Income Tax Appellate Tribunal Hyderabad M/S. Ushodaya Enterprises Ltd.,, ... vs Department Of Income Tax on 16 February, 2016 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES "A" : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.No.1265/Hyd/2013 Assessment Year 20072008 DCIT, Circle16(2) M/s. Ushodaya Enterprises Hyderabad. vs. Ltd., Hyderabad. PAN AAACU2690P (Appellant) (Respondent) For Revenue : Mr. Konda Ramesh For Assessee : Mr. K. Gopal Date of Hearing : 17.11.2015 Date of Pronouncement : 16.02.2016 ORDER PER SMT. P. MADHAVI DEVI, J.M. This is Revenue's appeal for the A.Y. 200708. Along with the Form No.36, the Revenue has raised the following grounds of appeal: 1. "The order of the CIT(A) is erroneous in law and facts of the case. 2. The Ld. CIT(A) ought to have considered that value of Software Film Library WDV of the asset is only Rs.160,96,47,766 in the hands of Sri Ch Ramoji Rao (HUF), instead of valuing at an exorbitant price of Rs.775,00,00,000. 3. The Ld. CIT(A) ought to have confirmed the addition towards the Film Software Library as the same is not intangible asset and it is to be treated 2 ITA.No.1265/Hyd/2013 M/s. Ushodaya Enterprises Ltd., Hyderabad. as Plant & Machinery and therefore a depreciation @ 15% has to be allowed instead of 25%. 4. Any other ground(s) that may be urged at the time of hearing." 1.1. Further, vide letter dated 10.10.2014, the Revenue has raised the following additional ground of appeal. 1. "The Ld. CIT(A) has erred in holding that the requirements of Section 43(1) are not met/or provisions are erroneously invoked." 2. Brief facts of the case are that the assessee is a company engaged in publishing of newspapers and also satellite television broadcasting. For the relevant assessment year i.e., A.Y. 200708, it filed its return of income on 31.10.2007 admitting income of Rs.27,10,85,700 under normal provisions and book profit of Rs.104,33,52,595 under the provisions of Section 115JB of the I.T. Act, 1961. Initially, the return was processed under section 143(1) of the I.T. Act on 19.03.2009. Subsequently, the assessment proceedings were completed under section 143(3) of the I.T. Act computing the taxable income at Rs.163,38,26,535. 3. Thereafter, the Ld. CIT, under section 263 of the I.T. Act, held the assessment order to be erroneous and prejudicial to the interests of the Revenue. Therefore, the original assessment order passed under section 143(3) was set aside by the Commissioner vide his order dated 28.03.2012 under section 263 of the I.T. Act with a 3 ITA.No.1265/Hyd/2013 M/s. Ushodaya Enterprises Ltd., Hyderabad. direction to redo the assessment as per the directions given by him. The assessee challenged the revision order before the ITAT but it was upheld by the Tribunal. Thereafter, the A.O, in order to give effect to the revision order, issued notices under section 143(2) and 142(1) of the Act and examined the return of income of the assessee. He observed that the Ld. CIT has sought to revise the assessment order on the grounds that (i) excess depreciation has been claimed on Film Software Library which was purchased by the assessee from Sri Ramoji Rao (HUF) and (ii) the depreciation on Film Software Library has been allowed at 25% as allowable on an intangible asset, though the asset was to be treated as plant and machinery and depreciation was to be allowed accordingly. 4. The A.O. observed that Sri Ramoji Rao is the Kartha of Sri Ramoji Rao (HUF) and is also the Chairman of M/s. Ushodaya Enterprises Limited, wherein he, along with his family members is the 100% shareholder. He observed that M/s. Ushakiran Television and M/s. Ushakiran Movies being business units of Sri Ramoji Rao (HUF), are the owners of (Film Software Library) and are in the business of production of films and TV programmes which are exclusively telecast in the ETV channels owned by M/s. Ushodaya Enterprises Limited and that the resultant revenue generated by M/s. Ushodaya Enterprises Limited from the sale of advertising spots and telecast of films and programmes is shared with M/s. 4 ITA.No.1265/Hyd/2013