MUDRA LIFESTYLE LTD, MUMBAI V. ASST CIT CEN CIR 38, MUMBAI

ITA 1603/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7824 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 07-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Keywords: Depreciation; Validity of assessment
• Section: 43B; 143(3); 153A; 234B; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & SANDEEP GOSAIN (JM) I.T.A. NO. 1603 /MUM/20 1 4 (ASSESSMENT YEAR 20 0 8 - 0 9 ) I.T.A. NO. 1604/MUM/2014 (ASSESSMENT YEAR 2009 - 10) I.T.A. NO. 1605/MUM/2014 (ASSESSMENT Y EAR 2010 - 11) MUDRA LIFESTYLE LTD. OFFICE NO. 509, 5 TH FLOOR EDG - 1 ST , WESTERN EXPRESS HIGHWAY, MAGATHANE BORIVALI(EAST) MUMBAI - 400 066. PAN NO. AACCM6461E VS. ACIT - CC 38 AAYAKAR BHAVAN GROUND FLOOR M.K. ROAD MUMBAI 400020. ( APPELLANT ) ( RESPONDENT ) I.T.A. NO. 1857/MUM/2014 (ASSESSMENT YEAR 2008 - 09) I.T.A. NO. 2710/MUM/2014 (ASSESSMENT YEAR 2009 - 10) I.T.A. NO. 2711/MUM/2014 (ASSESSMENT YEAR 2010 - 11) ACIT - CC 38 AAYAKAR BHAVAN GROUND FLOOR M.K. ROAD MUMBAI 400020. VS. MUDRA LIFESTYLE LTD. OFFICE NO. 509, 5 TH FLOOR EDG - 1 ST , WESTERN EXPRESS HIGHWAY, MAGATHANE BORIVALI(EAST) MUMBAI - 400 066. PAN NO. AACCM6461E ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI DHARMESH SHAH & SHRI DHAVAL SHAH DEPARTMENT BY SHRI B. SRINIVAS DATE OF HEARING 19. 1 2 . 201 7 DATE OF PRONOUNCEMENT 22 . 1 2 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - THESE CROSS APPEALS PERTAIN TO A.YS. 2008 - 09 TO 2010 - 11 AND THEY ARE DIRECTED AGAINST THE ORDERS PASSED BY THE LEARNED CIT(A) - 39, MUMBAI. SINCE ISSUES URGED IN THESE APPE ALS ARE COMMON IN NATURE, A LL THESE APPEA LS WERE HEARD TOGETHER AND THEY ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. MUDRA LIFESTYLE LTD. 2 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF FABRICS IN DOMESTIC AND EXPORT MARKET. THE ASSESSEE WAS SUBJECTED TO SEARCH OPERATION S U/S. 132 OF THE ACT ON 12.8.2009. CONSEQUENT THERETO, THE ASSESSMENTS OF THE YEARS UNDER CONSIDERATION WERE COMPLETED BY THE ASSESSING OFFICER U/S. 143(3) READ WITH SECTION 1 53A OF THE ACT BY MAKING VARIOUS ADDITIONS. THE ASSESSEE GOT PARTIAL RELIEF IN THE APPEALS FILED BEFORE THE LEARNED CIT(A). AGGRIEVED BY THE ORDER PASSED BY THE LEARNED CIT(A), BOTH THE PARTIES ARE IN APPEAL ON THE POINTS DECIDED AGAINST EACH OF THEM. 3. WE SHALL NOW DEAL WITH COMMON ISSUES URGED BY THE PARTIES. IN ASSESSMENT YEARS 2008 - 09 AND 2009 - 10, THE ASSESSEE HAS RAISED GROUNDS RELATING TO VALIDITY OF ASSESSMENTS PASSED U/S 153A OF THE ACT (GROUND NO.1) AND THE DISALLOWANCE MADE U/S 35DD OF THE A CT (GROUND NO.2). AT THE TIME OF HEARING, LEARNED AR DID NOT PRESS BOTH THE ABOVE SAID GROUND S URGED IN AY 2008 - 09 AND 2009 - 10. ACCORDINGLY THEY ARE DISMISSED AS NOT PRESSED. 4. NEXT COMMON G ROUND IN ALL THE THREE YEARS URGED BY THE ASSESSEE RELATES T O DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND AND ESIC ETC. MADE BY THE ASSESSING OFFICER ON THE REASONING THAT THE SAID PAYMENTS HAVE BEEN MADE BEYOND THE GRACE PERIOD PROVIDED IN THE RESPECTIVE ACT. (RAISED AS GROUND NO.3 & 4 IN ASSESSMENT YEARS 2008 - 09 AND 2009 - 10; AND AS GROUND NO.1 & 2 IN ASSESSMENT YEAR 2010 - 11). THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAS PAID THE ABOVE SAID AMOUNT S WITHIN THE DUE DATE PRESCRIBED FOR FILING THE RETURN OF INCOME U/S 139(1) OF THE ACT , EVEN THOUGH THEY WERE PAID BEYOND THE GRACE PERIOD PROVIDED UNDER THE RESPECTIVE ACTS . HE SUBMITTED THAT THEY ARE NOT LIABLE FOR DISALLOWANCE, SINCE THEY HAVE BEEN PAID BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME. HE SUBMITTED THAT THE TAX AUTHORITIES HA V E REJECT ED THE CONTENTIONS OF THE ASSESSEE, BUT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION RENDERED BY HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GHATGE PATIL TRANSPORTS LTD. (368 ITR 749) AND ALSO CIT VS. HINDUSTAN ORGANICS CHEMICALS LTD. (366 ITR 1) , WHEREIN IT IS HELD MUDRA LIFESTYLE LTD. 3 THAT THE EMPLOYEES CONTRIBUTION ALSO ARE NOT LIABLE FOR DISALLOWANCE, IF IT HAS BEEN PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME . 5. ON THE CONTRARY, LEARNED DEPARTMENTAL REPRESENTATIVE SUBM ITTED THAT THE IMPUGNED PAYMENTS ARE RELATED TO THE EMPLOYEES CONTRIBUTION AND HENCE THE SAME IS LIABLE TO BE DISALLOWED U/S. 36(1)(VA) OF THE ACT. HE SUBMITTED THAT HON'BLE K ERALA HIGH COURT HAS HELD IN THE CASE OF CIT VS. SOUTH INDIA CORPORATION LTD. (2 015) 232 TAXMAN 241 THAT BELATED PAYMENT OF EMPLOYEES CONTRIBUTION CANNOT BE ALLOWED AS DEDUCTION IN VIEW OF THE PROVISIONS OF EXPLANATION TO CLAUSE (VA) OF SECTION 36(1) AND SECTION 43B OF THE ACT. 6. WE HEARD THE PARTIES ON THIS ISSUE. SINCE DECISI ON RENDERED BY HON'BLE BOMBAY HIGH COURT IS IN FAVOUR OF THE ASSESSEE , BEING JURISDICTIONAL HIGH COURTS DECISION, THE SAME IS BINDING ON US. ACCORDINGLY, BY FOLLOWING THE DECISION RENDERED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF GHATGE PATIL TRANSPOR TS LTD. (SUPRA), WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE IN ALL THE THREE YEARS AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION RELATING TO THE SAME. 7. THE NEXT COMMON ISSUE CONTESTED BY BOTH THE PARTIES IN ALL THE THR EE YEARS RELATES TO ADHOC DISALLOWANCE MADE OUT OF EXPENSES. THIS IS URGED BY WAY OF GROUND NO.5 IN AY 2008 - 09 & 2009 - 10 AND BY WAY OF GROUND NO.3 IN AY 2010 - 11 BY THE ASSESSEE. THE REVENUE HAS URGED TH IS ISSUE BY WAY OF GROUND NO.2 IN ALL THE THREE ASSES SMENT YEARS. THE FACTS RELATING TO THIS ISSUE ARE DISCUSSED IN BRIEF. DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF ALL THE THREE YEARS , THE ASSESSING OFFICER ASKED THE ASSESSEE TO SUBMIT DE TAILS OF EXPENDITURE INCURRED IN CASH AND ALSO FURNISH PROOF S TO ESTABLISH GENUINENESS OF SUCH CASH EXPENDITURE. SINCE THE ASSESSEE DID NOT FURNISH DETAILS, THE ASSESSING OFFICER DISALLOWED 5% OF THE AGGREGATE AMOUNT OF EXPENDITURE . FOR THE SAKE OF CLARITY, WE EXTRACT BELOW THE WORKINGS GIVEN BY THE AO FOR ASSESSMENT Y EAR 2008 - 09 : - MUDRA LIFESTYLE LTD. 4 THE LEARNED CIT(A) , HOWEVER, REDUCED THE DISALLOWANCE TO 2% OF THE AGGREGATE EXPENSES IN ALL THE THREE YEARS. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN PARTIALLY SUSTAINING THE DISALLOWANCE. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) ON THE RELIEF GRANTED TO THE ASSESSEE TO THE EXTENT OF 3%. 8. LEARNED AR SUBMITED THAT THE ASSESSING OFFICER INITIALLY SOUGHT TO MAKE ADHOC DISALLOWANCE OUT OF EXPENDITURE INCURRED BY WAY OF CASH ON LY. HOWEVER, HE HAS COMPUTED DISALLOWANCE OUT OF AGGREGATE AMOUNT OF EXPENDITURE , WHICH INCLUDES EXPENDITURE INCURRED BY WAY OF CHEQUE PAYMENTS ALSO . HE SUBMITTED THAT MOST OF THE PART OF THE EXPENDITURE HAS BEEN INCURRED BY WAY OF CHEQUE PAYMENTS ONLY AND ACCORDINGLY CONTENDED THAT THE ASSESSING OFFICER SHOULD HAVE EXCLUDED THEM WHILE COMPUTING DISALLOWANCE. LEARNED AR FURTHER SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL THE VOUCHERS BEFORE THE ASSESSING OFFICER, BUT THE ASSESSING OFFICER HAS STILL CHOSE TO MAKE DISALLOWANCE ON ADHOC BASIS. HE SUBMITTED THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN PARTIALLY SUSTAINING THE DISALLOWANCE IN THE FACTS AND CIRCUMSTANCES OF THE CASE . 9. ON THE CONTRARY, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THA T THE ASSESSING OFFICER HAS SPECIFICALLY OBSERVED THAT THE ASSESSEE HAS NOT MUDRA LIFESTYLE LTD. 5 FURNISHED DETAILS CALLED FOR BY HIM. HE FURTHER SUBMITTED THAT THE ASSESSEE DID NOT FURNISH THE DETAILS BEFORE LEARNED CIT(A) ALSO AND HENCE HE SHOULD HAVE SUSTAIN ED ENTIRE ADDITIO N MADE BY THE AO. 10. WE HEARD THE PARTIES ON THIS ISSUE. BEFORE US THE ASSESSEE HAS FURNISHED BREAKUP DETAILS OF EXPENSES THAT WERE INCURRED BY WAY OF CASH AND ALSO THROUGH CHEQUE PAYMENTS IN ALL THE THREE YEARS UNDER CONSIDERATION . SINCE THE DETAILS WERE FURNISHED FOR THE FIRST TIME BEFORE US, WE ARE OF THE VIEW THAT THESE BREAK - UP DETAILS REQUIRE EXAMINATION AT THE END OF THE ASSESSING OFFICER. WITH REGARD TO THE QUANTUM OF DISALLOWANCE, WE AGREE WITH THE CONTENTION S OF THE ASSESSEE THAT THE ASSESSI NG OFFICER INITIALLY WANTED TO VERIFY THE EXPENDITURE INCURRED BY WAY OF CASH ONLY, SINCE THEY ARE NOT AMENABLE FOR CROSS VERIFICATION. ACCORDINGLY THERE IS MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT THE DISALLOWANCE, IF ANY, WA S INTENDED BY THE AO TO B E MADE ON EXPENDITURE INCURRED BY WAY OF CASH. IN OUR VIEW, THE SAID INTENTION OF THE ASSESSING OFFICER IS CLEAR FROM THE READING OF ASSESSMENT ORDER. HENCE, WE HOLD THAT THE DISALLOWANCE, IF ANY, IS REQUIRED TO BE MA D E OUT OF EXPENDITURE INCURRED BY WAY OF CASH ONLY. WITH REGARD TO THE QUANTUM OF ADHOC DISALLOWANCE TO BE MADE, WE HAVE EARLIER NOTICED THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE @ 5% OF THE AGGREGATE AMOUNT OF EXPENDITURE WHICH WAS REDUCED TO 2% BY LD CIT(A) . THE CASE OF THE ASSESSEE IS THAT IT IS MAINTAINING VOUCHERS FOR ALL THE EXPENDITURE AND BOOKS OF ACCOUNT HAVE ALSO BEEN AUDITED. HOWEVER, THE CASE OF THE REVENUE IS THAT THE ASSESSEE DID NOT FURNISH THE DETAILS THAT WERE CALLED FOR BY THE AO. 11. A PER US AL OF THE NATURE OF EX PENDITURE CONSIDERED BY THE AO WOULD SHOW THAT MAJOR PORTION OF THE EXPENDITURE HAS BEEN INCURRED ON WAGES , WEAVING CHARGES AND TRAVELLING . THE POSSIBILITY OF REVENUE LEAKAGE IN BOOKING THESE EXPENSES CANNOT BE RULED OUT, SINCE THEY ARE MAINLY SUPPORTED B Y SELF MADE VOUCHERS . UNDER THESE SET OF FA CTS, WE ARE OF THE VIEW THAT THIS ISSUE MAY BE PUT TO REST IN ALL THE THREE YEARS IF THE DISALLOWANCE IS SUSTAINED TO THE EXTENT OF 3 % OF THE CASH COMPONENT OF EXPENDITURE, WHICH WILL TAKE CARE OF REVENUE MUDRA LIFESTYLE LTD. 6 LEAKAGE, IF ANY. ACCORDINGLY, WE MODIFY THE ORDERS PASSED BY LD CIT(A) ON THIS ISSUE IN ALL THE THREE YEARS AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO 3 % OF THE EXPENDITURE INCURRED BY WAY OF CASH , AFTER EXAMINING THE BREAKUP OF DETAILS OF EX PENDITURE BETWEEN CASH AND CHEQUE, GIVEN BY THE ASSESSEE. WE ORDER ACCORDINGLY. 12. NEXT ISSUE RELATES TO DISALLOWANCE OF DEPRECIATION CLAIMED ON GOODWILL AND BRAND VALUE. THE ASSESSEE CLAIMED DEPRECIATION ON THE AMOUNT OF GOODWILL AND BRAND VALUE BY TREATING THEM AS INTANGIBLE ASSETS . THE ASSESSING OFFICER DISALLOWED THE CLAIM S BY HOLDING THAT THE ASSESSEE DID NOT ACQUIRE THESE ASSETS BY MAKING PAYMENT. IN AY 2008 - 09, T HE LEARNED CIT(A) ALLOWED THE DEPRECIATION ON THE BRAND VALUE AND CONFIRMED THE DI SALLOWANCE OF DEPRECIATION CLAIMED ON GOODWILL. IN AY 2009 - 10 AND 2010 - 11, THE LE CIT(A), HOWEVER, ALLOWED THE CLAIM OF THE ASSESSEE ON BOTH THE ITEMS . THE ASSESSEE HAS CHALLENGED THE DECISION OF LD CIT(A) IN RESPECT OF GOODWILL IN GROUND NOS.6 IN AY 2008 - 09. THE REVENUE HAS CHALLENGED THE DECISION OF LD CIT(A) RENDERED ON BOTH GOODWILL AND BRAND VALUE IN AY 2008 - 09. HOWEVER, THE REVENUE HAS CHALLENGED THE RELIEF GRANTED ON BRAND VALUE ONLY IN AY 2009 - 10 AND 2010 - 11 , I.E., IT DID NOT OBJECT TO THE RELIEF GRANTED ON GOODWILL IN THESE TWO YEARS . 13. THE FACTS RELATING TO THESE ISSUES ARE DISCUSSED IN BRIEF. THE LEARNED AR SUBMITTED THAT THE ASSESSEE ACQUIRED THREE GROUP COMPANIES DURING THE YEAR RELEVANT TO THE A.Y. 2006 - 07 INCLUDING THE BRAND NAME . TH E D IFFERENCE BETWEEN THE ASSETS AND LIABILITIES WAS TREATED AS GOODWILL AS PER THE ACCOUNTING PRINCIPLES . ACCORDINGLY, THE ASSESSEE CLAIMED DEPRECIATION ON THE AMOUNT OF BRAND VALUE AS WELL AS GOOD WILL BY TREATING THEM AS INTANGIBLE ASSETS ELIGIBLE FOR D EPRECIATION. HOWEVER, THE AO REJECTED BOTH THE CLAIMS WITH THE OBSERVATIONS THAT THE ASSESSEE WAS ALREADY ENJOYING THE BRAND NAME OF MUDRA AND FURTHER IT DID NOT PAY ANY AMOUNT SPECIFICALLY FOR GOOD WILL. THE LD CIT(A) ALLOWED DEPRECIATION ON BRAND NA ME, BUT CONFIRMED THE DISALLOWANCE OF DEPRECIATION ON GOODWILL. MUDRA LIFESTYLE LTD. 7 14. TH E LD A.R SUBMITTED THAT HON'BLE SUPREME COURT HAS HELD IN THE CASE OF SMIFS SECURITIES LTD. , (348 ITR 302) THAT DEPRECIATION IS ALLOWABLE ON GOODWILL AMOUNT. HE FURTHER SUBMITTED THA T HON'BLE SUPREME COURT HAS OBSERVED IN PARAGRAPH 12 OF HIS ORDER THAT THE DIFFERENCE BETWEEN COST OF ASSETS AND THE AMOUNT PAID TO ACQUIRE THE SAME WOULD CONSTITUTE GOODWILL. ACCORDINGLY , LEARNED AR SUBMITTED THAT THE DIFFERENCE BETWEEN THE NET ASSET ACQUIRED BY THE ASSESSEE AND PAYMENT MADE FOR IT WAS RIGHTLY TREATED BY THE ASSESSEE AS GOODWILL. ACCORDINGLY HE SUBMITTED THAT THE LD CIT(A) WAS NOT RIGHT IN LAW IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION ON GOODWILL. HE SUBMITTED THAT THE BRAND NAM E MUDRA WAS OWNED BY SOME OTHER COMPANY AND THE ASSESSEE HAS ACQUIRED THE SAME IN THE PROCESS OF MERGER. HENCE THE LD CIT(A) WAS JUSTIFIED IN ALLOWING DEPRECIATION ON BRAND NAME. 15. THE LEARNED AR FURTHER SUBMITTED THAT THE LEARNED CIT(A) HAS FOLLOWE D THE DECISION RENDERED BY THE COORDINATE BENCH IN THE CASE OF TOYO ENGINEERING INDIA LTD. (ITA NO. 1040/MUM/2010 AND 3834/MUM/2011 DATED 11.7.2012) IN ORDER TO DECIDE THIS ISSUE RELATING TO DEPRECIATION ON GOODWILL AGAINST THE ASSESSEE. THE LD A.R SUBMITT ED THAT THE TRIBUNAL HAD DISALLOWED THE CLAIM OF DEPRECIATION ON GOODWILL IN THE VERY SAME ASSESSEE S CASE IN ANOTHER YEAR AND HENCE THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE HON'BLE BOMBAY HIGH COURT . THE HON'BLE HIGH COURT, VIDE ITS ORDER DATED 3 0.10.2012 PASSED IN ITA NO. 1330 OF 2012, RESTORED THE MATTER BACK TO THE FILE OF THE TRIBUNAL FOR EXAMINING THE ISSUE AFRESH IN THE LIGHT OF THE DECISION RENDERED BY HON'BLE SUPREME COURT IN THE CASE OF SMIFS SECURITIES LTD. (SUPRA). THEREAFTER THE COORDI NATE BENCH HAS PASSED THE ORDER IN ITA NO. 3279/MUM/2008 DATED 30.10.2014 AND HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. HE SUBMITTED THAT THE COORDINATE BENCH, IN PARA 7 OF THE ORDER , HAS SPECIFICALLY OBSERVE D THAT THE DIFFERENCE, IF ANY, BETWEEN TH E BOOK VALUE OF ASSETS AND LIABILITIES SHOULD BE TRANSFERRED TO THE ACCOUNT OF GOODWILL OF THE ASSESSEE. FURTHER THE COORDINATE BENCH OF THE HELD THAT THE ASSESSEE IS ENTITLED FOR DEPRECIATION ON THE AMOUNT OF GOODWILL. MUDRA LIFESTYLE LTD. 8 16. ON THE CONTRARY, THE LEARNED DEPARTMENTAL REPRESENTATIVE PLACED STRONG RELIANCE ON THE ORDER PASSED BY THE ASSESSING OFFICER ON BOTH THE ISSUES IN ALL THE THREE YEARS . THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE LEARNED CIT(A) HAS COMMITTED AN ERROR IN ALLOWING DEPRECIATION ON THE BRAND VALUE IN ALL THE THREE YEARS . 17. WE HEARD THE RIVAL CONTENTION S AND PERUSED THE RECORD. WE SHALL FIRST TAKE UP THE ISSUE RELATING TO DEPRECIATION ON BRAND VALUE . WE NOTICED THAT THE LEARNED CIT(A) HAS FOLLOWED THE DECISION OF THE COORDINATE BENCH RENDERED IN THE CASE OF KEC INTERNATIONAL LTD. VS. ADDL. CIT (2010) 41 SOT 43 TO COME TO THE CONCLUSION THAT DEPRECIATION IS ALLOWABLE ON BRAND VALUE. THE LD A.R SUBMITTED THAT THE BRAND NAME WAS OWNED BY SOME OTHER COMPANY AND TH E ASSESSEE HAS ACQUIRED THE SAME ONLY DURING THE COURSE OF MERGER PROCESS. SINCE THE ASSESSEE HAS ACQUIRED THE BRAND NAME, THE SAME CONSTITUTES INTANGIBLE ASSETS AS HELD BY THE CO - ORDINATE BENCH IN THE CASE OF KEC INTERNATIONAL (SUPRA) AND THE DEPRECIATIO N IS ALLOWABLE THEREON. ACCORDINGLY WE CONFIRM THE ORDER PASSED BY LD CIT(A) IN ALL THE THREE YEARS UNDER CONSIDERATION. 18. THE NEXT ISSUE RELATES TO THE DEPRECIATION CLAIMED ON GOODWILL. WE HAVE EARLIER NOTICED THAT THE LD CIT(A) HAS CONFIRMED DISA LLOWANCE OF CLAIM ONLY IN AY 2008 - 09 AND ALLOWED THE CLAIM MADE IN AY 2009 - 10 AND 2010 - 11. THE REVENUE HAS ACCEPTED THE DECISION OF LD CIT(A) RENDERED IN AY 2009 - 10 AND 2010 - 11 ON GOODWILL ISSUE. WE NOTICED THAT THE LEARNED CIT(A) HAS CONFIRMED THE DISA LLOWANCE OF DEPRECIATION CLAIMED ON GOODWILL BY FOLLOWING THE DECISION RENDERED BY THE COORDINATE BENCH IN THE CASE OF TOYO ENGINEERING INDIA LTD. (SUPRA). THE LEARNED AR HAS DEMONSTRATED THAT THE MATTER IN THE CASE OF TOYO ENGINEERING INDIA LTD. (SUPRA) W AS TAKEN TO HON'BLE BOMBAY HIGH COURT AND HON'BLE HIGH COURT HAS R ESTORED THE MATTER BACK TO THE F ILE OF THE TRIBUNAL. IN THE RESTORED PROCEEDINGS, THE COORDINATE BENCH HAS SPECIFICALLY HELD THAT THE DIFFERENCE BETWEEN THE BOOK VALUE OF ASSETS AND LIABIL ITIES SHOULD BE TRANSFERRED TO GOODWILL ACCOUNT OF THE ASSESSEE AND FURTHER THE ASSESSEE IS MUDRA LIFESTYLE LTD. 9 ENTITLED TO CLAIM DEPRECIATION ON THE GOODWILL. THUS, WE NOTICED THAT VARIOUS REASONING GIVEN BY THE TAX AUTHORITIES IN SUPPORT OF THE DISALLOWANCE O N DEPRECIATION ON GOODWILL FAIL . ACCORDINGLY, W E DIRECT THE ASSESSING OFFICER TO ALLOW DEPRECIATION CLAIMED BY THE ASSESSEE BOTH ON GOODWILL AS WELL AS BRAND VALUE IN ALL THE THREE YEARS . THE ORDERS PASSED BY LD CIT(A) ON THIS ISSUE, WHEREVER CONTRADICTORY TO OUR DECISI ON, WOULD STAND MODIFIED ACCORDINGLY. 19. THE ASSESSEE HAS ALSO RAISED GROUNDS RELATING TO CHARGING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. THEY ARE CONSEQUENTIAL IN NATURE AND HENCE DO NOT REQUIRE ADJUDICATION. 20. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND RELATING TO CHARGING OF INTEREST US 234A, 234B AND 234C OF THE ACT ON THE BOOK PROFIT IN AY 2009 - 10. THE LD A.R DID NOT PRESS THE SAME AND HENCE THE SAME IS DISMISSED AS NOT PRESSED. 21. IN TH E RESULT, ALL THE APPEALS ARE PARTLY ALLOWED. ORDER HAS BE E N PRONOUNCED IN THE COURT ON 22 . 1 2 .201 7. SD/ - SD/ - (SANDEEP GOSAIN ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 22 / 12 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( SENIOR PRIVATE SECRETARY ) PS ITAT, MUMBAI MUDRA LIFESTYLE LTD. 10