Sunij Pharma Pvt.Ltd., Ahmedabad V. The Dy.CIT, Circle-8, Ahmedabad

ITA 2473/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0951 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 21-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J M SHAH
• Keywords: Depreciation; Valuation report
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.2473/AHD/2013 ( / ASSESSMENT YEAR : 2010-11) SUNIJ PHARMA PVT.LTD. C/O. VINOD & NARENDA 101/102, SHAILY NR.OLD GUJARAT HIGH COURT NAVRANGPURA AHMEDABAD-380 009 / VS. THE DCIT CIRCLE-8 AHMEDABAD $ ./ ./ PAN/GIR NO. : AAFCS 2899 M ( $& / APPELLANT ) .. ( '($& / RESPONDENT ) $&) / APPELLANT BY : SHRI J. M. SHAH, AR '($&*) / RESPONDENT BY : SHRI JAMES KURIAN, SR.DR +* / DATE OF HEARING 25/07/2016 ,-./* / DATE OF PRONOUNCEMENT 04/08/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I AHMEDABAD DA TED 25/09/2013 FOR THE ASSESSMENT YEAR (AY) 2010-11. ITA NO.2473/AHD /2013 SUNIJ PHARMA PVT.LTD. VS. DCIT ASST.YEAR 2010-11 - 2 - 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- 2.1. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING, JOB-WORK AND TRADING OF MEDICINES A ND FOOD PRODUCTS. ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2010-11 ON 25/09/2010 DECLARING TOTAL INCOME OF RS.1,80,10,565/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') VI DE ORDER DATED 26/12/2012 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,83,59,8 60/-. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER (AO), ASSESSEE CARRI ED THE MATTER BEFORE THE LD.CIT(A), WHO VIDE ORDER DATED 25/09/2013 (IN APPE AL NO.CIT(A)- I/DCIT.CIR.8/225/2013-14) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A) ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. DISALLOWANCE OF DEPRECIATION ON GOODWILL RS.2,4 3,399/- . THE COMMISSIONER OF INCOME TAX (APPEALS)-I, AHMEDAB AD ERRED IN CONFIRMING DISALLOWANCE OF DEPRECIATION ON GOODWILL RS.2,43,399/-. THE CIT(A) ERRED IN CONFIRMING DISALLOWANCE WITHOUT DEALING WITH SUBMISSION THAT ISSUE IS COVERED BY SUPREME COURT I N SMIFS SECURITIES LTD. THE ACTION OF COMMISSIONER OF INCOME TAX (APPEALS) IS INVALID & BAD IN LAW. 3. BEFORE US, LD.AR SUBMITTED THAT THE SOLITARY ISS UE IS WITH RESPECT TO DISALLOWING DEPRECIATION OF GOODWILL. ITA NO.2473/AHD /2013 SUNIJ PHARMA PVT.LTD. VS. DCIT ASST.YEAR 2010-11 - 3 - 3.1. AO NOTICED THAT, DURING THE COURSE OF ASSESSM ENT PROCEEDINGS FOR AY 2004-05, THE ASSESSEE DURING THE AYS 2002-03 TO 2005-06 HAD CLAIMED DEPRECIATION OF GOODWILL. HE ALSO NOTICED THAT NO ASSESSMENT U/S.143(3) OF THE ACT WAS MADE FOR AYS 2002-03 AND 2003-04 AND IN THOSE YEARS ALSO ASSESSEE HAD CLAIMED DEPRECIATION OF GOODWILL VALUED AT RS.75 LACS. AO THEREFORE ON THE BASIS OF ACTUAL CO ST AND WDV DETERMINED IN AY 2004-05 WORKED OUT THE DISALLOWANC E OF GOODWILL FOR THE YEAR WHICH ACCORDING TO IT WAS NOT ALLOWABLE TO THE ASSESSEE (THE DETAILS OF SUCH CALCULATION ARE GIVEN IN PARA-3.7 O F PAGE NO.8 OF THE ASSESSMENT ORDER). HE ACCORDINGLY DISALLOWED THE C LAIM OF DEPRECIATION OF RS.2,43,399/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO FOLLOWING THE ORDE R OF HIS PREDECESSOR, UPHELD THE ORDER OF AO BY OBSERVING AS UNDER:- 5. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF THE A.R. OF THE APPELLANT CAREFULLY. THE ISSUE HAS BEE N DECIDED BY THE CIT(A)-XIV, AHMEDABAD IN ORDER NO.CIT(A)-XIV/WD.8(2 )/171/2010-11 DATED 06.07.2011. THE CIT(A)-XIV, AHMEDABAD OBSERV ED AS UNDER:- 3. DECISION: I HAVE CAREFULLY PERUSED THE PENALTY ORDER AND THE WRITTEN SUBMISSION FILED BY THE LD.A.R. OF THE APPELLANT. THIS ISSUE AFTER ELABORATE DISCUSSION BOTH IN RESPECT OF APPELLANTS OWN CASE FOR A.Y. 2004-05 AND ALSO IN A COMBINED ORDER FOR A.Y. 2002-03, 2003-04 AND 2005-06 HAS BEEN DECIDED AGAINST THE AP PELLANT. IT WAS HELD THAT CONSIDERING THE FACTS OF THE CASE, AN D RATIO OF VARIOUS JUDGEMENTS AS DISCUSSED THEREIN AND FOLLOWI NG HONBLE ITAT, AHMEDABADS DECISION IN THE CASE OF BHARATBHA I J. VYAS VS. ITO 97 ITD 248, THE APPELLANT HAS NOT ACQUIRED ANY GOODWILL ITA NO.2473/AHD /2013 SUNIJ PHARMA PVT.LTD. VS. DCIT ASST.YEAR 2010-11 - 4 - AND ALSO THAT DEPRECIATION IS NOT AT ALL ELIGIBLE O N SUCH GOODWILL. IT IS, THEREFORE, THE ALTERNATE AS MENTIONED BY A.O . IN THE ORDER, THE ENTIRE CLAIM OF DEPRECIATION ON GOODWILL WAS DI SALLOWED. RESPECTFULLY FOLLOWING THE RATIO OF SAME ORDERS, IN THE YEAR UNDER CONSIDERATION, GROUND OF APPEAL OF THE APPELLANT IS REJECTED. THE A.O. IS DIRECTED TO DISALLOW ENTIRE CLAIM OF DEPREC IATION ON GOODWILL. 6. I AGREE WITH THE FINDINGS OF THE CIT(A)-XIV, AH MEDABAD. IN VIEW OF THE ABOVE, THIS GROUND IS DISMISSED. 4. AGGRIEVED BY THE ORDER OF LD.CIT(A) ASSESSEE IS NOW IN APPEAL BEFORE US. 4.1. BEFORE US, LD.AR REITERATED THE SUBMISSIONS MA DE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF THE TRIBUNAL (ITAT B BENCH AHMEDABAD) IN ASSESSEES OWN CASE BY A CONSOLIDATED ORDER OF THE TRIBUNAL FOR AYS 2002-03 TO 2007-08 ORDER DATED 19/12/2014. HE PLAC ED ON RECORD THE COPY OF THE AFORESAID ORDER. HE FURTHER SUBMITTE D THAT IN VIEW OF THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL, T HE ORDER OF AO AND LD.CIT(A) NEEDS TO BE SET ASIDE. LD.SR.DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF AO AND LD.CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DI SALLOWANCE OF DEPRECIATION ON GOODWILL. WE FIND THAT THE COORDIN ATE BENCH OF THE ITA NO.2473/AHD /2013 SUNIJ PHARMA PVT.LTD. VS. DCIT ASST.YEAR 2010-11 - 5 - TRIBUNAL WHILE DECIDING THE ISSUE FOR AY 2004-05 IN ITA NO.3884/AHD/2007 ORDER DATED 19/12/2014 IN ASSESSEE S OWN CASE HAD DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER:- 9. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUS ED THE ORDERS OF THE AO AND THE CIT(A), AND ALSO VARIOUS CASE LAWS R ELIED ON BY THE PARTIES. WE FIND THAT THE ISSUE OF ALLOWANCE OF DE PRECIATION ON INTANGIBLE ASSET IN THE FORM OF GOODWILL IS COVER ED IN FAVOUR OF THE ASSESSEE WITH THE VARIOUS DECISIONS INCLUDING THAT OF THE HONBLE APEX COURT IN COMMISSIONER OF INCOME-TAX V. SMIFS SECURI TIES LTD. (SUPRA), AND THE DECISION OF ITAT, AHMEDABAD IN DCIT VS. TAL ENT INDIA (SUPRA). WE HAVE GONE THROUGH THE MEMORANDUM OF TRANSFER OF BUSINESS, A COPY OF WHICH HAS BEEN FILED IN THE COMPILATION BEFORE U S, WHICH IS DATED 1.4.2001 WHEREIN IT IS SPECIFICALLY PROVIDED THAT A LL THE TRADE NAMES, TRADE-MARKS, PERMITS AND LICENSES, GOODWILL AND KNO WHOW ATTACHED TO THE BUSINESS CARRIED ON IN INDIA OR ELSEWHERE WERE TRANSFERRED TO THE ASSIGNEES I.E. THE ASSESSEE COMPANY. IT IS NOW WEL L SETTLED THAT THE GOODWILL IS AN INTANGIBLE ASSET ENTITLED TO DEPRECI ATION. THE QUANTIFICATION OF GOODWILL AT RS.75 LAKHS IN THIS C ASE SEEMS TO BE REASONABLE. THE ASSESSEE HAS FILED A COPY OF WORKI NG OF THE VALUATION OF THE GOODWILL AS GIVEN BY M/S.ANMOL SEKHRI & ASSOCIA TES, MUMBAI, VALUER, AND A COPY OF WHICH HAS BEEN FILED IN THE C OMPILATION BEFORE THE TRIBUNAL. A PERUSAL OF THE SAID VALUATION REPORT J USTIFIES THE REASONABLENESS OF THE VALUATION OF THE GOODWILL AS CLAIMED BY THE ASSESSEE. IN THESE FACTS OF THE CASE, WE HOLD THAT THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ON GOODWILL WAS JUSTIFIED , AND ACCORDINGLY, THE GROUND NO.2 AND 3 OF THE ASSESSEE ARE ALLOWED. 5.1. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO SHOW THAT THE AFORESAID ORDER OF TRIBUNAL HAS BEEN SET A SIDE BY HIGHER FORUM OR THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE D ISTINGUISHABLE FROM ITA NO.2473/AHD /2013 SUNIJ PHARMA PVT.LTD. VS. DCIT ASST.YEAR 2010-11 - 6 - EARLIER YEARS. IN VIEW OF THE AFORESAID FACTS AND RESPECTFULLY FOLLOWING THE ORDER OF TRIBUNAL CITED HEREIN, WE HEREBY DIREC T THE DELETION OF ADDITION. THUS, THIS GROUND OF ASSESSEE IS ALLOWED . 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 04/08/2016 SD/- SD/- () () (RAJPAL YADAV) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 04/ 08 /2016 3..,.../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT. 3. 456 7 / CONCERNED CIT 4. 7 ( ) / THE CIT(A)-I, AHMEDABAD 5. 89:'56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<=+ / GUARD FILE. / BY ORDER, (8' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 25.7.16 (DICTATION-PAD 6- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 1.8.2016 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.4.8.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 4.8.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER