M/s Beacon Higher Education Services Pvt. Ltd. vs ACIT

Parties Involved

Facts Summary

The assessee, a company, filed its return of income at NIL after setting off of the brought forward losses of Rs. 4,29,60,688/- under normal provisions of the Income-tax Act, 1961 (hereinafter referred to as the 'Act') and book profit of Rs. 57,22,914/- u/s 115JB of the Act. The case was taken up for scrutiny and the assessment was completed u/s 143(3) of the Act on 30.10.2018 at an income of Rs. 7,15,68,060/- after setting off the brought forward losses of Rs. 5,24,34,375/-. Thereafter the Assessing Officer noticed that in the assessment order as per the previous year’s order, no further losses of previous years were available for set off during AY 2014-15. The assessee had entered into ‘Service Continuation Agreement’ in May 2011 with Shri V. Sankasran and ‘non-compete agreement’ in June, 2011 with Shri A. Mahendran and claimed depreciation of Rs. 1,20,93,750/- @ 25% as ‘non-compete agreement’. Since neither of the two agreements qualified for depreciation as intangible assets, a rectification notice u/s 154 of the Act was issued to the assessee for rectifying the mistake. In response to the notice the learned Authorized Representative of the assessee filed the submissions. The Assessing Officer after considering the submissions of the assessee rejected the claim and thus made addition of Rs. 1,20,93,150/-. Aggrieved against this action of the Assessing Authority the assessee filed appeal before the learned CIT(Appeals), who after considering the submissions vide order date…

Legal Issues

• 1. Whether the Ld. CIT (A) has grossly erred on facts of the matter and law under applicable provisions and passed the order u/s 154 by reversing his own order passed in the appeal matter u/s 154, is arbitrary and applied the fact decided in judicial order being against the principles of natural justice and the provisions of IT Act, 1961 to the appellant.
• 2. Whether the Ld. CIT (A) has grossly erred on facts to extend an opportunity to examine any additional evidence being against the principles of natural justice.
• 3. Whether the Ld. CIT(A) has grossly erred on fact as well as in law by withdrawing the depreciation amounting to Rs.1,20,93,750/- u/s 32 (1) (ii) of the IT, Act 1961 on intangible asset i.e. non- compete fee, as per definition u/s 2 (f), which allowed by him in the appeal order passed u/s 250 by setting aside the AO's order u/s 154 disallowing depreciation claimed, and applied the judicial order arbitrary, which accepted by him as not related to the matter of appellant.
• 4. Whether the Ld. CIT(A) has grossly erred to disallow the brought forward accumulated losses of Rs.5,24,34,375/- by withdrawing the allowed depreciation on the ground that it was not available to assessee.
• 5. Whether the Ld. CIT (A) has grossly erred by exceeding his authority to pass order u/s 154 by reversing not only his own order but ignored the order passed by his predecessor in the same issue in AY 12-13, setting aside the AO's order u/s 154 to disallow depreciation of Rs. 1,20,93,750/- claimed u/s 32 (1) (ii) on intangible asset i.e. non-compete fee, as per definition u/s 2 (f), without going into the merit of fact of assessee and a judicial order which was not applicable to the appellant.

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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