IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR.JUSTICE. P.S.GOPINATHAN SATURDAY, THE 19TH DAY OF NOVEMBER 2011/28TH KARTHIKA 1933 ITA.No. 260 of 2010 ( ) ======================= (ITA.810/COCH/2008 of I.T.A.TRIBUNAL,COCHIN BENCH) APPELLANT/APPELLANT ====================== M/S.VRINDAVAN HOTELS PVT. LTD., XXXV-903 M.G.ROAD COCHIN-682 016. BY ADV.SRI.JOSEPH MARKOSE (SR.) SRI.MATHEWS K.UTHUPPACHAN SRI.TERRY V.JAMES SRI.B.J.JOHN PRAKASH SRI.TOM THOMAS (KAKKUZHIYIL) RESPONDENT ============= THE INCOME TAX OFFICER WARD 1(1) ERNAKULAM. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 19-11-2011 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX ANNEXURE A: TRUE COPY OF LICENSE AGREEMENT DT.18.7.1989. ANNEXURE B: TRUE COPY OF SETTLEMENT AGREEMENT DT.29.7.1998. ANNEXURE C: TRUE COPY OF RELEVANT PAGE OF DIRECTOR'S REPORT DT.4.9.1999. ANNEXURE D: TRUE COPY OF ASSESSMENT ORDER DT.28.12.2006. ANNEXURE E: TRUE COPY OF ORDER DT.30.4.2008 OF THE COMMISSIONER (APPEALS). ANNEXURE F: TRUE COPY OF SECOND APPEAL DT.11.7.2008 PREFERRED BY THE PETITITONER. ANNEXURE G: CERTIFIED COPY OF ORDER DT.28.1.2010 OF THE APPELLATE TRIBUNAL. TRUE COPY P.S. TO JUDGE C.N.RAMACHANDRAN NAIR & P.S.GOPINATHAN, JJ. .................................................................... I.T. Appeal No.260 of 2010 .................................................................... Dated this the 19th day of November, 2011. JUDGMENT Ramachandran Nair, J. Heard Senior counsel Sri.Joseph Markose appearing for the appellant and Standing Counsel for the respondent. The question raised is whether the Tribunal was justified in declining depreciation on amount paid for acquisition of business rights and also disallowing interest paid on funds borrowed for acquisition of business assets. 2. The facts leading to the controversy are the following. The petitioner is a private limited company constituted with husband and wife and their two children, one son and the other daughter. While the family was controlling the Hotel business, the Managing Director namely, the father, granted a licence to his daughter's husband for running a restaurant, a coffee shop and an ice cream parlour in the hotel building on payment of rent. However, after the death of the father, the daughter assigned her shares in the appellant-company in favour of her mother and thereby relinquished her rights in the assessee-company. 2 Under the family agreement entered into between the widow, her daughter and the son-in-law, the daughter relinquished the shares of the appellant-company in favour of her mother. The consideration paid was Rs.50 lakhs and under the agreement, licencee namely, the son-in- law, also gave up his rights. This transaction was treated as an acquisition of business asset by the appellant-company and accordingly they claimed depreciation on the amount of Rs.50 lakhs paid to the daughter and deduction of the interest paid on funds borrowed for settling daughter's rights. The Assessing Officer, the first appellate authority as well as the Tribunal on facts found that the settlement is a family settlement and so much so, the assessee's claim that the amount is paid for acquisition of business rights is without any basis. 3. After hearing both sides and after going through the records, we are of the view that the findings on fact concurrently entered into by the three authorities including the final fact finding authority namely, the Tribunal, do not warrant any interference because obviously the payment is made against the daughter surrendering her shares in the assessee-company in favour of her mother and not for termination of 3 the licence rights enjoyed by the son-in-law. Admittedly appellant- assessee owns the hotel building which is a valuable asset and after relinquishing the rights, the daughter lost her rights in the property. In view of the finding on facts on these lines based on which Tribunal decided the matter, we do not find any substantial question of law arising in the appeal. Consequently appeal is dismissed as devoid of any merit. C.N.RAMACHANDRAN NAIR Judge P.S.GOPINATHAN Judge pms