Shilpa Architects Planners & Designers P Ltd., CHENNAI V. DCIT, CHENNAI

ITA 1062/CHNY/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1518 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 28-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Reopening of assessment; Depreciation; Question of law; Date of conversion; Valuation report
• Section: 143(3); 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C BENCH, CHENNAI . . . , , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ./ I.T.A.NOS.1059 TO 1065/CHNY/2017 ( [ [ / ASSESSMENT YEARS: 2009-10 TO 2014-15) M/S. SHILPA ARCHITECTS PLANNERS & DESIGNERS P. LTD., L20, VSI ESTATE, THIRUVANMIYUR, CHENNAI 600 041. VS THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6(1), CHENNAI. PAN: AAMCS4326G ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI CLEMENT RAMESH KUMAR, ADDL. CIT /DATE OF HEARING : 03.06.2019 /DATE OF PRONOUNCEMENT : 06.06.2019 / O R D E R PER M. BALAGANESH, ACCOUNTANT MEMBER: THESE APPEALS OF THE ASSESSEE ARISE OUT OF THE COMMON ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNAI VIDE PROCEEDINGS IN ITA NOS. 245/246/13/2014-15/A.Y.2009-10 TO 2011- 12/ ITA NO.274/2015-16/A.Y.2012-13 / ITA NO.007/259/2016-17/A.Y. 2013-14 & A.Y.2014-15 DATED 24.03.2017 FOR THE ASSESSMENT YEARS 2009-10 TO 2014-15 AGAINST THE ORDERS OF ASSESSMENT PASSED BY THE DCIT, COMPANY CIRCLE 6(1), CHENNAI (HEREIN AFTER REFERRED TO AS LD. 2 ITA NOS.1059 TO 1065/CHNY/2017 AO) U/S. 143(3) R.W.S. 147 OF THE INCOME TAX ACT (HEREIN AFTER REFERRED TO AS THE ACT) FOR THE ASSESSMENT YEARS 2009-10 & 2010-11 AND U/S.143(3) OF THE ACT FOR THE ASSESSMENT YEARS 2011-12 TO 2014- 15. AS THE ISSUES INVOLVED IN ALL THESE APPEALS ARE IDENTICAL IN NATURE, THE SAME ARE TAKEN UP TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ONLY IDENTICAL ISSUE INVOLVED IN THESE APPEALS IS WHETHER THE LD.CIT(A) WAS JUSTIFIED IN DISALLOWING THE DEPRECIATION ON INTANGIBLE ASSETS VESTED WITH THE ASSESSEE COMPANY ON CONVERSION OF PROPRIETORSHIP BUSINESS INTO PRIVATE LIMITED COMPANY IN THE FACTS AND CIRCUMSTANCE OF THE CASE. 3. THE FACTS OF ASSESSMENT YEAR 2009-10 ARE TAKEN UP FOR ADJUDICATION AND THE DECISION RENDERED THEREON WOULD APPLY WITH EQUAL FORCE FOR OTHER ASSESSMENT YEARS BEFORE US EXCEPT WITH VARIANCE IN FIGURES. THE BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF PLANNING AND DESIGN CONSULTANCY. THIS PRIVATE LIMITED COMPANY WAS FORMED BY CONVERSION OF PROPRIETORSHIP BUSINESS OF M/S. SHILPA ARCHITECTS AND INTERIOR DESIGNERS ON 07.10.2008. ACCORDINGLY ASSESSMENT YEAR 3 ITA NOS.1059 TO 1065/CHNY/2017 2009-10 I.E., THE YEAR UNDER APPEAL, IS THE FIRST RETURN OF INCOME FILED IN THE NAME OF THE ASSESSEE COMPANY. THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 30.09.2009 ADMITTING LOSS OF RS.3,02,70,498/-. DURING THE PREVIOUS YEAR 2008-09 RELATING TO ASSESSMENT YEAR 2009-10, THE ASSESSEE HAS TAKEN OVER THE ASSETS AND LIABILITY OF THE PROPRIETARY CONCERN AND DURING SUCH TAKE OVER, THE INTANGIBLE ASSETS OF THE PROPRIETARY CONCERN WERE VALUED AT RS.30,12,68,983/- FOR WHICH CONSIDERATION WAS ISSUED IN THE FORM OF ALLOTMENT OF SHARES TO THE PROPRIETRIX. THE ASSESSEE PLEADED THAT THIS TRANSACTION OF ASSETS AND LIABILITIES PURSUANT TO THE CONVERSION FROM PROPRIETARY CONCERN INTO PRIVATE LIMITED COMPANY DOES NOT CONSTITUTE TRANSFER WITHIN THE MEANING OF SECTION 47(XIV) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSETS AND LIABILITIES OF THE ERSTWHILE PROPRIETORSHIP GOT VESTED WITH THE ASSESSEE COMPANY PURSUANT TO CONVERSION OF PROPRIETARY CONCERN INTO PRIVATE LIMITED COMPANY. CERTAIN INTANGIBLE ASSETS WHICH ARE REMAINING IN THE BOOKS OF PROPRIETARY CONCERN PURSUANT TO CONVERSION INTO PRIVATE LIMITED COMPANY, WERE REVALUED BY THE PROPRIETARY CONCERN BY GIVING 4 ITA NOS.1059 TO 1065/CHNY/2017 CORRESPONDING CREDIT OF REVALUATION AMOUNT TO THE ACCOUNT OF PROPRIETRIX. ADMITTEDLY, THIS REVALUATION OF INTANGIBLE ASSETS HAD BEEN CARRIED OUT PRIOR TO CONVERSION OF PROPRIETARY CONCERN INTO PRIVATE LIMITED COMPANY. THEREAFTER THE SAID PROPRIETARY CONCERN WAS CONVERTED INTO PRIVATE LIMITED COMPANY AND THE REVALUED INTANGIBLE ASSETS TOGETHER WITH THE OTHER ASSETS AND LIABILITIES GOT VESTED WITH THE ASSESSEE COMPANY. THE ASSESSEE COMPANY HAD ALLOTTED SHARES FOR THE NET VALUE OF ASSETS AND LIABILITIES TAKEN OVER TO THE PROPRIETRIX. THE NET VALUE OF ASSETS TAKEN OVER ADMITTEDLY INCLUDES THE REVALUED PORTION OF INTANGIBLE ASSETS, FOR WHICH ALSO, THE CONSIDERATION WAS DISCHARGED BY THE ASSESSEE COMPANY BY WAY OF ISSUANCE OF SHARES TO THE PROPRIETRIX. SINCE THE INTANGIBLE ASSET BROUGHT FORWARD FROM THE BOOKS OF PROPRIETARY CONCERN TO THE BOOKS OF THE PRIVATE LIMITED COMPANY I.E., THE ASSESSEE COMPANY, WAS ELIGIBLE FOR DEPRECIATION, THE ASSESSEE COMPANY CLAIMED DEPRECIATION THEREON ON THE REVALUED AMOUNT OF INTANGIBLE ASSETS. IT IS NOT IN DISPUTE THAT THE ENTIRE REVALUATION OF INTANGIBLE ASSETS VIZ-A-VIZ THE ENTIRE SUBJECT MATTER OF TRANSFER OF ASSETS AND LIABILITIES FROM THE PROPRIETARY CONCERN TO PRIVATE LIMITED COMPANY AND THE ISSUANCE OF SHARES THEREON TO THE PROPRIETRIX WERE BASED ON INDEPENDENT VALUATION REPORT OBTAINED FROM AN INDEPENDENT VALUER. HENCE THERE IS A STRONG CASE FOR THE 5 ITA NOS.1059 TO 1065/CHNY/2017 ASSESSEE FOR TRANSFER OF ASSETS AND LIABILITIES FROM PROPRIETARY CONCERN TO PRIVATE LIMITED COMPANY WITH RESPECTIVE VALUES DETERMINED THEREON. WE FIND THAT THE LD.AO HAD ACCEPTED THE ENTIRE TRANSACTIONS AS GENUINE. IT IS NOT THE CASE OF THE LD.AO THAT THE TRANSACTIONS BY WAY OF CONVERSION OF PROPRIETARY CONCERN INTO PRIVATE LIMITED COMPANY WERE SO ARRANGED WITH A MALIGN INTENTION TO EVADE PAYMENT OF TAXES OR REDUCE THE INSTANCE OF TAX LIABILITY THEREON. WE FIND THAT THE REVENUE HAD NOT CONSIDERED THE TRANSACTION OF ASSETS AND LIABILITIES GETTING VESTED WITH THE PRIVATE LIMITED COMPANY FROM THE BOOKS OF PROPRIETARY CONCERN AS SHAM. NOW THE DISPUTE BEFORE US BOILS DOWN TO ALLOWANCE OF DEPRECIATION ON INTANGIBLE ASSETS I.E., WHETHER THE ASSESSEE IS ENTITLED FOR DEPRECIATION ON INTANGIBLE ASSETS AT THE ORIGINAL COST OF SUCH ASSET OR AT THE REVALUED COST OF SUCH ASSET. IN ANY CASE, WE ALSO FIND THAT THESE TRANSACTIONS OF THE VESTING OF ASSETS AND LIABILITIES WITH THE ASSESSEE COMPANY PURSUANT TO VALUATION REPORT AND THEIR ARRANGEMENTS CANNOT BE CONSTRUED AS SHAM, IN VIEW OF THE FACT THAT THE LD.AO HAD ACCEPTED AND GRANTED DEPRECIATION ALLOWANCE ON THE ORIGINAL COST OF INTANGIBLE ASSETS INSTEAD OF GRANTING DEPRECIATION ON REVALUED PORTION OF INTANGIBLE ASSETS. ADMITTEDLY NO EXAMINATION WAS CARRIED OUT INDEPENDENTLY BY THE LD.AO BY CALLING UPON THE INDEPENDENT VALUER AND UNDERSTANDING THE FACTS. THE 6 ITA NOS.1059 TO 1065/CHNY/2017 LD.AR BEFORE US HOWEVER STATED THAT THE SAME WAS DONE BY THE LD.CIT(A) BEHIND THE BACK OF ASSESSEE, DURING THE COURSE OF APPELLATE PROCEEDINGS. BUT WE FIND NO SUCH RECORDING HAS BEEN MADE IN THE ORDER OF THE LD.CIT(A) TO THAT EFFECT. IN THESE CIRCUMSTANCES, AT THE COST OF REPETITION, WE WOULD LIKE TO REITERATE THAT THE REVENUE HAS NOT CONSIDERED THE ENTIRE TAKEOVER OF ASSETS AND LIABILITIES PURSUANT TO CONVERSION AS SHAM TRANSACTION. IN ANY CASE, WE FIND THAT THE REVALUED AMOUNT OF INTANGIBLE ASSETS WAS REMAINING IN THE BOOKS OF THE PROPRIETARY CONCERN PRIOR TO CONVERSION ITSELF. THE SAID REVALUED INTANGIBLE ASSET TOGETHER WITH OTHER ASSETS AND LIABILITIES GOT VESTED WITH THE ASSESSEE COMPANY PURSUANT TO CONVERSION. HENCE, THERE IS NO REASON TO DISALLOW THE CLAIM OF DEPRECIATION ON THE REVALUED PORTION ALONE. THE LD.AR BEFORE US STATED THAT THE REVALUATION OF INTANGIBLE ASSETS BASED ON INDEPENDENT VALUER REPORT WAS NOT DISPUTED IN ANY MANNER WHATSOEVER IN THE HANDS OF THE PROPRIETARY CONCERN TILL THE DATE OF CONVERSION. WHEN THE TRANSFER OF NET ASSETS INCLUDING THE INTANGIBLE ASSETS HAS BEEN ACCEPTED AS GENUINE IN THE HANDS OF THE PROPRIETARY CONCERN AT RESPECTIVE VALUES, THEN THE SAME CANNOT BE DISTURBED IN THE HANDS OF THE VESTED ENTITY I.E., THE ASSESSEE COMPANY. IN GENERAL PARLANCE, THIS TRANSFER OF NET ASSETS WOULD BE TREATED AS TRANSFER AND LIABLE FOR 7 ITA NOS.1059 TO 1065/CHNY/2017 CAPITAL GAINS BUT PURSUANT TO OPERATION OF LAW BY WAY OF SPECIFIC PROVISION CONTAINED IN SECTION 47(XIV) OF THE ACT, THE SAID TRANSACTION WAS NOT CONSIDERED AS A TRANSFER. HENCE WHEN THE ASSESSEE CLAIMS THE BENEFIT AS PROVIDED IN THE STATUTE AFTER DULY SATISFYING THE REVENUE THAT SHE HAD INDEED COMPLIED WITH ALL THE CONDITIONS STIPULATED FOR THE CLAIM THAT THE SUBJECT MENTIONED TRANSACTION WAS NOT BEEN CONSIDERED AS TRANSFER WITHIN THE MEANING OF SECTION 47(XIV) OF THE ACT, THEN THE VERY SAME ASSETS AND LIABILITIES WHICH GOT VESTED IN THE HANDS OF THE VESTED ENTITY I.E., THE ASSESSEE COMPANY CANNOT BE DISPUTED BY THE REVENUE BY WAY OF DISALLOWANCE OF DEPRECIATION ON REVALUED PORTION OF INTANGIBLES. WE FIND THAT THE RELIANCE PLACED BY THE LD.AR ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SANDVIK CHOKSHI LTD., REPORTED IN [2015] 55 TAXMANN.COM 453(GUJARAT) DATED 10.11.2014, IS WELL FOUNDED AND THE ANALOGY DRAWN THEREON COULD BE UTILIZED TO THE FACTS OF THE INSTANT CASE. THE QUESTION BEFORE THE HONBLE GUJARAT HIGH COURT IS AS UNDER: 2. THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW ARE RAISED FOR OUR CONSIDERATION IN THE PRESENT APPEALS: '(A) WHETHER THE TRIBUNAL IS RIGHT IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF DEPRECIATION OF RS. 17,67,90,015/- MADE BY THE A.O HOLDING THAT CLAIM OF DEPRECIATION ON ENHANCED VALUE OF ASSETS BY THE ASSESSEE WAS NOT WITH AN INTENTION TO REDUCE TAX LIABILITY AND ALSO 8 ITA NOS.1059 TO 1065/CHNY/2017 THAT THE AO HAS ERRONEOUSLY INVOKED THE EXPLANATION - 3 OF SECTION 43(1) OF THE INCOME TAX ACT AND ALSO HOLDING VALUATION REPORT OF VALUER AS VALID DESPITE OF THE FACT BROUGHT ON RECORD BY THE AO THAT VALUATION REPORT WAS MADE AFTER THE TRANSACTION AND 40% ADDITION. ON ACCOUNT OF TIME FACTOR WAS NOT A PRESCRIBED METHOD FOR VALUATION OF PLANT AND MACHINERY? (B) WHETHER THE TRIBUNAL IS RIGHT IN LAW AND ON FACTS TO DELETE THE DISALLOWANCE OF RS. 64,69,017/- ON ACCOUNT OF INTEREST EXPENDITURE ON UNPAID PURCHASE CONSIDERATION?' THE OPERATIVE PORTION OF THE ORDER IS REPRODUCED AS UNDER:- 5. HAVING HEARD MR. MEHTA AND HAVING GONE THROUGH THE RECORDS OF THE CASE, WE ARE OF THE OPINION THAT THESE APPEALS DO NOT DESERVE CONSIDERATION INASMUCH AS THE ISSUE INVOLVED IN THE APPEALS IS SQUARELY COVERED BY A DECISION OF THIS COURT DATED 23.09.2014 RENDERED IN TAX APPEAL NO. 1071 OF 2014. THE RELEVANT PARAGRAPHS READ AS UNDER: '9. SECTION 43 OF THE ACT PRESCRIBES DEFINITIONS OF CERTAIN TERMS RELEVANT TO INCOME FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION. SUB-SECTION (1) OF SECTION 43 PROVIDES, THUS - 43. IN SECTIONS 28 TO 41 AND IN THIS SECTION, UNLESS THE CONTEXT OTHERWISE REQUIRES - 1.ACTUAL COST MEANS THE ACTUAL COST OF THE ASSETS TO THE ASSESSEE, REDUCED BY THAT PORTION OF THE COST THEREOF, IF ANY, AS HAS BEEN MET DIRECTLY OR INDIRECTLY BY ANY OTHER PERSON OR AUTHORITY. PROVIDED THAT WHERE THE ACTUAL COST OF AN ASSET, BEING A MOTOR CAR WHICH IS ACQUIRED BY THE ASSESSEE AFTER THE 31ST DAY OF MARCH 1967, [BUT BEFORE THE 1ST DAY OF MARCH 1975] AND IS USED OTHERWISE THAN IN A BUSINESS OF RUNNING IT ON HIRE FOR TOURIST, EXCEEDS TWENTY FIVE THOUSAND RUPEES, THE EXCESS OF THE ACTUAL COST OVER SUCH AMOUNT SHALL BE IGNORED, AND THE ACTUAL COST THEREOF SHALL BE TAKEN TO BE TWENTY FIVE THOUSAND RUPEES. 9 ITA NOS.1059 TO 1065/CHNY/2017 EXPLANATION 3 WHERE, BEFORE THE DATE OF ACQUISITION BY THE ASSESSEE, THE ASSETS WERE AT ANY TIME USED BY ANY OTHER PERSON FOR THE PURPOSES OF HIS BUSINESS OR PROFESSION AND THE ASSESSING OFFICER IS SATISFIED THAT THE MAIN PURPOSE OF THE TRANSFER OF SUCH ASSETS, DIRECTLY OR INDIRECTLY TO THE ASSESSEE, WAS THE REDUCTION OF A LIABILITY TO INCOME-TAX (BY CLAIMING DEPRECIATION WITH REFERENCE TO AN ENHANCED COST), THE ACTUAL COST TO THE ASSESSEE SHALL BE SUCH AN AMOUNT AS THE ASSESSING OFFICER MAY, WITH THE PREVIOUS APPROVAL OF THE JOINT COMMISSIONER, DETERMINE HAVING REGARD TO ALL THE CIRCUMSTANCES OF THE CASE. 9.1 THUS, EXPLANATION - 3 CAN BE INVOKED IF THE ASSESSING OFFICER IS SATISFIED THAT THE MAIN PURPOSE OF THE TRANSFER OF ASSETS, DIRECT OR INDIRECTLY TO THE ASSESSEE, WAS THE REDUCTION OF A LIABILITY OF INCOME- TAX BY CLAIMING DEPRECIATION WITH REFERENCE TO AN ENHANCED COST. IN SUCH CIRCUMSTANCES, THE ACTUAL COST TO THE ASSESSEE CAN BE DETERMINED BY THE ASSESSING OFFICER HAVING REGARD TO ALL THE CIRCUMSTANCES OF THE CASE, WITH THE PREVIOUS APPROVAL OF THE JOINT COMMISSIONER. 10. IT CAN BE NOTED FROM THE RECORD THAT AT THE TIME OF TRANSFER OF THE ASSETS, THE ASSESSEE HAD NO INCOME FOR IT TO REDUCE ITS TAX LIABILITIES BY WAY OF SUCH TRANSFER, AND THEREFORE, BOTH THE CIT [A] AND THE TRIBUNAL HAD RIGHTLY CONCLUDED THAT THE ASSESSING OFFICER WAS IN ERROR IN INVOKING EXPLANATION 3 TO SECTION 43 FOR DETERMINING ACTUAL COST IN THE SAID DEAL. 11. FOR THE REASONS MENTIONED HEREINABOVE, WE SEE NO MISTAKE IN CIT [A] AS WELL AS TRIBUNAL IN CONCLUDING THAT EXPLANATION 3 TO SECTION 43 OF THE ACT WAS NOT REQUIRED TO BE INVOKED. THE FIRST ISSUE NEED NO CONSIDERATION THEREFORE AS NO SUBSTANTIAL QUESTION OF LAW HAS ARISEN. 14.1 EXPLANATION 8 TO SECTION 43 (1) OF THE ACT REQUIRES REPRODUCTION AT THIS STAGE - EXPLANATION 8 - FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT WHERE ANY AMOUNT IS PAID OR IS PAYABLE AS INTEREST IN CONNECTION WITH THE ACQUISITION OF ASSET, SO MUCH OF SUCH AMOUNT AS IS RELATABLE TO ANY PERIOD AFTER SUCH ASSET IS FIRST PUT TO USE SHALL NOT 10 ITA NOS.1059 TO 1065/CHNY/2017 BE INCLUDED, AND SHALL BE DEEMED NEVER TO HAVE BEEN INCLUDED, IN THE ACTUAL COST OF SUCH ASSET. 14.2 IT CAN BE NOTICED THAT SUCH EXPLANATION IS BROUGHT ON THE STATUTE BOOK BY THE FINANCE ACT, 1986, W. E. F 1ST APRIL 1974, WHICH EXPLAINS THAT WHERE AN AMOUNT IS PAID OR IS PAYABLE AS INTEREST IN CONNECTION WITH ACQUISITION OF ASSET, SO MUCH OF SUCH AMOUNT WHICH IS RELATABLE TO ANY PERIOD AFTER SUCH ASSET IS FIRST PUT TO USE SHALL NOT BE INCLUDED AND SHALL BE DEEMED TO HAVE BEEN INCLUDED IN THE ACTUAL COST OF SUCH ASSET. 14.3 THE BOMBAY HIGH COURT IN CASE OF COMMISSIONER OF INCOME- TAX V. RAJARAM BANDEKAR, REPORTED IN 202 ITR 514 WAS CONSIDERING EXPLANATION 8 TO SECTION 143 (I) OF THE ACT WHEREIN, IT IS HELD THAT THE SAID EXPLANATION WAS ADDED WITH AN OBJECT OF REMOVING DOUBTS WITH REGARD TO THE INCLUDIBILITY OF INTEREST RELATABLE TO ANY PERIOD AFTER THE ASSET HAS FIRST BEEN PUT TO USE, IN THE COMPUTATION OF ITS ACTUAL COST. BY THIS EXPLANATION, IT HAS BEEN DECLARED BY PARLIAMENT THAT, WHERE ANY AMOUNT IS PAID OR IS PAYABLE AS INTEREST IN CONNECTION WITH THE ACQUISITION OF AN ASSET, SO MUCH OF SUCH AMOUNT AS IS RELATABLE TO ANY PERIOD AFTER SUCH ASSET IS FIRST PUT TO USE SHALL NOT BE INCLUDED, AND SHALL BE DEEMED NEVER TO HAVE BEEN INCLUDED, IN THE ACTUAL COST OF SUCH ASSETS. PARLIAMENT, IN THE ABOVE EXPLANATION, HAS. TAKEN FULL CARE TO COUCH THE EXPLANATION IN THE WIDEST POSSIBLE TERMS TO AVOID ANY FURTHER CONTROVERSY IN REGARD TO THE VERY SAME ISSUE ON THE BASIS OF THE MANNER OF PAYMENT OF INTEREST OR TIME OF PAYMENT THEREOF. THIS HAS BEEN DONE BY THE USE OF EXPRESSION WHERE ANY AMOUNT IS PAID OR IS PAYABLE AS INTEREST. 15. IN THE MATTER ON HAND, CIT [A] AS WELL AS THE TRIBUNAL HAVE NOTICED THAT IN VIEW OF INTRODUCTION OF EXPLANATION 8 TO SECTION 43 (1) OF THE ACT WHICH WAS HELD RETROSPECTIVE IN NATURE, THE INTEREST CANNOT BE CAPITALIZED WHICH WAS PAID AFTER THE SLUMP SALE WAS EFFECTED AND THE FACTORY WAS IN OPERATION, AND THEREFORE, SUCH EXPENSES WERE REVENUE IN NATURE. THE DIRECTIONS GIVEN TO THE ASSESSING OFFICER TO ALLOW THE AMOUNT OF INTEREST OF RS. 1.57 CRORES [ROUNDED OFF] IS IN ACCORDANCE WITH THE PROVISION OR LAW.' 11 ITA NOS.1059 TO 1065/CHNY/2017 5. IT IS NOW WELL SETTLED THAT CONSIDERATION BY WAY OF ISSUANCE OF SHARES ON THE ENTIRE VALUE OF NET ASSETS AND LIABILITIES IS A VALID CONSIDERATION. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF COMMONWEALTH TRUST (INDIA) LTD VS CIT REPORTED IN 306 ITR 356 (KER). THE HONBLE KERALA HIGH COURT HAD CATEGORICALLY OBSERVED THAT: IF SHARES WERE TRANSFERRED TO THE SHAREHOLDERS OF THE FOREIGN COMPANY, THEN THE TRANSFER OF PROPERTY TO THE APPELLANT COMPANY IS AGAINST CONSIDERATION IN THE FORM OF VALUE OF SHARES ALLOTTED TO THE SHAREHOLDERS OF THE AMALGAMATING COMPANY. SHARE CAPITAL IS A LIABILITY OF THE COMPANY TO THE SHAREHOLDERS AND SO MUCH SO, VALUE OF SHARES ALLOTTED CONSTITUTE VALUE OF THE PROPERTY ACQUIRED BY THE COMPANY IN THE COURSE OF AMALGAMATION. IN VIEW OF THE AFORESAID FINDINGS IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREIN ABOVE, WE DIRECT THE LD.AO TO GRANT DEPRECIATION ON REVALUED PORTION OF INTANGIBLE ASSETS FOR ALL THE YEARS IN APPEAL BEFORE US. ACCORDINGLY THE GROUND NOS.1 TO 7 RAISED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 ARE ALLOWED. 6. GROUND NOS.8 AND 9 RAISED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 ON THE VALIDITY OF REOPENING OF ASSESSMENT WAS STATED TO BE NOT PRESSED BY THE LD.AR AT THE TIME OF HEARING BEFORE US FOR WHICH NECESSARY ENDORSEMENT WAS DULY MADE BY THE LD.AR IN OUR FILES. ACCORDINGLY THE SAME ARE DISMISSED AS NOT 12 ITA NOS.1059 TO 1065/CHNY/2017 PRESSED. THE DECISION RENDERED HEREIN FOR THE ASSESSMENT YEAR 2009-10 WOULD APPLY WITH EQUAL FORCE FOR OTHER ASSESSMENT YEARS IN APPEAL BEFORE US. 7. THE GROUND NO.10 RAISED BY THE ASSESSEE IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 8. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THE 6 TH JUNE, 2019 AT CHENNAI. SD/- SD/- /CHENNAI, /DATED 6 TH JUNE, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( ) /CIT(A) 4. /CIT 5. /DR 6. [ /GF ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ) (M. BALAGANESH) / ACCOUNTANT MEMBER