DCIT 1(1)(2), MUMBAI V. GILBARCO VEEDER INDIA PVT. LTD., MUMBAI

ITA 1246/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8206 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 05-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR LD
• Assessee Lawyers: PRANITH GOLECHA; PARMESHWARAN LD ARS
• Keywords: Depreciation; Additional evidence; Revised return; Set aside
• Section: 143(3); 139(5); 251; 13

Judgement Text

ITA NOS.1246 TO 1248/MUM/2019 ASSESSMENT YEARS :2010-11, 2013-14 & 2014-15 M/S GILBARCO VEEDER ROOT INDIA PRIVATE LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.1246/MUM/2019 ( / ASSESSMENT YEAR : 2010-11 ) & ./ I.T.A. NO.1247/MUM/2019 ( / ASSESSMENT YEAR : 2013-14 ) & ./ I.T.A. NO.1248/MUM/2019 ( / ASSESSMENT YEAR : 2014-15 ) D CIT - 1 (1) (2) ROOM NO.579 AAYKAR BHAVAN, M.K. MARG MUMBAI-400 020. / VS. M/S. GILBARCO VEEDER ROOT INDIA P V T . LTD. SF NO.627 & 628/2 SEC.W4, PDP COIMBATORE CAMPUS EACHANARI CHETTIPALAYAM ROAD INDUSTRIAL ESTATE, PO MALUNICHMAPTTI COIMBATORE, TAMIL NADU -641 021 &' ./ ./PAN/GIR NO. AADCG-4992-P ( ') /APPELLANT ) : ( *+') / RESPONDENT ) ASSESSEE BY : S/SHRI PRANITH GOLECHA & PARMESHWARAN LD. ARS REVENUE BY : SHRI V. VINOD KUMAR -LD. DR / DATE OF HEARING : 26/06/2020 / DATE OF PRONOUNCEMENT : 13/07/2020 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) ITA NOS.1246 TO 1248/MUM/2019 ASSESSMENT YEARS :2010-11, 2013-14 & 2014-15 M/S GILBARCO VEEDER ROOT INDIA PRIVATE LTD. 2 1. AFORESAID APPEALS BY REVENUE FOR ASSESSMENT YEAR S (AY) 2010-11, 2013-14 & 2014-15 CONTEST SEPARATE ORDERS OF FIRST APPELLATE AUTHORITY WHICH ARE ALL DATED 31/12/2018. SINCE, COMMON ISSUE IS INVOLVED IN ALL THE THREE APPEALS, THE APPEALS WERE HEARD TOGETHER AND ARE NOW BEING DISPOSED-OFF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE & BREVITY. FIRST, WE TAKE UP APPEAL FOR AY 2010-11. 2. THE LD. DR, DRAWING OUR ATTENTION TO THE GROUNDS OF APPEAL, SUBMITTED THAT LEARNED FIRST APPELLATE AUTHORITY ER RED IN ADMITTING FRESH CLAIM OF THE ASSESSEE AND FURTHER, THE RELIEF HAS B EEN GRANTED TO THE ASSESSEE ON ACCOUNT OF DEPRECIATION ON GOODWILL MER ELY BY RELYING UPON THE DECISION OF TRIBUNAL FOR AY 2011-12 WITHOUT VER IFYING THE VALUATION OF GOODWILL. PER CONTRA, LD. AR SUBMITTED THAT THE ISS UE IS SQUARELY COVERED IN ASSESSEES FAVOR BY THE DECISION OF THIS TRIBUNAL FOR AY 2011- 12, ITA NO.2695/MUM/2017 ORDER DATED 07/09/2018. A DIGITAL COPY OF THE SAME HAS BEEN PLACED BEFORE THE BENCH. IT WAS SUBMI TTED THAT LD. CIT(A) RELIED UPON THIS DECISION WHILE DECIDING THE ISSUE AND THEREFORE, THE APPELLATE ORDER WOULD NOT REQUIRE ANY INTERFERE NCE ON OUR PART. 3. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING DOCUMENTS SUB MITTED THROUGH ELECTRONIC MODE. OUR ADJUDICATION TO THE SUBJECT MA TTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. THE SOLE ISSU E INVOLVED IN THE APPEAL IS ASSESSEES CLAIM OF DEPRECIATION ON GOODW ILL. 4.1 FACTS FROM CASE RECORDS OF AY 2010-11 WOULD REV EAL THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE IS STATE D TO BE ENGAGED IN DEVELOPMENT, MANUFACTURING AND MARKETING OF ENGINEE RING PRODUCTS AND FUEL DISPENSERS, SUBMERSIBLE TANK PUMPS, OUTDOOR PA YMENT TERMINALS. IT ITA NOS.1246 TO 1248/MUM/2019 ASSESSMENT YEARS :2010-11, 2013-14 & 2014-15 M/S GILBARCO VEEDER ROOT INDIA PRIVATE LTD. 3 WAS ASSESSED FOR YEAR UNDER CONSIDERATION IN SCRUTI NY ASSESSMENT U/S 143(3) ON 22/03/2013 WHEREIN THE LOSS OF THE ASSESS EE WAS DETERMINED AT RS.1497.30 LACS AFTER SOLE DISALLOWANCE OF DEPRE CIATION ON CAPITALIZED INTEREST FOR RS.4.55 LACS WHICH WAS SUO-MOTO OFFERE D BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4.2 THE ORIGINAL RETURN OF INCOME WAS E-FILED ON 15 /10/2010 AT LOSS OF RS.1501.86 LACS. HOWEVER, DURING ASSESSMENT PROCEED INGS, THE ASSESSEE FILED A REVISED COMPUTATION OF INCOME WHER EIN IT REDUCED CLAIM OF DEPRECIATION ON FIXED ASSETS BY RS.4.55 LACS ON ACCOUNT OF CAPITALIZED INTEREST, WHICH WAS ACCEPTED BY LD. AO. AT THE SAME TIME, IT CLAIMED CERTAIN DEPRECIATION ON GOODWILL IN TERMS OF THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF SMIFS SECURITIES LTD. (24 TAXMANN.COM 222) HOWEVER, RELYING UPON THE DECISION OF HONBLE SUPRE ME COURT IN GOETZ INDIA LTD. V/S CIT (284 ITR 323), LD. AO REFUSED TO ADMIT THE SAME SINCE THE CLAIM WAS MADE AFTER EXPIRY OF TIME ALLOWED FOR FILING OF REVISED RETURN OF INCOME U/S 139(5) OF THE ACT AND THE ASSESSEE HAD NOT CLAIMED THE SAME BY WAY OF FILING REVISED RETURN OF INCOME. 4.3 THE LEARNED CIT(A) OPINED THAT THE CLAIM NOT MA DE IN THE RETURN OF INCOME COULD BE MADE BEFORE APPELLATE AUTHORITIES A ND THEREFORE, THE CLAIM WAS TO BE ADMITTED. IT WAS NOTED THAT THE ASS ESSEE ACQUIRED PDP DIVISION OF AN ENTITY NAMELY L&T LTD. ON SLUMP SALE BASIS VIDE BUSINES TRANSFER AGREEMENT DATED 17/11/2009 AND THE GOODWIL L AROSE ON ACCOUNT OF EXCESS CONSIDERATION BEING PAID OVER NET ASSETS TAKEN OVER. THE ASSESSEE RECORDED THE GOODWILL AT RS.8766.84 LACS W HICH WAS REPORTED IN TAX AUDIT REPORT. HOWEVER, UPON SUBSEQUENT REVIE W BY MANAGEMENT, THE GOODWILL WAS RECOGNIZED AT RS.9191.74 LACS. ACC ORDINGLY, THE ITA NOS.1246 TO 1248/MUM/2019 ASSESSMENT YEARS :2010-11, 2013-14 & 2014-15 M/S GILBARCO VEEDER ROOT INDIA PRIVATE LTD. 4 ASSESSEE CLAIMED DEPRECIATION ON THE SAME @12.5%, B EING HALF OF 25% SINCE THE ACQUISITION WAS IN LATER HALF OF THE YEAR . THE LD. CIT(A) REJECTED THE ENHANCEMENT MADE BY THE MANAGEMENT BUT ACCEPTED THE GOODWILL AT RS.8766.84 LACS AND DIRECTED LD. AO TO ALLOW DEPREC IATION ON THE SAME @12.5%. PRIMA FACIE , THE ASSESSEE HAS ACCEPTED THE VERDICT OF LEARNED CIT(A) AND HAS NOT CONTESTED THE SAME ANY FURTHER. HOWEVER, THE REVENUE IS UNDER FURTHER APPEAL BEFORE US WITH FOLL OWING GROUNDS OF APPEAL: - I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ADMITTING THE CLAIM OF DEPRECIATION ON GOODWILL BY RELYING UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GO ETZ INDIA LTD. (284 ITR 323) WHEREIN IT WAS HELD THAT THE APPELLATE AUTHORITIES HAVE POWERS TO ADMIT CLAIM; WITHOUT APPRECIATING THE FACT THE APPELLATE AUTHOR ITY AS MENTIONED IN THE ORDER CITED ABOVE IS THE ITAT AND ITS POWERS VESTED UNDER SEC. 254 OF THE ACT AND NOT THE COMMISSIONER OF INCOME TAX (APPEALS). II) ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF DEPRECIATION ON GOOD WILL BY RELYING ON ITAT DECISION IN ASSESSEES OWN CASE FOR AY 2011-12 AND THE APEX COU RT DECISION IN THE CASE OF SMIFS SECURITIES LTD. (384 ITR 302), WHICH AMOUNTS TO ADMITTING OF ADDITIONAL EVIDENCES.; WITHOUT APPRECIATING THE FACT THAT THE CIT(A) IS GOVERNED BY THE PROVISIONS OF SEC. 251 R.W.R. 46AOF THE IT RULES AN D HENCE, SHOULD HAVE REMANDED THE ISSUE TO THE FILE OF AO FOR VERIFICATION. III) ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN IN ALLOWING THE CLAIM OF DEPRECIATION ON G OODWILL BY RELYING ON THE DECISION OF ITAT IN ASSESSEES OWN CASE FOR AY 2011-12; WITH OUT VERIFYING THE VALUATION OF GOODWILL; THE METHOD OF ACCOUNTING EMPLOYED FOR VAL UATION; THE APPLICABILITY OF RATIO OF DECISION OF THE HONBLE SUPREME COURT IN THE CAS E OF SMIFS SECURITIES LTD. (384 ITR 302) IN ASSESSEES CASE, AS IT IS DISTINGUISHAB LE ON FACTS, AS SUCH, THE ISSUE MAY BE SET ASIDE BACK TO THE FILE OF A.O. FOR FRESH ADJ UDICATION OF THE MERIT. 4.4 THE MAIN CONTENTION OF THE REVENUE IS THAT LD. CIT(A) COULD NOT ADMIT THE CLAIM AND FURTHER, IF THE CLAIM WAS TO BE ADMITTED, THE MATTER SHOULD HAVE BEEN REMANDED BACK TO THE FILE OF LD. A O FOR VERIFICATION OF VALUATION OF GOODWILL AND COMPUTATIONS THEREOF. THE LD. AR WOULD SUBMIT THAT SIMILAR CLAIM HAS BEEN ALLOWED BY THE TRIBUNAL IN AY 2011-12 WHICH ITA NOS.1246 TO 1248/MUM/2019 ASSESSMENT YEARS :2010-11, 2013-14 & 2014-15 M/S GILBARCO VEEDER ROOT INDIA PRIVATE LTD. 5 HAS BEEN FOLLOWED BY LD. CIT(A) AND THEREFORE, THE APPELLATE ORDER WOULD REQUIRE NO INTERFERENCE. 5. WE HAVE CAREFULLY CONSIDERED THE SAME. SO FAR AS THE REVENUES SUBMISSIONS THAT LD. CIT(A) COULD NOT HAVE ADMITTED A NEW CLAIM IS CONCERNED, THE SAME WOULD STAND NEGATED BY THE DECI SION OF HONBLE SUPREME COURT IN GOETZ INDIA LTD. V/S CIT (284 ITR 323) AS WELL AS THE DECISION OF HONBLE BOMBAY HIGH COURT IN ITS JUDGME NT TITLED AS CIT VS. PRUTHVI BROKERS & SHAREHOLDERS P. LTD. (2012) 349 I TR 336 (BOM.) WHEREIN IT WAS HELD THAT THERE WAS NO BAR FOR THE A PPELLATE AUTHORITIES TO ADMIT ASSESSEES NEW CLAIM OTHERWISE THAN BY WAY OF FILING REVISED RETURN OF INCOME . IT IS ALSO UNDISPUTED FACT THAT THE ASSESSEE HAD MA DE THIS CLAIM DURING THE COURSE OF ASSESSMENT PROCEEDI NGS ITSELF BEFORE LD. AO BY WAY OF LETTER DATED 11/09/2012 ALONG WITH SUP PORTING DOCUMENTS BUT THE SAME WERE NOT ADMITTED BY LD. AO SINCE THE ASSESSEE DID NOT REVISE ITS RETURN OF INCOME. HOWEVER, LD. CIT(A), B EING AN APPELLATE AUTHORITY, WAS EMPOWERED TO DO SO. FURTHERMORE, THI S CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED BY THE TRIBUNAL IN AY 20 11-12 VIDE ITA NO.2695/MUM/2017 ORDER DATED 07/09/2018 WHICH HAS B EEN FOLLOWED BY LD. CIT(A). THEREFORE, THIS PLEA OF THE REVENUE WAS TO BE REJECTED AND WE FIND NO INFIRMITY IN THE ACTION OF LD. CIT(A) IN ADMITTING ASSESSEES CLAIM BY RELYING UPON THE CITED DECISION OF THE TRI BUNAL IN ASSESSEES OWN CASE FOR AY 2011-12. 6. HAVING SAID SO, WE FIND THAT ASSESSEES NEW CLAI M ARISES OUT OF BUSINESS TRANSFER AGREEMENT DATED 17/11/2009 AND TH IS WAS THE FIRST YEAR OF CLAIM WHICH WOULD HAVE CONSEQUENTIAL IMPACT ON SUBSEQUENT YEARS. IT IS QUITE EVIDENT THAT LD. AO HAD NO OCCAS ION TO CONSIDER THE ITA NOS.1246 TO 1248/MUM/2019 ASSESSMENT YEARS :2010-11, 2013-14 & 2014-15 M/S GILBARCO VEEDER ROOT INDIA PRIVATE LTD. 6 ASSESSEES CLAIM SINCE THE CLAIM WAS NOT ADMITTED A ND NO VERIFICATION AS TO QUANTIFICATION / COMPUTATIONS / VALUATION OF GOO DWILL HAS BEEN DONE AT THE LEVEL OF LD. AO. THEREFORE, TO DISPEL THE CONCE RNS RAISED BY REVENUE AND KEEPING IN VIEW THE FACT THAT THIS WAS FIRST YE AR OF CLAIM, WHILE IN PRINCIPAL HOLDING THAT THE ASSESSEE WAS ENTITLED TO CLAIM THE DEPRECIATION ON GOODWILL IN TERMS OF THE DECISION OF HONBLE SUP REME COURT IN THE CASE OF SMIFS SECURITIES LTD. (24 TAXMANN.COM 222) AS WELL AS IN TERMS OF DECISION OF TRIBUNAL FOR AY 2011-12 IN ASS ESSEES OWN CASE, THE LIMITED MATTER OF VERIFICATION OF VALUATION OF GOOD WILL STAND REMITTED BACK TO THE FILE OF LD. AO. THE LD. AO IS DIRECTED TO AL LOW THE DEPRECIATION AFTER DUE VERIFICATION OF QUANTIFICATION OF AMOUNT OF GOODWILL AFTER APPRECIATING THE RELEVANT DOCUMENTS. FOR THE SAID L IMITED PURPOSE, THE MATTER STAND RESTORED BACK TO THE FILE OF LD. AO. 7. RESULTANTLY, THE APPEAL STANDS PARTLY ALLOWED FO R STATISTICAL PURPOSES IN TERMS OF OUR ABOVE ORDER. ITA NOS. 1247& 1248/MUM/2019, AYS 2013-14 & 2014-15 8. SIMILAR ARE THE FACTS IN REVENUES APPEALS FOR A YS 2013-14 & 2014- 15. THE LD. CIT(A) HAS ALLOWED ASSESSEES NEW CLAIM OF DEPRECIATION ON GOODWILL IN SIMILAR MANNER, AGAINST WHICH THE REVEN UE IS IN FURTHER APPEAL BEFORE US. SINCE, THESE YEARS ARE SUBSEQUENT YEARS, OUR ADJUDICATION AS FOR AY 2011-12 SHALL MUTATIS MUTANDIS APPLY TO BOTH THESE YEARS ALSO. RESULTANTLY, BOTH THE APPEALS STAND PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.1246 TO 1248/MUM/2019 ASSESSMENT YEARS :2010-11, 2013-14 & 2014-15 M/S GILBARCO VEEDER ROOT INDIA PRIVATE LTD. 7 CONCLUSION 9. ALL THE APPEALS STAND PARTLY ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JULY, 2020. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 13/07/2020 SR.PS, JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. ') / THE APPELLANT 2. *+') / THE RESPONDENT 3. 2 ( ) / THE CIT(A) 4. 2 / CIT CONCERNED 5. 34*-5 , 5 , / DR, ITAT, MUMBAI 6. 4678 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.