Commissioner has travelled beyond the jurisdiction as prescribed u/s.263 and the order u/s.263 was set aside. 31. From the record we found that in this year also the issue were appealed as under:- i. Jurisdiction to revise the order ii. Allowability of depreciation on the commercial rights iii. Issue of share premium and unsecured loans Tribunal in A. Y.2009-10 considered the facts relating to depreciation on commercial rights. The assessee had acquired the right to revive the dormant subscriber of Reliance Communication under agreement dated 1-8-2008 and made onetime payment of Rs.320.04 crs. towards the payment of EITPL as an Exclusive Reviving Agent of RCOM and further RS.199 per subscriber inclusive of applicable taxes and levies, if any, payable under the law. The business right to revive the dormant subscribers of RCOM was acquired by the assessee against the payment of Rs.517.09 crs. for doing the business of providing the services of revival and generating the income in the shape of service charges as provided under the terms of the agreement. This aspect was looked into by the Assessing Officer in A.Y.2009-10 and had restricted the claim of

30 ITA No.2461/M/15 depreciation from Rs.25.9 crs. to RS.6.06 crs. The assessee relied upon the following decisions before Tribunal :- i. Techno Shares and Stock Ltd. 327 ITR 323 ii. B. Raveendran Pillai v CIT 332 ITR 531 iii. CIT v Hindustan Coco Cola Beverages P. Ltd. 331 ITR 192 iv. Areva T & D India Ltd. v DCIT 345 ITR 421 During the year under consideration the assessee has continued the claim of depreciation in respect of the above agreement. It was submitted that when the order u/s.263 for A.Y.2009-10 is set aside, the claim for depreciation as allowed is continued for subsequent years as the facts and the agreements in question continue to remain same and the Commissioner could not have passed order setting aside the issue of allowability of depreciation. On the issue of share application money and unsecured loans the Tribunal considered that the assessee had furnished all relevant material before the Assessing Officer during the assessment proceedings and the Assessing Officer after considering the relevant evidence accepted the genuineness of the credit entries. When all the relevant material was available with the Assessing Officer as it was produced during the assessment proceedings the order of the Assessing Officer does not suffer from any error. The Commissioner cannot initiate proceedings with a view to start fishing and roving inquiries in the matters or orders which are already concluded. 32. We had carefully gone through the order of the Tribunal in assessee‟s own case in the immediately preceding year wherein also on the similar ground the CIT has invoked his power u/s.263. It was claimed before Tribunal that it is a clear case where the Assessing Officer has

31 ITA No.2461/M/15 made enquiries and satisfied himself about the correctness and genuineness of the claim. In support of his contention the assessee had relied upon the decision of Hon'ble Jurisdictional High Court in the case of Commissioner of Income-Tax v Gabriel India Ltd. The assessee further submitted that when companies who have given funds to the assessee have shown all these transactions in their return of income then the question of no accepting credit paid to the assessee for want of source is contrary to the well settled principle on this point. If the revenue doubts the capacity of these companies then the issue has to be considered in their assessment and not in the assessment of the assessee. The decision of Hon'ble Supreme Court in the case of Lovely Exports was referred to the support the contention that when the assessee has prima facie proved the identity of the creditors and genuineness of the transactions and the creditworthiness of the creditors/subscribers by furnishing the details of addresses, PAN nos. as well as return of income where the transaction is duly reflected then if the Assessing Officer has any doubt of legitimacy of any of the subscribers/creditors, he is free to carry out thorough investigation in the case of the subscribers/creditors. In support of this proposition, the assessee had relied upon the following decisions:- (i) Hari Iron Trading Co. Vs. CIT ( 263 ITR 437) (ii)Commissioner of Income-Tax. Vs. Eicher Limited (294 ITR 310) (iii) CIT. vs. Development Credit Bank Limited. (323 ITR 167) (iv) CIT Vs. Sunbeam Auto Ltd., (2011) 3321TR 167 (Del.) (v) CIT Vs. Anil Kumar Sharma, 335 ITR 83 33. The learned DR from the department had also argued before Tribunal that the Assessing Officer had not made any inquiry and that

32 ITA No.2461/M/15 there was lack of application of mind on the part of the Assessing Officer which renders the order erroneous so far as prejudicial to the interest of revenue. The learned DR had relied upon following decisions:- i. CIT v Infosys Technologies 341 ITR 293 ii. CIT v Hindustan Lever 343 ITR 161 iii. Frick India Ltd. v DCIT 6 ITR 82 iv. Major Metals Ltd. v Union of India 359 ITR 450 v. Malabar Industrial Co. Ltd. v CIT 243 ITR 83 vi. South India Steel Rolling Mills v CIT 224 ITR 654 34. After considering the arguments and submissions of both sides, the Tribunal in assessee‟s own case for lA.Y.2009-2010, held as under :- “8.We have considered the rival submissions as well as relevant material on record. The assessment in this case was completed u/s 143(3) on 9.12.2011. Subsequently, the Commissioner has issue a show cause notice dated 20.03.2014 u/s 263 as under:- “The assessee company i.e. M/s Elder Infotech Pvt. Ltd. has filed its return of income on 30.09.2009 declaring a net loss of Rs.19,82,57,889/- for A.Y. 2009-10. Thereafter, the said company i.e. M/s Elder Infotech got merged with Elder IT solutions Pvt. Ltd., 6 ground floor, Shree Hanuman Apt, Bamanwada, Nr. Chakala Cigarette Factory, Andheri (E) Mumbai – 400 009. During the year under consideration i.e. A.Y. 2009-10 (F.Y. 2008-09), the assessee was having the commission income of Rs. 25.89 crores on account of purchase of dormant subscribers. The assessee company has paid to Reliance Communication Ltd. an amount of Rs. 517.94 crores in the nature of purchase of intangible asset. The assessee company has provided depreciation @ 25% for 73 days amounting to Rs. 25.90 crores. The assessee company has claimed the depreciation on commercial rights from the period 01.04.2009 to 28.05.2009 amounting to Rs. 25.90 crores. This has been claimed on the instant that the assessee has paid to Reliance Communication Ltd., a sum amounting to Rs. 517.94 crores in the nature of purchase of intangible assets. The assessee company has claimed the depreciation for 6 months amounting to Rs. 64.74 crores but claimed only Rs. 25.90 crores. The Assessing Officer has considered this aspect and restricted the claim of the assessee to the extent of commission income earned by it in pursuance of the aforesaid agreement of revival. The Assessing Officer has not considered whether the revival of dormant subscribers is a commercial right or not. The substantive aspect of the depreciation prescribed u/s 32(1)(ii) which says that depreciation will be allowed on know-how, patents, copyrights, trade mark, licences, franchises or any

33 ITA No.2461/M/15 other business or commercial right of similar nature being intangible assets acquired on or after the 1st day of April, 1998 has not been examined by the Assessing Officer. There is nothing on record that verification of the assessee‟s technical capabilities or the infrastructure required to carry out the alleged revival was ever done. The second issue in this case is with respect to share application money and unsecured loans for the year ending 31.03.2010. The assessee company, M/s Elder IT solutions Pvt. Ltd has received the unsecured loan of Rs. 48,75,56,8401/- and share application money of Rs. 1,39,86,00,000/-. The above two issues have not been examined by the Assessing Officer while passing the order of Elder Infotech Pvt. Ltd. for A.Y. 2009-10. On the issues as stated above a show cause is being given to you as to why the order passed by JCIT (OSD)-Cir. 8(1), Mumbai dtd 09.12.2011 should not be revised u/s 263 of the Act being order erroneous one ad prejudicial to the interest of revenue. Please submit your reply either in person or through authorize representative on 25.03.2014 at 11.30 A.M.” 9. The Commissioner proposed to revise the assessment order dated 9.12.2011 in respect of these two issues on the ground that the Assessing Officer has not examined these issues while passing the order for the A.Y. under consideration. There may be two broad scenario in which section 263 can be invoked. Firstly, in a case where the claim of the assessee needed inquiry and examination but the Assessing Officer failed to conduct any inquiry. Such a case would fall under the category of lack of enquiry and consequentially non application of mind on the part of the Assessing Officer, renders the order erroneous so far as prejudicial to the interest of revenue. Secondly, in a case where despite the inquiry the view of the Assessing Officer is not permissible due to non consideration of crucial relevant facts or legal provisions of law on the point. The failure on the part of the Assessing Officer to consider the crucial facts, provisions of law or settled legal precedent on the point renders the order erroneous and prejudicial to the interest of revenue. However, in a case where the Assessing Officer conducted an inquiry may be inadequate and allow the claim by taking a view on the issue having two possible views then the CIT cannot invoke the provisions of section 263 merely on the ground that he does not agree with the view taken by Assessing Officer.. This position has been settled by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. Vs. CIT (supra) as under:- “There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without

34 ITA No.2461/M/15 applying the principles of natural justice or without application of mind. The phrase „prejudicial to the interests of the revenue‟ has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue - Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 (SC) and inSmt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC).” 10. In the case in hand, the Assessing Officer has made an enquiry regarding the claim of depreciation on tangible asset and after considering the relevant agreement under which the assessee had acquired the right for revival of dormant subscribers of RCOM Ltd., has decided the issue in para 3.3 of the assessment order as under:- “3.3 The submissions of the assessee have been considered but the same are not acceptable. The assessee furnished the ledger account of advance towards purchase of subscribers', perusal of which shows that during the year the assessee has given advance of Rs 402,44,00,000/- on 23.10.2008 and Rs.115,50,00,000/- on 20.01.2009 to Reliance Communication Limited on account of purchase of subscribers. Thus, during the year, the assessee has - paid a sum of Rs. 517,94,00,000/- to Reliance Communication Limited on account of 'purchase of subscribers'. However, at the end of the year itself i.e. on 31st March, 2009, the assessee has written off a sum of Rs.25,89,70,000/- being 5% of the amount of 'advance towards purchase or subscribers'. To substantiate the aforesaid transaction, the assessee has furnished a Reliance Communications Limited. During the year, the assessee has earned income by way of commission of Rs.6,06,61,421/- from Reliance Communication Limited due to revival of certain subscriber contracts. The assessee also earned income in the copy of Agreement for Revival of Dormant Subscribers dated 01.08.2008 with form of consultancy fees. However, the assessee has not clearly justified the logic of claiming 5% of the total amount of subscriber contracts against the aforesaid income. Even, the perusal of Profit & Loss Account reveals that there is no other expenditure incurred to earn this income such as legal and professional charges, salary & wages, etc. In view of the same, it would be in the interest of justice to restrict the

35 ITA No.2461/M/15 claim of assessee to the extent of commission income earned by the assessee in pursuance of the aforesaid Agreement of Revival and the balance stands disallowed.” 11. Thus it is clear that it is not a case of complete lack of enquiry on the part of the Assessing Officer on the issue of allowing depreciation on intangible asset being business or commercial rights acquired under the agreement for revival of dormant subscribers of RCOM. Once the Assessing Officer has conducted the enquiry and after examination of relevant record as well as contention of the assessee has given a finding then the provisions of section 263 can be invoked by the Commissioner only if the view taken by the Assessing Officer is not permissible under the law. The Commissioner in this case though has given the reasons for not accepting the view of the Assessing Officer, however, at the same time he has again left the issue to be decided by the Assessing Officer afresh in the concluding para as under:- “Subject to the above discussion, I wish to conclude that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of revenue , with respect to the claim of depreciation on revival of dormant subscribers as a commercial asset (intangibles) made by assessee company and accetance of unsecured loan of Rs. 4,87,55,68,401/- and preference share of Rs. 13,98,60,000/-. Therefore, the order is set aside and matter is resorted to the file of Assessing Officer for a fresh consideration after giving reasonable opportunity of being heard to the assessee.” 12. When the matter was restored back to the file of Assessing Officer for a fresh consideration after giving reasonable opportunity of hearing to the assessee then it is apparent that the Commissioner has not arrived to a concluding finding that the view taken by the Assessing Officer is not permissible under the law. Moreover, the issue of tangible asset being business or commercial right as per section 32(1)(ii) of the Act., is a debatable issue in view of the various judgments including the judgment of Hon'ble Supreme Court in the case of Techno Shares & Stocks (supra), referred by assessee wherein, the stock exchange membership was considered as a right akin to a license which is one of the item which falls under section 32(1)(ii) of the Income Tax Act. The Hon'ble Supreme Court has observed that right to practice in market has an economic and money value. It was an expense incurred by the assessee which satisfied the test of being a „licence‟ or „any other business or commercial right of similar nature‟ in terms of S. 32(1)(ii) of the Income Tax Act. In the case of B. Raveendran Pillai Vs. CIT (supra), the Hon‟ble Kerala High Court has discussed the allowability of depreciation on very huge amount paid for good will and held that it is certainly for acquiring a business or commercial right and also comparable with the trade mark, franchise, copyright etc,. referred to in the first part of sub clause (ii) of section 32(1). In the case of CIT Vs. Hindustan Coco Cola (supra), the Hon‟ble Delhi High Court on the issue of depreciation on intangible asset u/s 32(1)(ii) held that the asset

36 ITA No.2461/M/15 which are in the definition of intangible asset includes along with other things any other business or commercial right of similar nature. The meaning of business or commercial rights of similar nature has been discussed in para 24 as under:- “24. It is worth noting that the meaning of business or commercial rights of similar nature has to be understood in the backdrop of section 32(1)(ii) of the Act. Commercial rights are such rights which are obtained for effectively carrying on the business and commerce, as is understood, is a wider term which encompasses in its fold many a facet. Studied in this background, any right which is obtained for carrying on the business with effectiveness is likely to fall or come within the sweep of meaning of intangible asset. The dictionary clause clearly stipulates that business or commercial rights should be of similar nature as know-how, patents, copyrights, trademarks, licences, franchises, etc. and all these assets which are not manufactured or produced overnight but are brought into existence by experience and reputation. They gain significance in the commercial world as they represent a particular benefit or advantage or reputation built over a certain span of time and the customers associate with such assets. Goodwill, when appositely understood, does convey a positive reputation built by a person/company/business concern over a period of time. Regard being had to the wider expansion of the definition after the amendment of section 32 by the Finance (No. 2) Act, 1998 and the auditor‟s report and the explanation offered before the Assessing Officer, we are of the considered opinion that the Tribunal is justified in holding that if two views were possible and when the Assessing Officer had accepted one view which is a plausible one, it was not appropriate on the part of the Commissioner to exercise his power under section 263 solely on the ground that in the books of account it was mentioned as „goodwill‟ and nothing else. As has been held by the Apex Court in Malabar Industrial Co. Ltd.‟s case (supra), Max India Ltd.‟s case ( supra) and CIT v. Vimgi Investment (P.) Ltd. [2007] 290 ITR 505 (Delhi) once a plausible view is taken, it is not open to the Commissioner to exercise the power under section 263 of the Act.” 13. The meaning as understood by the Hon‟ble High Court that any business or commercial right which is obtained for carry on business with effectiveness is likely to fall or comes within the sweep meaning of tangible asset. Similarly in the case of AREVA T&D India Ltd. (Supra), the Hon‟ble Delhi High Court has held that the term business or commercial right of similar nature has been additionally used under the category of intangible asset referred to section 32(1)(ii) clearly demonstrates that the legislature did not intend to provide for depreciation only in respect of specified intangible asset but also to other categories of intangible assets which were neither feasible nor possible to exhaustively enumerate. Therefore, the expression any business or commercial rights cannot be restricted to only the six categories of the assets as

37 ITA No.2461/M/15 mentioned in section 32(1)(ii). The Hon‟ble High court has clearly foreseen the non feasible impossibility to enumerate the intangible asset under the category of business or commercial rights. In view of the above said decisions it cannot be said that the claim of the assessee and view of he Assessing Officer is absolutely contrary to law but the issue of allowability of depreciation on intangible asset being business or commercial rights is a debatable issue. Once the Assessing Officer has taken a possible view then the Commissioner is not permitted to invoke the provisions of section 263 merely because he did not agree with the view taken by the Assessing Officer. 14. Now we take up the second issue of share application money and unsecured loan. The Commissioner has given the details of preferential share holder of the assessee at page 9 of the impugned order as under:- Sr. Name Face Premium Amount no. value received 1. Mindtree Industrial 3,50,000 34,96,50,000 35,00,00,000 Finance Ltd. Address: 60-B, 4th Floor, 9, Bhupen Chamber, Dalal Street, Fort, Mumbai – 400001. PAN : AACV1614N 2 Pearl Housing Finance 3,50,000 34,96,50,000 35,00,00,000 (India) Ltd. Address: 60-B, 4th Floor, 9, Bhupen Chamer, Dalal Street, Fort, Mumbai – 400001 PAN: AAACP6331J 3 VB Desai Securities and 3,50,000 34,96,50,000 35,00,00,000 Finance Ltd. Address: 60-B, 4th Floor, 9, Bhupen Chamer, Dalal Street, Fort, Mumbai - 400001 PAN: AAACV3592M 4 Vishvakarma Equipment 3,50,000 34,96,50,000 35,00,00,000 Finance (India) Ltd. Address: 60-B, 4th Floor, 9, Bhupen Chamer, Dalal Street, Fort, Mumbai – 400001 PAN: AAACV4286N Total 14,00,000 1,39,86,00,000 1,40,00,00,000 15. One of the reasons for proposing the revision on this issue by Commissioner is the justification of huge premium paid by these share applicant companies. The Commissioner has stated in the order that the source of applicant company is also the share premium

38 ITA No.2461/M/15 and loan generated by them and the Assessing Officer while finalizing the assessment order has not examined the credentials of these companies and how they have generated fund to give the assessee under consideration. The Commissioner has further recorded at page no. 10 of the impugned order as under:- “The above companies‟ financial details have been called for by the AO but no examination of the accounts of these companies have been done when it is required by the AO to examine the transaction pertaining to these companies because these companies do not have any operational income and creating entries in their books of accounts by way of loans and premium on issue of shares. The AO has recorded the statement of some of the persons but the statement recorded by the AO was also stereotype and no worthwhile question has been asked while recording the statement of the concerned parties. Al the statement recorded by the AO is stereotype. Even the confirmation filed by the parties who have given money to the assessee has not been examined by the AO with respect to source of money of depositors. In the background of above stated facts, it needs to be discussed the requirement of Sec.263 of the Act. The section 263 of the I.T. Act, 1961 speaks two things: (i) Order should be prejudicial to the interest of the revenue (ii) Order should be erroneous one. 16. The Commissioner has not disputed the fact as recorded in the impugned order that the above companies financial details have been called for by the Assessing Officer but no examination of accounts of these companies have been done when it is required by the Assessing Officer to examine the transaction pertaining to these companies in view of the fact that these companies do not have any operational income. It is further recorded that the Assessing Officer has recorded the statement of some of the persons but the statement so recorded by the Assessing Officer are stereo type and no worthwhile questions have been asked. Thus the reason for doubting the genuineness of the transaction of preferential shares issued at premium as well as unsecured loans is that the Assessing Officer has not properly conducted the enquiry. It is pertinent to mention that when the Assessing Officer has called for all the relevant details including financial details as well as parties for examination of genuineness of the transaction then it is not a case of lack of enquiry or non application of mind on the part of the Assessing Officer. The Commissioner was not pleased with the manner in which the enquiry was conducted by the Assessing Officer. The facts recorded by the Commissioner also demonstrate the source of application money and loan given to the assessee is against the share application money received by these companies as well as certain loans generated by them. Therefore, the facts as far as availability of source is concerned, the same is admitted by the Commissioner but the reason for not accepting the transaction is non examination of the transaction of money received by the share applicant companies. It is not the case of the Commissioner that these companies were not having funds but since the Assessing Officer has not examined the source of source, therefore, this issue was again restored back to the

39 ITA No.2461/M/15 Assessing Officer for fresh consideration. In the case of CIT Vs. Gabriel India (supra), the Hon‟ble High Court has recorded the reasons on which the order of Assessing Officer was held as erroneous by the Commissioner at page 112 and then held as under:- “The Commissioner, however, did not accept the contention of the assessee. He observed that the order of the ITO did not contain discussion in regard to the allowability of the claim for deduction which indicated non-application of mind. According to the Commissioner, the claim of the assessee required examination as to whether the expenditure in question was a revenue or capital expenditure. In that view of the matter, he cancelled the order of the ITO in this regard and directed him to make a fresh assessment on the lines indicated by him. ******************* ******************* From a reading of sub-section 1 of section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the ITO is 'erroneous insofar as it is prejudicial to the interests of the revenue'. It is not an arbitrary or unchartered power. It can be exercised only on fulfilment of the requirements laid down in sub-section (1). The consideration of the Commissioner as to whether an order is erroneous insofar as it is prejudicial to the interests of the revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi- judicial controversies as it must in other spheres of human activity- [SeeParashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 (SC), at page 10].” 17. As it was held that the Commissioner cannot initiate proceedings with a view to start fishing and roving enquiries in the matter or orders which are already concluded. The order cannot be termed as erroneous unless it is not in accordance with law. If the Assessing Officer is acting in accordance with law and made certain assessment, the same cannot be said erroneous by the Commissioner simply because according to him matter should have been written more elaborately. Similar view has been taken by the Hon‟ble Delhi High Court in the case of Hari Iron Trading Vs. CIT (supra) and observed at page 442 and 449 s under:-

40 ITA No.2461/M/15 “. In the light of the above factual background, we have not been able to appreciate as to how the Commissioner has recorded a finding that the assessment had been framed without application of mind or that difference in stock has not been properly examined. Unfortunately, his order is totally non-speaking and it does not convey as to what according to him should have been the proper examination by the Assessing Officer. The assessee had filed a detailed reply to his notice under section 263(1) of the Act which has been rejected without giving any reasons whatsoever. The Commissioner does not appear to have either perused the records or applied his mind to the detailed reply filed by the assessee. He has not discussed even a single contention raised therein. We have referred to the assessment recorded and find that the Assessing Officer had issued various notices on these points and had, satisfied himself that the addition of Rs. 10 lacs on account of discrepancy in stock was not called for as there was no discrepancy in stock. The Tribunal has done no better. A bare perusal of the aforesaid provision shows that the Commissioner can exercise powers under sub-section (1) of section 263 of the Act only after examining "the record of any proceedings under the Act". The expression „record‟ has also been defined in clause (b) of theExplanation so as to include all records relating to any proceedings available at the time of examination by the Commissioner. Thus, it is not only the assessment order but the entire record which has to be examined before arriving at a conclusion as to whether the Assessing Officer had examined any issue or not. The assessee has no control over the way an assessment order is drafted. The assessee on its part had produced enough material on record to show that the matter had been discussed in detail by the Assessing Officer. The least that the Tribunal could have done was to refer to the assessment record to verify the contentions of the assessee. Instead of doing that, the Tribunal has merely been swayed by the fact that the Assessing Officer has not mentioned anything in the assessment order. During the course of assessment proceedings, the Assessing Officer examines numerous issues. Generally, the issues which are accepted do not find mention in the assessment order and only such points are taken note of on which the assessee‟s explanations are rejected and additions/ disallowances are made. As already observed, we have examined the records of the case and find that the Assessing Officer had made full inquiries before accepting the claim of the Assessing Officer qua the amount of Rs. 10 lacs on account of discrepancy in stock. Not only this, he has even gone a step further and appended an office note with the assessment order to explain why the addition for allegation discrepancy in stock was not being made. In the absence of any suggestion by the Commissioner as to how the inquiry was not proper, we are unable to uphold the action taken by him under section 263 of the Act.” 18. In the case in hand, there is no dispute that the Assessing Officer called for financial details of these companies and also

41 ITA No.2461/M/15 examine the parties in order to satisfy himself about the genuineness of the transaction. Therefore, on the basis of the record available before him, the Assessing Officer accepted the claim of the assessee. The Commissioner has not found any fault with the details and records filed by the assessee in support of the claim but has cited the reasons that the Assessing Officer has not conducted the proper enquiry. When the entire record was available with the Commissioner then he ought to have given a concluding finding that the view taken by the Assessing Officer is contrary to the law as well as facts emerging from the records. However, the Commissioner has not given any such finding and restored the matter to the record of the Assessing Officer which is not permissible as per the provisions of section 263 when the Assessing Officer has conducted the enquiry and allowed the claim of the assessee on the basis of the examination of the record as well a the parties in person. We further note that the assessee has also filed the bank statements of these companies showing the transaction of payment of share premium as well as loans to the assessee. The transactions were also reflected in the return of income filed by these companies, therefore, in any case if the department has any doubt about the genuineness of arranging the funds by these share applicant companies, the enquiry and investigation should have been conducted in those cases as held by the Hon‟ble Delhi High Court in the case of Lovely Exports (299 ITR 268) which has been confirmed by the Hon'ble Supreme Court by dismissing the SLP filed by the department. 19. One more reasons for setting aside the assessment order in respect of the share premium is the justification of payment of huge premium in comparison to the prospective earnings of the assessee. It is pertinent to note that as per the provisions of section 68, the addition can be made if the transaction of cash credit is not properly explained by the assessee by establishing the identity of the creditor and the capacity of the creditor and genuineness of the transactions to the satisfaction of the Assessing Officer. Therefore, the justification of payment cannot be a sole ground for addition u/s 68. Though the same may be the reason for enquiry and investigation by the assessing authorities to find out the genuineness of the transactions. There is not dispute about the identity of the parties as it was also not disputed by the Commissioner, the source and capacity of these parties were prima facie established by the assessee by producing their financial statements and bank accounts etc. The Commissioner has also found from record the source of payment of share premium as the share application money and loan generated by these companies, therefore, the availability of fund was not disputed by the Commissioner but how that fund was generated by these companies is the only reason for revising the assessment order on this issue. The Commissioner himself has not given a concluding finding about the genuineness of the transactions, therefore, the enquiry of source of source is not warranted when the identity and source as well as transaction through banking channel has already been established by the assessee in view of the decision in the case of Lovely Exports. The Commissioner has also not brought out any fact or material to

42 ITA No.2461/M/15 suggest or cast any doubt about the genuineness of the transaction, accordingly, the setting aside of the assessment order and restoring back to the file of Assessing Officer for fresh consideration is beyond the jurisdiction u/s 263. 18. The judgment in the case of CIT Vs. Infosys Technologies (supra) as relied upon by the Ld. DR will not help the case of the revenue as in the said case the issue was allowability of deduction u/s DTAA with Canada and Thailand which were not examined by the Assessing Officer while passing the order. The Hon‟ble High Court has observed that it is the duty of the assessing authorities to do the computation in accordance with the relevant Articles of DTAA and if it had failed in that, more so in extending a tax relief to the assessee, the order definitely constitutes an order not merely erroneous but also prejudicial to the interest of the Revenue. Therefore, it was a glaring case of ignoring the mandatory provisions under the DTAA on the part of the Assessing Officer. In the case of CIT Vs. Hindustan Liver (supra), the Assessing Officer has completely missed out the head office expenses to be apportioned to determine the quantum of profit derived from industrial undertaking. Therefore, in the said case the point of apportionment of Head Quarter expenses was totally ignored due to non application of mind on the part of the Assessing Officer. It was a case of missing a crucial fact on the part of the Assessing Officer, therefore, the said decision cannot be applied in the facts of the present case. In the case of Frick India, Vs. DCIT (supra), the Tribunal has noted the fact that the Assessing Officer allowed the deduction without considering the earlier assessment orders, wherein, the said deduction was disallowed. Thus it was clear case of overlooking a mandatory aspect of the assessment and the fact that the deduction was earlier disallowed. The Assessing Officer failed to consider the earlier assessment orders and, therefore, the action of the Assessing Officer was absolutely not permissible under law. The said case is entirely distinguishable on fact and not applicable in the facts of the present case. In the case of Major Metals Ltd. Vs. Union of India (supra), is a judgment of the Hon‟ble High Court against the finding of the settlement commission, which was based on the material and evidence on record. Therefore, the said analogy cannot be applied in the case of revision order passed u/s 263. It was purely a finding of fact and hence have no applicability in the facts of the present case. 19. In view of the above, facts and circumstances of the case as well as above discussion , we are of the view that the Commissioner has travelled beyond the jurisdiction as prescribed u/s 263 and accordingly, the impugned revision order is not sustainable and, therefore, the same is set aside. 20. The assessee has also raised the ground no. 1 and 2 regarding validity of the revision order passed in the name of a person who is not in existence but amalgamated with the assessee. Since we have already set aside the revision order on the other grounds, therefore, this ground of assessee‟s appeal becomes

43 ITA No.2461/M/15 academic in nature. Further we note that the Commissioner has passed the impugned order in the name of Elder Infotech Pvt. Ltd., merged with Elder IT Solutions Pvt., Ltd., accordingly, we do not find any error or illegality in writing the name of the assessee along with erstwhile company being merged with the assessee. Hence, this ground of the assessee‟s appeal is dismissed 21. In the result appeal of the assessee is allowed.” 35. From the above findings of the Tribunal, we found that Tribunal in AY.2009-10 has considered both issues i.e. depreciation on commercial rights as well as share application money and unsecured loans and has come to conclusion that proceedings u/s.263 were wrongly invoked and the order of CIT u/s.263 was set aside. From the facts narrated above it can be seen that the facts in the year under consideration are same. The claim far depreciation on commercial rights started in AY.2009-10 and continued in AY.2010-11. The order of the AO for AY.2009-10 granting the depreciation was restored by cancellation of order passed u/s.263 by the CIT. Therefore the claim for depreciation on the same facts for AY.2010-11 was proper and the CIT has no jurisdiction to revise the order of the Assessing Officer. As regards share application money and unsecured loans, also there was proper inquiry and compliance during the assessment proceedings. The same issue was also subject matter of revision in AY.2009-10 and the Tribunal on the similar facts has held that proceedings u/s.263 were invalid. 36. In view of the above, we hold that the order of CIT u/s.263 on the ground that there was lack of application of mind by the AO in examining the facts and circumstances of the case, is not sustainable and the same deserves to be set aside.

44 ITA No.2461/M/15 37. In the result, appeal of the assessee is allowed. Order pronounced in the open court on this 17/12/2015.

Sd/- Sd/- (SANDEEP GOSAIN) (R.C.SHARMA) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER भुंफई Mumbai; ददनांक Dated 17/12/2015 प्र.कु.मभ/pkm, नन.स/ PS आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीराथी / The Appellant 1. प्रत्मथी / The Respondent. 2. आमकय आमुक्त(अऩीर) / The CIT(A), Mumbai. 3. आमकय आमुक्त / CIT 4. ववबागीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai 5. गार्ा पाईर / Guard file. 6. सत्मावऩत प्रनत //True Copy// आदेशाि सार/ BY ORDER,

उप/सहायक पुंजीकार (Asstt. Registrar) आयकर अपीऱीय अधिकरण, भुंफई / ITAT, Mumbai