Appeal details
Counselvise Citation
[2022] 106 COUNSELVISE.COM (IT) 3979 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-09-2022
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB-B
Assessment Year
2012-2013
Appeal Filed On
05-05-2022
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad Before Shri Rama Kanta Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member O R D E R Per Bench: The above three appeals filed by the assessee are directed against the separate orders dated 13.12.2021 of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre(NFAC), Delhi relating to AYs 2012-13 to 2014-15 respectively. Since identical grounds have been raised by the assessee in all these appeals, therefore, these were heard together and are being disposed-of by this common order. 2. There is a delay of ‘84’ days in filing of these appeals by the assessee for which assessee has filed a condonation application along with affidavit stating the reasons for delay in filing of the ITA Nos. 164,165 & 166/Hyd/2022 Assessment Years: 2012-13,2013-14 & 2014-15 Curia India Private Limited (after merger of Amri India Pvt.Ltd.) Plot No.9, Phase-I M.N.Park Genome Valley Turkapally, Shameerpet Mandal, Rangareddy district Hyderabad-500 003 PAN : AAFCA1469D Vs. ACIT Masab Tank Hyderabad (Appellant) (Respondent) Assessee by: Ms. Ananaya Kapoor, Advocate Revenue by : Shri Kumar Aditya, Sr.AR Date of hearing: 19.09.2022 Date of pronouncement: 23.09.2022 2 Curia India Private Limited appeals which is due to the prevailing COVID. After considering the contents of the condonation application filed along with the affidavit and after hearing the ld. DR, the delay in filing of the above three appeals by 84 days is condoned and appeals are admitted for adjudication. ITA NO.164/HYD/2022 for AY 2012-13 3. The grounds raised by the assessee are as under:- 1. That, in view of the facts and circumstances of the case and in law, the impugned assessment order dated 28.03.2015 passed under Section 143(3) of the Income Tax Act, 1961 ("the Act") by the Assessing Officer ("the AO") as upheld by the National Faceless Appeal Centre ('"NFAC") vide order dated 13.12.2021 and also the addition made therein is illegal, bad in law, without jurisdiction and is liable to be quashed and deleted. 2. That, in view of the facts and circumstances of the case and in law, the AO/NFAC has erred in law and on facts, in making and upholding addition of Rs.1,66,42,682/- (reduced by the NFAC to Rs. 1,24,95,942/-). The said addition is illegal and bad in law and is liable to be set aside and deleted. 3. That, in view of the facts and circumstances of the case and in law, the AO/NFAC has erred in not appreciating that the said depreciation as claimed by the Assessee is justified and as such allowable under the provisions of the Act. 4. That, in view of the facts and circumstances of the case and in law, the NFAC has erred in not admitting the application for additional evidence as filed by the Assessee under Rule 46A. As such the said rejection by the NFAC is illegal and bad in law. 5. That, in view of the facts and circumstances of the case and in law, the NFAC erred in not appreciating that the application for additional evidence goes to the root of the matter and has a direct bearing on the outcome of the present proceedings. Hence, in the interest of justice, the application for additional evidence ought to have been admitted. 6. That, in view of the facts and circumstances of the case and in law, the evidences filed and materials available on record has not been properly construed and has not been judiciously interpreted. 7. That, in view of the facts and circumstances of the case and in law, the NFAC has erred in not passing a speaking order on the merits of the case. The order of the NFAC dated 13.12.2021 is against the provisions of law. 3 Curia India Private Limited 8. That, in view of the facts and circumstances of the case and in law, the AO/NFAC erred in not providing adequate and sufficient opportunity to the Assessee. 9. That, in view of the facts and circumstances of the case and in law, the NFAC has erred in not providing right of personal hearing to the Assessee. 10. That, in view of the facts and circumstances of the case and in law, the observation and the addition made are unjust, illegal, arbitrary, bad in law, highly excessive and based on surmises and conjectures. 11. That, in view of the facts and circumstances of the case and in law, the AO/NFAC has erred in initiating penalty proceedings under Section 271(1)(c) of the Act mechanically and without recording any adequate satisfaction/reasons. 4. Facts of the case, in brief, are that the assessee is a company engaged in the business of manufacture and marketing of active pharmaceutical ingredients and other pharmaceutical intermediates. It filed its return of income on 29.09.2012 declaring loss at Rs.8,17,73,799/-. The case was selected for scrutiny and statutory notices u/s143(2) and 142(1) were issued to the assessee. In response to the same, the ld. AR of the assessee appeared before the AO from time to time and made submissions as called for by the AO. During the course of assessment proceedings, the AO noted that assessee has shown revenue from operations at Rs.17,98,27,285/- and other income of Rs.1,18,49,235/- and net loss at Rs.6,14,94,116/-. He noted that in the previous year 2007-08, the assessee company had acquired the business of two companies, namely (a) M/s. Arine Orgachem Pvt.Ltd.(b) M/s. Ferico Laboratories Ltd on slump sale basis without assigning any values to individual assets or liabilities. He noted that during the assessment proceedings for AY 2008-09 it was seen that the total consideration paid was Rs.40,42,54,876/- in respect of M/s. Ariance Orgachem Pvt.Ltd. and Rs.4,51,30,163/- in respect of M/s. Ferico Laboratories Ltd. and the assessee has apportioned the total consideration received to various assets as under:- 4 Curia India Private Limited Particulars Ariance Orgachem Pvt.Ltd.(Amount in INR) Ferico Laboratories Ltd.(amount in INR) Lease hold land 24,62,807 11,07,913 Building 11,50,63,879 44,80,300 Plant & Machinery 18,68,30,139 1,20,561 Computer 2,53,341 7,331 Furniture, fixture & Office Equipment 8,19,488 35,842 Vehicle 8,14,600 10,99,710 Capital WIP 85,54,929 Nil Net Current Assets 2,42,60,075 14,26,630 Total 33,90,59,258 82,78,287 Goodwill 6,51,95,617 3,68,51,876 Total Purchase Value 40,42,54,875 4,51,30,163 The assessee had submitted a copy of audited financial statement of M/s. Ariane Orgachem Pvt.Ltd as on 31.03.2007. The audited financial statements had not been submitted in respect of M/s. Ferico Laboratories Ltd. The assessee had not submitted any valuation report and thus had failed to provide any basis of adopting various values to different assets of above mentioned two companies. Accordingly, the value of assets of both the companies was taken by the AO as per the WDV of such assets as on 31.03.2007 as per the I.T.Act. 5. After considering the depreciation allowable and actual cost of the assets in the case of the assessee, the AO noted that depreciation allowable to the assessee was worked out at Rs.182,14,736/- as against Rs.4,04,54,827/- in respect of acquired assets for AY 2008-09. Accordingly depreciation to the tune of Rs.2,22,40,091/- was disallowed. Since the above issue has impact on the WDV of fixed assets as well as the depreciation allowable for the year under consideration, i.e. AY 2012-13, the assessee was required to work out the WDV of fixed assets as well as the depreciation having regard to the findings given in the order u/s. 143(3) passed for AY 2008-09. In response to the same, 5 Curia India Private Limited the assessee vide letter dated 18.03.2013 reworked the depreciation allowable for the year under consideration at Rs.1,93,47,324/- as against the depreciation claimed in the return at Rs.2,93,54,593/-. Therefore, the AO disallowed the excess depreciation to the tune of Rs.1,66,42,682/- i.e. (2,93,54,593-1,93,47,324). 6. Before the ld.CIT(A), the assessee filed certain additional evidences. However the ld.CIT(A) rejected the additional evidences on the ground that the case of the assessee does not fall within any of the four points of sub-section (1)(a) to (1)(d) of Rule 46(A)(1). So far as the merit of the case is concerned, the ld.CIT(A) held that the reasons given by the AO in the assessment order for AY 2014-15 and invoking of Explanation 3 to section 43(1) and assuming the value of fixed assets as WDV appearing in the books of the previous owner on the date of acquisition is correct. He accordingly rejected the claim of the assessee. 7. Aggrieved with such order of the ld.CIT(A), the assessee is in appeal before the Tribunal. 8. The ld. Counsel for the assessee relying on a series of decisions submitted that the additional evidences filed before the ld.CIT(A) go to the root of the matter and therefore, the ld.CIT(A) was not justified in rejecting the additional evidences filed before him. For the above proposition, the ld. Counsel for the assessee relied on the following decisions:- i. PCIT vs Daljit singh Sra [ITA No.98/2017] [2017] 80 taxmann.com 271(Punjab & Haryana) ii. Smt. Prabhavati s.Shah vs.CIT[1998] 231 ITR 1(Bombay) iii. Abhay Kumar shroff vs. ITO [1997] 63 ITR 144(Patna) iv.Make My Trip(India) Pvt.Ltd. vs DCIT [ITA No.2307 & 4757/Del/2013](ITAT,Del) v. Smt. Avan Gidwani Vs. ACIT [ITA No.5138/M/2015](ITAT,Mum) 6 Curia India Private Limited vi.Mrs. Manisha Bipin Bhinsara vs. ITO [2016] 49 ITR[T] 517(ITAT,Mumbai) vii. Naresh Chauhan v. DCIT[2016] 48 ITR (T) 1 (Chandigarh) viii.DCIT vs. UK Paints (India) Ltd. [2010] 4 ITR(T) 455(Delhi) ix. Sanjay Matai vs. ITO [ITA No.375/Jp/2016] (ITAT,Jaipur) x. Dinesh Khemabhai Patel vs. ITO [ITA No.2131/Mum/2019](ITAT, Mum) 9. Referring to the following decisions, the ld. Counsel for the assessee submitted that the ld.CIT(A) has to pass a speaking order while deciding the appeal and since in the instant case, he has passed a very cryptic order, the same should be set aside to his file for passing a detailed speaking order. i. Fujitsu consulting India(P.) Ltd. vs ACIT [2019] 110 taxmann.com 172 ii. Gujarat Themis Biosyn Ltd. vs. JCIT [200] 74 ITD 339(AHD) iii. Swati Pawa vs. DCIT [2019] 103 taxmann.com 300 iv. Aggarwal Multy Speciality Hospital vs. ITO [ITA No.9062/Del/2019] v. ITO vs. Charanbir Singh Oberoi [2010] 5 ITR (T) 251 (Delhi) vi. Kashi Vishwanath Steels pt.Ltd. vs ACIT [ITA No.2959/Del/2016) (ITAT, Delhi) vii. HHS India Pvt.Ltd. vs.ITO [ITA No.2700/Del/2012] (ITAT, Delhi) 9.1 She submitted that since the ld.CIT(A) has not passed a speaking order while deciding the appeal, therefore, she has no objection if the matter is resorted to the file of the ld.CIT(A), since the appeals for AY 2008-09 and 2010-11 are pending before the ld.CIT(A). She submitted that there was no addition for AY 2009- 10 and 2011-12. Referring to a series of decisions, the ld. Counsel for the assessee submitted that the explanation 3 to section 43 has no application in the instant case. She accordingly submitted that in the interest of justice, the matter should be restored to the file of the ld.CIT(A). 10. The ld. DR on the other hand heavily relied on the order of the AO and ld.CIT(A). Referring to the decision of the Mumbai Bench of the Tribunal in the case of ITO vs. M/s. Archroma India(P) Ltd. and vice versa vide ITA No.306/Mum/2019 & ITA No.6919/Mum/2018 order dated 15.06.2020 for AY 2014-15 he submitted that the disallowances of depreciation by the AO is in 7 Curia India Private Limited accordance with law. So far as the admission of additional expenses are concerned, he submitted that the so called valuation report was never filed before the AO in any of these three years. He accordingly submitted that the order of the ld.CIT(A) being in accordance with law should be upheld. 10.1 He submitted that in this case actually no valuation report is required for the assets transferred to assessee in slump sale. Valuation is only required to determine the lump sump value which needs to be paid by the Transferor to Transferee Company as the ongoing concern is sold on lump sump basis without ascertaining any value to each and every assets individually. This value is needed for the transferor to compute the capital gain u/s.50B of the l.T. Act, 1961. It is not required for the transferee company to ascertain the new value to the assets which already exists as block of asset in transferor company book on which the transferor company has already claimed depreciation and has ascertained WDV. It is not at all permitted by the I.T. Act, as it is clearly covered by the following relevant sections. i. Section 43( 1) Explanation.3 ii. Section 43(6) Definition of WDV (Especially Clause 'C') iii. Section 32(1) Provisio-5 iv. Section 170(2) 10.2 So far as the plea of remanding the matter back to A.O is concerned, he submitted that the same cannot be accepted, on the basis that A.Y.2008-09 is pending before CIT(A). He submitted that it has no bearing with present case since no valuation report is required to ascertain the new value to the block of assets. other than the value present in the books of accounts of transferor company and whole argument of assessee 8 Curia India Private Limited is based on the valuation report before the lower authority in each A. Y. which cannot be justified as per Income Tax Act-1961 (relevant section mentioned supra) and as per accounting standard. Therefore, the case of the assessee may be decided on merit without remanding back to Assessing officer 11. We have heard the rival arguments made by both the sides, perused the orders of the AO and ld.CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case, following the order of AY 2008-09 noted that actual depreciation allowable to the assessee is only at Rs.193,47,324/- as against Rs.2,93,54,593/- claimed in respect of assets acquired during AY 2008-09 and accordingly made addition of Rs.1,66,42,682/-. We find the ld.CIT(A) upheld the action of the AO by rejecting the additional evidences filed before him. It is the submission of the ld. Counsel for the assessee that when the order for AY 2008-09 and 2010-11 are still pending before the ld.CIT(A) for adjudication and the AO has not made any disallowance during AY 2009-10 and 2011-12, therefore, appeals for AY 2008-09 and 2010-11 has got a bearing on the outcome of the current year. It is also her submission that the additional evidences filed before the ld.CIT(A) go to the root of the matter and the ld.CIT(A) without admitting the same should not have rejected the additional evidences. It is also her submission that the ld. CIT(A) has passed a very cryptic order without giving the reason for the decision. 12. We find some force in the above arguments of the ld. counsel for the assessee. It is an admitted fact that for the AY 2008-09, the AO has taken the value of assets of the two companies that were taken over by the assessee at the WDV of the assets as on 31.03.2007 on the ground that the copy of the audited financial 9 Curia India Private Limited statements of M/s. Ferico Laboratories Pvt.Ltd. was not submitted and the assessee has not filed any valuation report. However, the appeal for the AY 2008-09 is still pending before the ld.CIT(A) for adjudication. The outcome of the appeal for the AY 2008-09 in our opinion will have a bearing on the out come of this appeal. Since the appeal for AY 2008-09 is still pending before the ld.CIT(A) and the ld.CIT(A) has passed a very cryptic order, therefore, considering the totality of the facts of the case and in interest of justice, we deem it proper to restore the issue to the file of the ld.CIT(A) with a direction to admit the additional evidences, which has got a bearing on the outcome of this appeal and decide the issue as per fact and law, after giving due opportunity of being heard to the assessee. While doing so, he shall also keep in mind how the valuation report dated 02.07.2007 was prepared when the separate business Transfer Agreements are dated 16.05.2007 and therefore, whether such valuation report is a colourable device/sham instrument and self serving document. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. ITA No.165/Hyd/2022 for AY 2013-14 13. The grounds raised by the assessee are as under:- 1. That, in view of the facts and circumstances of the case and in law, the impugned assessment order dated 28.03.2015 passed under Section 143(3) of the Income Tax Act, 1961 ("the Act") by the Assessing Officer ("the AO") as upheld by the National Faceless Appeal Centre ('"NFAC") vide order dated 13.12.2021 and also the addition made therein is illegal, bad in law, without jurisdiction and is liable to be quashed and deleted. 2. That, in view of the facts and circumstances of the case and in law, the AO/NFAC has erred in law and on facts, in making and upholding addition of Rs.1,08,40,719/- The said addition is illegal and bad in law and is liable to be set aside and deleted. 10 Curia India Private Limited 3. That, in view of the facts and circumstances of the case and in law, the AO/NFAC has erred in not appreciating that the said depreciation as claimed by the Assessee is justified and as such allowable under the provisions of the Act. 4. That, in view of the facts and circumstances of the case and in law, the NFAC has erred in not admitting the application for additional evidence as filed by the Assessee under Rule 46A. As such the said rejection by the NFAC is illegal and bad in law. 5. That, in view of the facts and circumstances of the case and in law, the NFAC erred in not appreciating that the application for additional evidence goes to the root of the matter and has a direct bearing on the outcome of the present proceedings. Hence, in the interest of justice, the application for additional evidence ought to have been admitted. 6. That, in view of the facts and circumstances of the case and in law, the evidences filed and materials available on record has not been properly construed and has not been judiciously interpreted. 7. That, in view of the facts and circumstances of the case and in law, the NFAC has erred in not passing a speaking order on the merits of the case. The order of the NFAC dated 13.12.2021 is against the provisions of law. 8. That, in view of the facts and circumstances of the case and in law, the AO/NFAC erred in not providing adequate and sufficient opportunity to the Assessee. 9. That, in view of the facts and circumstances of the case and in law, the NFAC has erred in not providing right of personal hearing to the Assessee. 10. That, in view of the facts and circumstances of the case and in law, the observation and the addition made are unjust, illegal, arbitrary, bad in law, highly excessive and based on surmises and conjectures. 11. That, in view of the facts and circumstances of the case and in law, the AO/NFAC has erred in initiating penalty proceedings under Section 271(1)(c) of the Act mechanically and without recording any adequate satisfaction/reasons. ITA No.166/Hyd/2022 for AY 2014-15 14. The grounds raised by the assessee are as under:- 1. That, in view of the facts and circumstances of the case and in law, the impugned assessment order dated 28.12.2016 passed under Section 143(3) of the Income Tax Act, 1961 ("the Act") by the Assessing Officer ("the AO") as upheld by the National Faceless Appeal Centre ('"NFAC") 11 Curia India Private Limited vide order dated 13.12.2021 and also the addition made therein is illegal, bad in law, without jurisdiction and is liable to be quashed and deleted. 2. That, in view of the facts and circumstances of the case and in law, the AO/NFAC has erred in law and on facts, in making and upholding addition of Rs.94,12,236/- .The said addition is illegal and bad in law and is liable to be set aside and deleted. 3. That, in view of the facts and circumstances of the case and in law, the AO/NFAC has erred in not appreciating that the said depreciation as claimed by the Assessee is justified and as such allowable under the provisions of the Act. 4. That, in view of the facts and circumstances of the case and in law, the NFAC has erred in not admitting the application for additional evidence as filed by the Assessee under Rule 46A. As such the said rejection by the NFAC is illegal and bad in law. 5. That, in view of the facts and circumstances of the case and in law, the NFAC erred in not appreciating that the application for additional evidence goes to the root of the matter and has a direct bearing on the outcome of the present proceedings. Hence, in the interest of justice, the application for additional evidence ought to have been admitted. 6. That, in view of the facts and circumstances of the case and in law, the evidences filed and materials available on record has not been properly construed and has not been judiciously interpreted. 7. That, in view of the facts and circumstances of the case and in law, the NFAC has erred in not passing a speaking order on the merits of the case. The order of the NFAC dated 13.12.2021 is against the provisions of law. 8. That, in view of the facts and circumstances of the case and in law, the AO/NFAC erred in not providing adequate and sufficient opportunity to the Assessee. 9. That, in view of the facts and circumstances of the case and in law, the NFAC has erred in not providing right of personal hearing to the Assessee. 10. That, in view of the facts and circumstances of the case and in law, the observation and the addition made are unjust, illegal, arbitrary, bad in law, highly excessive and based on surmises and conjectures. 11. That, in view of the facts and circumstances of the case and in law, the AO/NFAC has erred in initiating penalty proceedings under Section 271(1)(c) of the Act mechanically and without recording any adequate satisfaction/reasons. 12 Curia India Private Limited 15. After hearing both the sides, we find the grounds raised by the assessee in the above two appeals are identical to the grounds raised in ITA No.164/Hyd/2022 for AY 2012-13. We have already decided the issue and the appeal filed by the assessee has been restored to the file of the ld.CIT(A) for fresh adjudication with certain directions. Following similar reasonings, we restore the appeals to the file of the ld.CIT(A) for fresh adjudication in the light of our direction for AY 2012-13. 16. In the result, all the three appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the Open Court on 23 rd September, 2022. Sd/- Sd/- (LALIET KUMAR) JUDICIAL MEMBER (RAMA KANTA PANDA) ACCOUNTANT MEMBER Hyderabad, dated 23 rd September, 2022. Thirumalesh/sps Copy to: S.No Addresses 1 Curia India Private Limited (after merger of Amri India Pvt.Ltd.) Plot No.9, Phase-I M.N.Park Genome Valley Turkapally, Shameerpet Mandal, Rangareddy district Hyderabad-500 003 2 ACIT Masab Tank Hyderabad 3 CIT(A), Hyderabad 4 NFAC, Delhi 5 DR, ITAT Hyderabad Benches 6 Guard File By Order
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