M/s Padmini Products Pvt Ltd , Bangalore V. The Deputy Commissioner of Income Tax Circle-5(1)(2), Bangalore , Bangalore

ITA 204/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4098 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 23-01-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Assessee Lawyers: M GANDHI
• Keywords: Depreciation; Wholly owned subsidiary
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 204 /BANG/201 8 ASSESSMENT YEAR : 201 4 - 1 5 M/S. PADMINI PRODUCTS PVT. LTD., # 157, K. KAMARAJ ROAD, BANGALORE 560 042. PAN: AADCP1790L VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 5 (1) (2), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI M. GANDHI, CA RESPONDENT BY : DR. P.V. PRADEEP KUMAR, ADDL. CIT (DR) DATE OF HEARING : 24 . 0 7 .2018 DATE OF PRONOUNCEMENT : 08 . 0 8 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME I S DIRECTED AGAINST THE ORDER OF LD. CIT(A)-5, BANGALORE DATED 13.11.2017 FOR ASS ESSMENT YEAR 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE ORDER OF THE LEARNED ASSESSING OFFICER IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE APPELLANT IS NOT JUSTIFIED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE. 2. AS REGARDS DISALLOWANCE OF DEPRECIATION ON INTAN GIBLE ASSETS TO THE EXTENT OF RS.1,07,19,468/-. 1. THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIF IED IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFIC ER IN DENYING DEPRECIATION OF RS.1,07,19,468/- ON INTANGI BLES BEING BRAND NAMES AND TRADEMARKS VALUED AT RS.65,26,40,15 0/-. 2. THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT REVALUATION OF THE INTANGIBLES WAS EFFECTED BY THE ERSTWHILE FIRM, BEFORE THE SUCCESSION, AND NOT THAT OF THE APPELLAN T AND THEREFORE, THEY WERE NOT JUSTIFIED IN OBSERVING THA T THE AFORESAID INTANGIBLE ASSETS WERE UNDER SECTION 47 (XIII) OF T HE IT ACT. ITA NO. 204/BANG/2018 PAGE 2 OF 8 3. THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT THE ASSETS (INCLUDING THE INTANGIBLE ASSETS) OF THE ERSTWHILE FIRM WERE TRANSFERRED TO THE APPELLANT IN THE SUCCESSION AS C ONTEMPLATED UNDER SECTION 47(XIII) OF THE IT ACT. 4. THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT NEITHER UNDER SECTION 47(XIII) OR ELSEWHERE IN THE IT ACT I S THERE A STIPULATION THAT ASSETS CANNOT BE REVALUED PRIOR TO SUCCESSION OR THE FACT THAT TRANSFER NEEDS TO NECESSARILY TAKE PL ACE AT THE BOOK VALUE. THE VERY FACT THAT SECTION 47(XIII) EXEMPTS SUCH TRANSACTION FROM THE PURVIEW OF TRANSFER FOR THE PU RPOSE OF CAPITAL GAINS IS THAT THERE IS A CONTEMPLATION THAT IN A SCENARIO OF SUCCESSION THERE COULD ARISE PROFITS DUE TO THE SALE OF ASSETS AT A VALUE HIGHER THAN THE COST. 5. THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT SECTION 47(XIII) MAKES AN EXPLICIT MENTION OF TRANSFER OF I NTANGIBLE ASSETS. 6. THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT WHERE IT WAS INTENDED THAT THE TRANSFER OF ASSETS SHOULD NOT TAKE PLACE AT A VALUE HIGHER THAN THE BOOK VALUE, THE SAME HAS BE EN EXPLICITLY PROVIDED FOR AS IN THE CASE OF SECTION 2 (19AA) OF THE ACT WHICH EXPLAINS THE TERM DEMERGER. 7. THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT IN CASES WHERE IT WAS INTENDED THAT THE EFFECT OF REVALUATIO N NEEDS TO BE IGNORED THE SAME HAS BEEN EXPLICITLY PROVIDED FOR A S ENVISAGED UNDER SECTION 50B OF THE ACT, DEALING WITH COMPUTAT ION OF CAPITAL GAINS IN A SLUMP SALE. 8. WITHOUT PREJUDICE TO THE ABOVE, THE LOWER AUTHOR ITIES HAVE FAILED TO APPRECIATE THAT THE REVALUATION OF THE AS SETS OF THE FIRM HAS TO BE NECESSARILY CARRIED OUT AND THE PARTNERS' ACCOUNTS HAVE TO BE NECESSARILY CREDITED IN RESPECT OF SUCH REVALUATION WHEN THE BUSINESS OF THE FIRM IS SUCCEEDED TO BY TH E COMPANY KEEPING IN MIND THE BUSINESS REALITY THAT THE SHARE S OF THE COMPANY MAY BE LISTED OR VENTURE CAPITALISTS MAY IN VEST IN THE COMPANY. 9. THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT SECTION 43(1) OF THE ACT WHICH DEFINES THE TERM 'ACTUAL COS T' NOWHERE STIPULATES THAT THE INCURRENCE OF THE EXPENDITURE N EEDS TO BE NECESSARILY IN CASH. 10. THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT BOARD CIRCULAR NO.21 DATED 09.07.1969 IN PARAGRAPH 11 (TH OUGH CURRENTLY WITHDRAWN VIDE CIRCULAR NO.382 FOR DIFFER ENT REASONS) HAD RECOGNIZED THE TRANSFER OF TECHNICAL KNOW-HOW O R SERVICES ITA NO. 204/BANG/2018 PAGE 3 OF 8 OR DELIVERY ABROAD OF MACHINERY AND PLANT FOR CONSI DERATION IN THE FORM OF SHARES. 11. THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT THE BOARD CIRCULAR NO 382 DATED 04.05.1984 CLARIFIES TH E ASPECT REGARDING 'TAXATION OF SHARES OF INDIAN COMPANIES A LLOTTED TO NON-RESIDENTS IN CONSIDERATION FOR THE PURCHASE OF MACHINERY AND PLANT DELIVERED ABROAD UNDER CLAUSE (VI/VII) OF SUB-SECTION (1) THEREBY RECOGNIZING THE ACQUISITION OF ASSETS F OR CONSIDERATION OTHER THAN CASH. 12. THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE SCHEDULE VI OF THE COMPANIES ACT, 1956 ALSO RECOGNIZES THE ALLO TMENT OF SHARES FOR CONSIDERATION OTHER THAN CASH. 13. THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTI FIED IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFIC ER, IN DISALLOWING THE DEPRECIATION ON INTANGIBLE ASSETS, WHEN IN FACT, THE EXISTENCE OF THE AFORESAID INTANGIBLE ASSETS AN D VALUATION THEREOF CERTIFIED BY A VALUER HAS NOT BEEN DISPUTED BY THE LEARNED ASSESSING OFFICER. 14. THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTI FIED IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFIC ER IN DISALLOWING THE DEPRECIATION, WHEN THE FACT THAT TH E INTANGIBLES ORIGINALLY BELONGED TO THE FIRM HAS NOT BEEN QUESTI ONED AND IN THE APPALLENT'S OWN CASE FOR A Y 2013-14 THE HON'BL E ITAT HAS ALLOWED THE DEPRECIATION. 15. THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTI FIED IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFIC ER IN DISALLOWING THE DEPRECIATION, MERELY BECAUSE THE HO N'BLE ITAT HAS DISALLOWED THE DEPRECIATION IN EARLIER YEARS AN D THE MATTER IS BEFORE THE HON'BLE KARNATAKA HIGH COURT. 3. THE LEARNED COMMISSIONER (APPEALS) IS NOT JUSTIF IED IN NOT CONSIDERING ALLOWING THE CARRIED OVER LOSSES FOR A YS 2011-12 RS. 3,54,897/-; A Y 2012-13 RS.2,52,90,640/- AND A Y 2013-14 RS.32,14,291/- WHICH WAS NOT ALLOWED BY THE LEARNED ASSESSING OFFICER WHILE ARRIVING AT THE TAX LIABILITY FOR A Y 2014-15. FOR THE ABOVE REASONS AND FOR SUCH OTHER REASONS WH ICH MAY BE ALLOWED BY THE HON'BLE MEMBERS TO BE URGED AT THE T IME OF HEARING, IT IS PRAYED THAT THE AFORESAID APPEAL BE ALLOWED. 3. THE LD. AR OF ASSESSEE REITERATED THE SAME CONTE NTIONS WHICH WERE RAISED BEFORE CIT(A). THE LD. DR OF REVENUE SUBMITTED THA T THE ISSUE IN DISPUTE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE TRIBUN AL ORDER IN ASSESSEES OWN ITA NO. 204/BANG/2018 PAGE 4 OF 8 CASE FOR ASSESSMENT YEAR 2012-13 IN ITA NO. 527/BAN G/2016 DATED 03.03.2017. HE SUBMITTED A COPY OF THIS TRIBUNAL O RDER AND DRAWN OUR ATTENTION TO PARA 8 OF THIS TRIBUNAL ORDER AND POINTED OUT TH AT IN THAT YEAR ALSO, THE TRIBUNAL HAS FOLLOWED ANOTHER TRIBUNAL ORDER IN ASS ESSEES OWN CASE FOR ASSESSMENT YEARS 2005-06 TO 2008-09 IN ITA NOS. 429 TO 430/BANG/2013 DATED 10.01.2014 AND HAS REPRODUCED THE RELEVANT PA RAS OF THAT TRIBUNAL ORDER I.E. 16 TO 25 AND THEREAFTER DECIDED THE ISSUE IN P ARA 9. HE SUBMITTED THAT IN THE PRESENT YEAR ALSO THE ISSUE SHOULD BE DECIDED A GAINST THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL WE REPRODUCE PARAS 8 AND 9 OF THIS TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2012- 13. 8. WITH RESPECT TO GROUND NO.2, IT IS POINTED OUT B Y THE LEARNED DR THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE IN THE ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEARS FROM 2005-06 TO 2 008-09 IN ITA NOS.429 TO 430/BANG/2013 DATED 10/1/2014, WHEREIN A T PARAGRAPH 16 TO 25 IT HAS BEEN HELD AS UNDER: 16. THE FIRST QUESTION FOR ADJUDICATION BEFORE US IS WHETHER THE EARLIER PARTNERSHIP FIRM WAS REQUIRED UNDER LAW TO REVALUE THE ASSETS BEFORE ITS CONVERSION INTO A COMPANY. AS RIG HTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, WHEN A PARTNERSHIP FIRM IS DISSOLVED, IT NEEDS TO REVALUE ITS ASSETS A S THE PARTNERS ARE ENTITLED TO RECEIVE THE VALUE OF THE ASSETS AS ON THE DATE OF DISSOLUTION IN THE RATIO OF THEIR CONTRIBUTION OF C APITAL AND, THEREFORE, TO ARRIVE AT THE VALUE OF THE ASSETS AS ON THE DATE OF DISSOLUTION THE REVALUATION OF ASSETS AND LIABILITI ES IS REQUIRED TO BE DONE. SIMILAR IS THE CASE WHERE ANY OF THE PARTN ERS RETIRES OR ANY NEW PARTNER IS INDUCTED. BUT WHAT HAPPENS WHEN THERE IS NO INDUCTION OF A NEW PARTNER OR RETIREMENT OF ANY PAR TNER OR DISSOLUTION OF PARTNERSHIP FIRM? THE REQUIREMENT OF REVALUATION OF THE ASSETS AND LIABILITIES ARISES ONLY IN THE CI RCUMSTANCES MENTIONED ABOVE. IN THE CASE ON HAND, THE ASSESSEE HAD REVALUED ITS ASSETS ON THE GROUND THAT IT WAS GETTI NG CONVERTED INTO A PRIVATE LIMITED COMPANY. THE LEARNED COUNSEL FOR THE ASSESSEE HAD PLACED RELIANCE UPON THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF KARTIKEYA A.V SARABHAI (CITED SUPRA) IN SUPPORT OF HIS CONTENTION THAT THE SHAREH OLDERS WHO BUY SHARES WILL NOT HAVE ANY INTEREST IN THE PROPER TY OF THE COMPANY WHICH IS ENTIRELY DISTINCT FROM THE SHAREHO LDER AND THE TRUE POSITION OF THE SHAREHOLDER IN A COMPANY ON BU YING THE SHARES IS THAT HE BECOMES ENTITLED TO A PERCENTAGE IN THE PROFITS OF THE COMPANY IF AND WHEN COMPANY DECLARES, SUBJEC T TO MEMORANDUM OF ASSOCIATION THAT THE PROFITS OR ANY P ORTION ITA NO. 204/BANG/2018 PAGE 5 OF 8 THEREOF SHOULD BE DISTRIBUTED AS DIVIDEND AMONGST T HE SHAREHOLDERS AND HE HAS FURTHER RIGHT TO PERCENTAGE IN THE ASSETS OF THE COMPANY WHICH WOULD BE LEFT-OVER AFTER WINDI NG UP. THUS, HE TRIED TO BRING OUT DISTINCTION BETWEEN THE RIGHT S OF THE PARTNERS IN A PARTNERSHIP FIRM WHICH IS JOINT AND S EVERAL IN CONTRAST TO THE RIGHTS AND LIABILITIES OF THE SHARE HOLDERS IN A COMPANY. HE HAS ALSO RELIED UPON THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF VODAFONE INTERNATIONAL HOLDINGS REPORTED IN 341 ITR 1 (SC) TO BRING OUT DISTINCTION BETWEEN THE HOLDING COMPANY AND WHOLLY OWNED SUBSIDIARY IN WHIC H THE HONBLE SUPREME COURT HAS HELD THAT THE LEGAL RELAT IONSHIP BETWEEN THE HOLDING COMPANY AND WHOLLY OWNED SUBSID IARY IS THAT THEY ARE TWO LEGALLY DISTINCT PERSONS AND HOLD ING COMPANY DOES NOT OWN THE ASSETS OF A SUBSIDIARY AND IN LAW THE MANAGEMENT OF THE BUSINESS OF THE SUBSIDIARY ALSO L IES WITH ITS DIRECTORS. THUS, ACCORDING TO HIM, THE PARTNERSHIP FIRM AND THE ASSESSEE COMPANY ARE TWO DIFFERENT AND DISTINCT LEG AL ENTITIES AND IT CANNOT BE SAID THAT THE ASSESSEE COMPANY HAS NOT ACQUIRED ANY ASSETS FROM THE ERSTWHILE PARTNERSHIP FIRM. TO APPRECIATE THESE CONTENTIONS OF THE ASSESSEE, WE HA VE TO EXAMINE THE PROCEDURE AND EFFECT OF CONVERSION OF A PARTNER SHIP FIRM INTO A COMPANY. THE HONBLE BOMBAY HIGH COURT IN THE CAS E OF CIT VS. TEXSPINENGG AND MANUFACTURING WORKS REPORTED IN (2003) 263 ITR 345 (BOM) HAS CONSIDERED THE EFFECT OF CONV ERSION OF A PARTNERSHIP FIRM INTO A LIMITED COMPANY BY VIRTUE O F SEC. 575 OF THE COMPANIES ACT AND HAS HELD THAT UNDER PART IX O F THE COMPANIES ACT, WHEN A PARTNERSHIP FIRM IS CONVERTED TO A LIMITED COMPANY, THE PROPERTIES OF THE ERSTWHILE FI RM VESTS IN THE LIMITED COMPANY. IT WAS OBSERVED THAT THERE IS A DI FFERENCE IN VESTING OF THE PROPERTY AND DISTRIBUTION OF THE PRO PERTY. IT WAS HELD THAT ON VESTING IN THE LIMITED COMPANY UNDER P ART IX OF THE COMPANIES ACT, THE PROPERTIES VEST IN THE COMPANY A S THEY EXIST WHILE DISTRIBUTION OF PROPERTY ON DISSOLUTION PRESU PPOSES DIVISION, REALIZATION, ENCASHMENT OF ASSETS AND APP ROPRIATION OF THE REALIZED AMOUNT AS PER THE PRIORITY AND THAT TH IS DIFFERENCE IS VERY IMPORTANT. HAVING OBSERVED THUS, THE HONBLE H IGH COURT HELD THAT THERE IS NO TRANSFER OF PROPERTY AND NO C APITAL GAINS ARISE FROMSUCH A TRANSACTION. THE HONBLE HIGH COUR T WAS DEALING WITH THE CASE OF THE PARTNERSHIP FIRM WHILE IN THE CASE ON HAND, WE ARE DEALING WITH THE CASE OF THE COMPAN Y. IN THE CASE OF TEXSPIN, THE QUESTIONS CONSIDERED WERE - (1) WHETHER CAPITAL GAINS AROSE IN THE HANDS OF THE PARTNERSHIP FIRM ON CONVERSION OF THE FIRM INTO THE COMPANY, AN D (2) WHETHER THE FIRM WAS ENTITLED TO DEPRECIATION O N THE ASSETS OWNED BY IT TILL THE DATE OF TRANSFER. 17. THE CASE ON HAND IS A REVERSE CASE. THE COMPANY IS CLAIMING THE DEPRECIATION ON THE VALUE OF THE ASSETS IN ITS BOOKS OF ACCOUNTS. THE CLAIM OF DEPRECIATION IS ON TRADEMARK S WHICH ARE INTANGIBLE ASSETS AND DEPRECIATION THEREON IS ALLOW ABLE U/S ITA NO. 204/BANG/2018 PAGE 6 OF 8 32(1)(II) OF THE IT ACT. THE TWO CONDITIONS MENTION ED IN SEC. 32 ARE THAT THE ASSETS SHOULD BE OWNED BY THE ASSESSEE AND SHOULD HAVE BEEN USED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION OF THE ASSESSEE. THE SUB-CLAUSES THERETO ENUMERATE TH E DEDUCTIONS ALLOWABLE U/S 32. SUB-CLAUSE (II) THEREOF PROVIDES FOR A DEDUCTION AT A PRESCRIBED PERCENTAGE OF THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS. 5TH PROVISO THERETO PROVIDE S THAT IN RESPECT OF CIRCUMSTANCES SUCH AS SUCCESSION, AMALGA MATION OR DEMERGER, THE AVERAGE DEDUCTION ON ACCOUNT OF DEPRE CIATION ON TANGIBLE OR INTANGIBLE ASSETS SHALL NOT EXCEED, IN ANY PREVIOUS YEAR, THE DEDUCTION CALCULATED AT THE PRESCRIBED RA TES AS IF THE SUCCESSION, AMALGAMATION OR DEMERGER HAS NOT TAKEN PLACE AND SUCH DEDUCTION SHALL BE APPORTIONED BETWEEN THE PRE DECESSOR AND THE SUCCESSOR, OR THE AMALGAMATING COMPANY AND AMALGAMATED COMPANY OR THE DEMERGED COMPANY AND THE RESULTING COMPANY AS THE CASE MAY BE, IN THE RATIO OF DAYS FOR WHICH THE ASSETS WERE USED BY THEM. 18. IN ALL THE THREE CIRCUMSTANCES ABOVE, THE ERSTW HILE COMPANY CEASES TO EXIST AND A NEW COMPANY COMES INTO EXISTE NCE. IN THE CASE ON HAND ALSO, ON ACCOUNT OF CONVERSION, THE ER STWHILE PARTNERSHIP FIRM CEASED TO EXIST WHILE THE COMPANY HAS COME INTO EXISTENCE. THEREFORE, THE ASSETS COME TO VEST IN THE HANDS OF THE COMPANY AND THERE IS NO COST OF ASSETS TO THE C OMPANY ON SUCH VESTING. WHEN THE TRANSACTION ITSELF HAS BEEN TREATED TO BE NOT A TRANSFER, BUT IS AKIN TO SUCCESSION, IN OUR O PINION THE 5TH PROVISO TO SUB-CLAUSE (II) OF SEC. 36(1) APPLIES AN D THE DEPRECIATION HAS TO BE CALCULATED AS IF THERE IS NO TRANSFER. 19. FURTHER, AS THERE IS NO TRANSFER, THERE IS NO C OST TO THE ASSESSEE. DEPRECIATION IS ALLOWABLE ON THE WDV OF T HE ASSET AND WDV HAS BEEN DEFINED U/S 43(6) TO MEAN IN THE CASE OF ASSETS ACQUIRED IN THE PREVIOUS YEAR, THE ACTUAL COST TO T HE ASSESSEE. AS ACTUAL COST TO THE ASSESSEE WAS NIL, THE WD VALUE OF THE ASSETS IN THE HANDS OF THE PREDECESSOR FIRM SHALL BE CONSI DERED FOR THE ALLOWANCE OF DEPRECIATION. 20. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFER E WITH THE ORDERS OF THE AUTHORITIES BELOW. 21. THE LEARNED COUNSEL FOR THE ASSESSEE HAD PLACED RELIANCE UPON THE DECISION OF ITAT AT AHMEDABAD IN THE CASE OF PRAKASH CHEMICAL AGENCIES PVT. LTD. REPORTED IN (2012) 136 ITD 222 (AHD) BUT WE FIND THAT IT IS THE CASE OF A TAKEOVER OF THE BUSINESS OF A PARTNERSHIP FIRM BY THE ASSESSEE COMPANY THERE IN WHEREAS IN THE CASE BEFORE US, IT IS THE CASE OF CONVERSION OF PARTNERSHIP FIRM INTO A COMPANY. THEREFORE, THE SAID DECISION I S NOT APPLICABLE TO THE CASE ON HAND. 22. THE OTHER OBJECTION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS ITA NO. 204/BANG/2018 PAGE 7 OF 8 THAT THE CONVERSION HAS TAKEN PLACE IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2004-05 AND HENCE IT CAN BE EXAM INED ONLY IN A.Y 2004-05 AND NOT IN SUBSEQUENT YEAR. WE ARE U NABLE TO ARGUE WITH THIS CONTENTION OF THE ASSESSEE. SUB-SEC (6) OF SEC. 43 DEFINES WRITTEN DOWN VALUE AND IT PROVIDES FOR BO TH THE ACQUISITION OF ASSETS DURING THE RELEVANT PREVIOUS YEAR AND ACQUISITION OF ASSETS BEFORE THE RELEVANT PREVIOUS YEAR AND BOTH THE CLAUSES MENTION ACTUAL COST TO THE ASSESSEE. IN THE SECOND CIRCUMSTANCE I.E WHERE THE ASSETS ARE ACQUIRED BEFO RE THE PREVIOUS YEAR AS IN THE CASE OF THE ASSESSEE BEFORE US, THE WDV SHALL BE THE ACTUAL COST TO THE ASSESSEE LESS ALL D EPRECIATION ACTUALLY ALLOWED TO HIM UNDER THE INCOME-TAX ACT. T HEREFORE, IT IS CLEAR THAT THE CLAIM OF DEPRECIATION CAN BE EXAM INED EVEN IN THE ASSESSMENTS YEARS SUBSEQUENT TO THE ASSESSMENT YEAR IN WHICH THE SUCCESSION HAS TAKEN PLACE. THIS ARGUMENT IS ACCORDINGLY REJECTED. 23. THE OTHER OBJECTION OF THE ASSESSEE IS THAT THO UGH ONLY THE AO IS ENTITLED TO INVOKE THE PROVISIONS OF EXPLANAT ION 3 TO SEC. 43(1) OF THE IT ACT, THE CIT(A) HAS INVOKED THE SAM E WHICH IS IMPERMISSIBLE. ON PERUSAL OF THE ORDER OF THE CIT(A ), WE FIND THAT HE HAS NOT INVOKED THE PROVISIONS OF EXPLANATI ON 3 TO SEC. 43(1) OF THE IT ACT BUT HAS ONLY JUSTIFIED THE ACTI ON OF THE AO IN QUESTIONING THE CLAIM OF DEPRECIATION BY CITING THE PROVISION OF SEC. 43(1) AND EXPLANATION 3 THEREOF. THEREFORE, WE SEEN NO STRENGTH IN THIS ARGUMENT OF THE ASSESSEE. 24. FURTHER, U/S 251 OF THE IT ACT, THE POWERS OF T HE CIT(A) ARE CO-TERMINUS WITH THAT OF THE AO MEANING THAT HE CAN DO WHAT THE AO COULD DO AND CAN ALSO DIRECT THE LATTER TO DO WH AT THE LATTER FAILED TO DO AS LAID DOWN BY THE HONBLE SUPREME CO URT IN THE CASE OF CIT VS. KANPUR COAL SYNDICATE (1964) 53 ITR 225 (SC). THEREFORE, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE CIT(A) WHICH NEEDS INTERFERENCE. THEREFORE, THIS ARGUMENT OF THE ASSESSEE IS ALSO REJECTED. 25. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E FOR ALL THE ASSESSMENT YEARS ARE DISMISSED. 9. RESPECTFULLY FOLLOWING THE DECISION OF COORDINAT E BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE, WE DEEM IT APP ROPRIATE TO DISMISS THIS GROUND OF THE ASSESSEE AS WELL. 5. SINCE THE LD. AR OF ASSESSEE COULD NOT POINT OUT ANY DIFFERENCE IN FACTS IN THE PRESENT YEAR, WE FIND NO REASON TO TAKE A CONTRARY VIEW AND RESPECTFULLY FOLLOWING THE TRIBUNAL ORDER IN EARLIER YEARS, WE D ECIDE THE ISSUE AGAINST THE ASSESSEE IN THE PRESENT YEAR ALSO. ITA NO. 204/BANG/2018 PAGE 8 OF 8 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DA TE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (SUNIL KUMAR YADAV) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 8 TH AUGUST, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.