GRAHAM FIRTH STEEL PRODUCTS (I) LTD, MUMBAI V. ACIT 12(2)(2), MUMBAI

ITA 2858/MUM/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100851 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 13-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 32

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 2858 /MUM/20 1 5 ( / ASSESSMENT YEAR : 20 10 - 11 ) GRAHAM FIRTH STEEL PRODUCTS (I) LTD., B - 212, SHREYASH INDUSTRIAL ESTATE, NEAR JAI COACH, WESTERN EXPRESS HIGHWAY, GOREGAON (E), MUMBAI - 400063 / VS. A SSISTANT COMMISSIONER OF INCOME TAX - 12(2)(2), (ERSTWHILE ACIT - 9(1), MUMBAI . ( / APPELL ANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAAC G 1 719P / ASSESSEE BY: SHRI PARESH SHAPARIA / REVENUE BY : S HRI KAILASH KANOJIYA / DATE OF HEARING : 1 8 . 7 .201 6 / DATE OF PRONOUNCEMENT : 26 .7.2016 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 19, MUMBAI DT.8.4.2 013 PERTAINING TO A.Y. 2010 - 11. 2. ONLY GROUND RAISED IN THIS APPEAL IS WITH RESPECT TO CONFIRMING THE DISALLOWANCE OF DEPRECIATION OF RS. 21,91,573/ - ON GOODWILL CLAIMED BY THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 14.10.2010 DECLARING A TOTAL INCOME AT RS.1,44,59,727/ - . THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF COLD ITA NO. 2858 /M/1 5 2 ROLLED STEEL STRIPS. IN THE SAID RETURN, THE ASSESSEE CLAIMED DEPRECIATION ON GOODWILL AMOUNTING TO RS.21,91,573 / - . THE AO OBSERVED THAT THE ASSESSEE DID NOT CLAIM ANY DEPRECIATION IN THE BOOKS OF ACCOUNT ON GOODWILL. THE AO ON THE BASIS OF AUDITORS REPORT DID NOT ALLOW DEPRECIATION U/S 32 OF THE ACT AND THEREFORE CALLED FOR EXPLANATION FROM THE ASSESS EE. THE ASSESSEE VIDE LETTER DATED 28.01.2013 FURNISHED A NOTE ON GOODWILL WHICH IS FORMING PART OF THE ASSESSMENT ORDER IN PARA 5.2. THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND BY RELYING AND FOLLOWING THE CIT(A) S ORDER FOR THE ASSESSMENT YEAR 2009 - 10 AND REJECTED THE CLAIM OF THE ASSESSEE QUA DEPRECIATION ON GOODWILL . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO IN TURN CONFIRMED THE ACTION OF THE AO. FURTHER AGGRIEVED BY THE ORDER OF LD.CIT (A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, THE LD.AR SUBMITTED THAT AN IDENTICAL ISSUE HAD COME UP BEFORE THE MUMBAI BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006 - 07 IN ITA NO.23 17/MUM/2010 AND VIDE ORDER DATED 20.4.2014 THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. SIMILARLY IN THE ASSESSMENT YEAR 2009 - 10 THE COORDINATE BENCH OF THE TRIBUNAL IN ITA NO.4916/MUM/2012 VIDE ORDER DATED 27.8.2014 , DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THEREFORE, THE LD.AR PRAYED THAT ON THE SAME ANALOGY THIS ISSUE MAY BE DECIDED IN FAVOUR OF THE ASSESSEE . ITA NO. 2858 /M/1 5 3 5 . ON THE CONTRARY, THE LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW . 6 . AFTER CONSIDERING THE RIVAL CONTENTIONS OF THE PARTIES AND ON PERUSAL OF THE RECORDS INCLUDING THE ORDERS OF AUTHORITIES BELOW , WE FIND THAT THIS ISSUE HAS ALREADY BEEN DISCUSSED AND DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE S FOR THE ASSESSMENT YEARS 2006 - 07 AN D 2009 - 10. FOR THE SAKE OF CLARITY, WE REPRODUCE THE RELEVANT FINDINGS OF THE TRIBUNAL AS UNDER (ITA NO.2317/MUM/2010) PARA - 25: 25. IN SO FAR AS CLAIM OF DEPRECIATION ON GOODWILL IS CONCERNED, THIS ISSUE IS NO MORE RES INTEGRA BECAUSE OF THE DECISION O F THE HONBLE SUPREME COURT IN THE CASE OF SMIFS SECURITIES (SUPRA) WHEREIN THE HONBLE SUPREME COURT HAS HELD THAT GOODWILL IS AN ASSET ELIGIBLE FOR DEPRECIATION. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT, WE DIRECT THE AO TO ALLOW THE CLAIM OF DEPRECIATION ON GOODWILL. GROUND NO. 2 AND ITS SUB GROUNDS ARE ALLOWED THE LD. DR COULD NOT BRING ANY MATERIAL TO CONTROVERT THE ABOVE FINDINGS. THEREFORE, IN VIEW OF THE TRIBUNAL DECISION, WE ALLOW THE APPEAL BY THE ASSESSEE. 7 . IN THE RE SULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 26TH JULY, 2016 . 26TH JULY, 2016 S D SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 26TH JULY, 2016 . ITA NO. 2858 /M/1 5 4 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCE RNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI