PPG ASIAN PAINTS P.LTD ( FORMERLY KNOWN AS ASIAN PPG INDUSTRIES LTD), MUMBAI V. ASST CIT LTU, MUMBAI

ITA 2919/MUM/2013

• Counselvise Citation: 291919914 RSA 2013
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 12-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 15-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARMINDER
• Keywords: Depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO .2919/M/2013 ASSESSMENT YEAR: 2008 - 09 M/S. PPG ASIAN PAINTS PVT. LTD. (FORMALLY KNOWN AS ASIAN PPG IN DUSTRIES LTD.), 158, VIDYA NAGARI MARG, DANI WOOLTEX COMPOUND, KALINA, SANTACRUZ, MUMBAI 400 098 PAN: AAACA8832H VS. ACIT LTU, CENTER 1 WORLD TRADE CENTER, CURR PARADE, MUMBAI 400 0 05 (APPELLANT) ( RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MADHUR AGRAWAL, A.R. REVENUE BY : SMT. PARMINDER, CIT D.R. DATE OF HEARING : 12.02 .201 5 DATE OF PRONOUNCEMENT : 15.04. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS THE CIT (A)] DATED 31.01.2013 RELEVANT TO ASSESSMENT YEAR 2008 - 09. 2. EARLIER, THE SAID APPEAL WAS DECIDED BY THE TRIBUNAL VIDE ORDER D ATED 12.03.2014. HOWEVER, THE ASSESSEE THEREAFTER BROUGHT AN APPLICATION UNDER SECTION 254 OF THE ACT PLEADING THAT THE GROUND NO.4 OF THE APPEAL OF THE ASSESSEE , WHICH WAS RELATING TO THE CLAIM OF DEPRECIATION ON GOODWILL HAS REMAINED UNADJUDICATED. THE TRIBUNAL VIDE ORDER DATED 01.08.2014 PASSED IN MA NO.136/M/2014 RECALLED THE ORDER DATED 12.03.2014 TO THE LIMITED EXTENT ITA NO.2919/M/2013 M/S. PPG ASIAN PAINTS PVT. LTD. (FORMALLY KNOWN AS ASIAN PPG INDUSTRIES LTD.) 2 F OR ADJUDICATION ON GROUND NO.4 OF THE ASSESSEES APPEAL. THUS, THE APPEAL OF THE ASSESSEE HAS BEEN HEARD FOR ADJUDICATION ON TO THE ISSUE TAKEN VIDE GROUND NO.4 OF THE APPEAL I.E. REGARDING THE CLAIM OF DEPRECIATION ON GOODWILL. THE SAID GROUND NO.4 OF THE APPEAL, FOR THE SAKE OF CONVENIENCE, IS REPRODUCED AS UNDER: GROUND NO.4 : NOT GRANTING DEPRECIATION ON GOODWILL 1. ON THE FACT S AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) - LTU ERRED IN NOT GRANTING DEPRECIATION ON GOODWILL OF RS.3,23,15,044/ - ON THE GROUND THAT GOODWILL IS NOT COVERED U/S 32(1)(II) OF THE ACT. 2. THE APPELLANT PRAYS THAT AO BE DIRECTED TO ALLOW DEPR ECIATION ON GOODWILL PAID AS PER THE PROVISION OF SECTION 32 OF THE ACT. 3. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND HAVE ALSO GONE THROUGH THE RECORD. THE LOWER AUTHORITIES HAVE REJECTED THE CLAIM OF DEPRE CIATION ON GOODWILL OBSERVING THAT THE GOODWILL DOES NOT FALL WITHIN THE DEFINITION OF ELIGIBLE INTANGIBLE ASSETS FOR THE CLAIM OF DEPRECIATION THERE UPON UNDER SECTION 32(1)(II) OF THE INCOME TAX ACT. 4. THE LD. A.R. OF THE ASSESSEE AT THE OUTSET HAS STATED THAT THE ISSUE RELATING TO THE DEPRECIATION OF GOODWILL HAS NOW BEEN SETTLED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT KOLKATA VS. SMIFS SECURITIES LTD. ( 2012 ) 24 TAXMANN.COM 222 ( SC ) THE HONBLE SUPREME COURT WHILE ADJUDICATING THE ISSUE RELATING TO THE CLAIM OF DEPRECIATION ON GOODWILL HAS CATEGORICALLY HELD AS UNDER: 4. EXPLANATION 3 STATES THAT THE EXPRESSION 'ASSET' SHALL MEAN AN INTANGIBLE ASSET, BEING KNOW - HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSI NESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE. A READING THE WORDS 'ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE' IN CLAUSE (B) OF EXPLANATION 3 INDICATES THAT GOODWILL WOULD FALL UNDER THE EXPRESSION 'ANY OTHER BUSINESS OR COMMERCIAL RIGHT OF A SIMILAR NATURE'. THE PRINCIPLE OF EJUSDEM GENERIS WOULD STRICTLY APPLY WHILE INTERPRETING THE SAID EXPRESSION WHICH FINDS PLACE IN EXPLANATION 3(B). ITA NO.2919/M/2013 M/S. PPG ASIAN PAINTS PVT. LTD. (FORMALLY KNOWN AS ASIAN PPG INDUSTRIES LTD.) 3 5. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT 'GOODWILL' IS AN ASSET UNDER EXPLANATION 3(B) TO SECTIO N 32(1) OF THE ACT. 5. IN VIEW OF THE CATEGORICAL FINDING OF THE HONBLE SUPRREME COURT THAT THE GOODWILL ALSO FALLS UNDER THE EXPRESSION ANY OTHER BUSINESS OR COMMERCIAL RIGHT OF A SIMILAR NATURE AND THUS WOULD BE AN ASSET UNDER EXPLANATION 3(B) TO SE CTION 32(1) OF THE ACT, WE ACCORDINGLY HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEPRECIATION ON GOODWILL. THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. 6. BEFORE PARTING WITH THE ORDER, IT IS CLARIFIED THAT OUR ABOVE OBSERVATIO NS WILL NOT BE HAVING ANY EFFECT OR IN ANY WAY DISTURB THE FINDINGS GIVEN BY THE TRIBUNAL VIDE ORDER DATED 12.03.2014 ON THE OTHER ISSUES/GROUNDS TAKEN BY THE ASSESSEE IN THE ABOVE TITLED APPEAL AND THE SAME WILL REMAIN AS SUCH. 7. IN THE RESULT, THE APP EAL OF THE ASSESSEE ON THE LIMITED POINT/GROUND NO.4 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.04. 201 5 . SD/ - SD/ - ( R.C. SHARMA ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 15.04.2015 . * KISHORE , SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI ITA NO.2919/M/2013 M/S. PPG ASIAN PAINTS PVT. LTD. (FORMALLY KNOWN AS ASIAN PPG INDUSTRIES LTD.) 4 THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.