ARAMARK INDIA P.LTD, NAVI MUMBAI V. ITO 6(1)(3), MUMBAI

ITA 3839/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92460 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 14-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SACHIDANAND DUBE
• Keywords: Depreciation; Initiation of penalty proceedings
• Section: 27; 144

Judgement Text

ARAMARK INDIA P LTD ITA 3839 / M/20 1 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI , , BEFORE SHRI SANJAY ARORA , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIA L MEMBER ITA ITA NO. : 3839 /MUM/20 1 3 (ASSESSMENT YEAR: 200 9 - 1 0 ) ARAMARK INDIA P LTD , 437 - 438, SECTOR - 4, GHANSOLI, NAVI MUMBAI - 400 701 .: PAN: AA G CA 4383 F VS I NCOME TAX OFFICER - 6 (1) (3) , MUMBAI (APPELLANT) (RESPONDE NT) APPELLANT BY : MS AARTI VISSANJI RESPONDENT BY : SHRI SACHIDANAND DUBE /DATE OF HEARING : 25 - 0 2 - 201 5 / DATE OF PRONOUNCEMENT : 01 - 0 5 - 201 5 ORDER , : PER AMIT SHUKLA , JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 2 2 .0 2 .2013 PASSED BY CIT(A) - 14, MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED U/S 144 FOR THE AY 2009 - 10. IN THE GROUNDS OF APPEAL, NO. 1 TO 5, THE ASSE SSEE HAS MAINLY CHALLENGED THE ASSESSMENT ORDER PASSED BY THE AO U/S 144 ON VARIOUS COUNTS. BESIDES THIS, THE ASSESSEE HAS RAISED FOLLOWING AS ADDITIONAL GROUNDS WHICH IS ON MERITS. PETITIONER COMPANY PRAYS THAT DEPRECIATION ON GOODWILL BE ALLOWED FOR TH E ASSESSMENT YEAR 2009 - 10. GOODWILL OF RS. 28,79,57,469/ - WAS WRITTEN OFF DURING THE ASSESSMENT YEAR IN QUESTION. THE DEPRECIATION AT 25% ON WDV BASIS WAS NOT CLAIMED IN THE NATURE FILED. THUS A PLEA IS FILED TO ALLOW SUCH AMOUNT OF DEPRECIATION TO THE PET ITIONER COMPANY . 2. THE FACTS IN BRIEF ARE THAT, THE ASSESSEE IS A SUBSIDIARY OF ARAMARK CORPORATION USA , ENGAGED IN THE BUSINESS OF RENDERING INTEGRATED FOOD AND FACILITY MANAGEMENT TO C ORPORATE CUSTOMERS IN INDIA. ARAMARK INDIA P LTD ITA 3839 / M/20 1 3 2 3. BEFORE US, THE LD. COUNSEL SUBMITT ED THAT, SO FAR AS THE ISSUE OF DEPRECIATION ON GOODWILL, RELEVANT FACTS ARE THAT THE ASSESSEE COMPANY HAD ENTERED INTO AN AGREEMENT WITH THREE GROUP COMPANIES OF THE PATMAN GROUP FOR ACQUIRING THE GOODWILL, BUSINESS AND OTHER RIGHTS. IN CONSIDERATION, THE ASSESSEE COM P ANY HAD PAID A SUM OF RS. 29,56,32,498/ - TOWARDS ACQUIRING OF GOODWILL, BUSINESS RIGHTS ETC. SUCH A PAYMENT WAS MADE TOWARDS THE END OF THE YEAR ENDING ON 31.03.2008, HENCE THE BENEFIT OF THE DEPRECIATION ON GOODWILL WAS TO BE CLAIMED FROM AY 2009 - 10 . H OWEVER, THE ASSESSEE HAD WRITTEN OFF THE AMOUNT OF GOODWILL IN THE BOOKS IN THE AY 2011 - 12 . T HUS THE DEPRECI A TION ON THE SAME WAS TO BE CLAIMED FROM THE AY 2009 - 10. PARTICULARS OF VALUE OF GOODWILL, AMOUNT OF DEPRECIATION CLAIMED AND WDV WAS GIV EN IN THE FOLLOWING MANNER: THUS THE DEPRECIA TION ON GOODWILL WAS TO BE CLAIMED FROM AY 2009 - 10 , @ 25% OF WDV, WHICH COULD NOT BE CLAIMED, HENCE SUCH CLAIM SHOULD BE ALLOWED . N OW IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SMIFF SECURITIES LTD [2012] 348 ITR 302 , IT IS QUI TE SETTLED THAT DEPRECIATION IS ALLOWABLE ON GOODWILL. PARTICULARS AMOUNT IN INR VALUE OF GOODWILL 287,957,469 DEPRECIATION FOR FY 2007 - 08 NOT CLAIMED AS PAYMENT WAS DELAYED WDV FOR 31 ST MARCH 2008 287,957,469 DEPRECIATION FOR FY 2008 - 09 71,989,367 UNCLAIMED WDV FOR 31 S T MARCH 2009 215,968,102 DEPRECIATION FOR FY 2009 - 10 53,992,025 WDV FOR 31 ST MARCH 2010 161,976,076 DEP. FOR FY 2010 - 11 40,494,019 WDV FOR 31 ST MARCH 2011 121,482,057 DEPRECIATION FOR FY 2011 - 12 30,370,514 ARAMARK INDIA P LTD ITA 3839 / M/20 1 3 3 4 . REGARDING VARIOUS OTHER GROUNDS CHALLENGING THE BEST JUDGMENT ASSESSMENT ORDER PASSED U/S 144, NO ARGUMENT HAS BEEN PUT FORTH BY THE LD. COUNSEL BEFORE US . 5 . LD. DR SUBMITTED THAT SO FAR AS THE ISSUE RAISED FROM THE GROUND NO. 1 TO GROUND NO. 5, THE LD. CIT(A) HAS GIVEN VERY DETAILED REASONS JUSTIFYING THE ACTION OF THE AO FOR PASSING THE ORDER U/S 144 AND MAKING THE BEST JUDGMENT ASSESSMENT. THUS, THE GROUNDS RAISED BY THE ASSESSEE IN THE ABSENC E OF ANY PROPER REBUTTAL SHOULD BE DISMISSED. 6 . REGARDING DEPRECIATION ON GOODWILL, HE SUBMITTED THAT SINCE THIS ISSUE HAS NOT BEEN RAISED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW, THEREFORE, SAME SHOULD BE RESTORED BACK TO THE FILE OF THE CIT(A) OR AO. 7 . AFTER CONSIDERING THE RIVAL SUBM I SSIONS AND ON PERUSAL OF THE IMPUGNED ORDERS, WE FIND THAT SO FAR AS THE ISSUE REGARDING PASSING OF BEST JUDGMENT ASSESSMENT U/ S 144, THE LD. CIT(A) HAS DEALT, WITH THE ENTIRE OBJECTIONS OF THE ASSESSEE IN A VE RY DETAILED MANNER AND THERE BEING NO PROPER REBUTTAL SUBMISSIONS BEFORE US, WE DO NOT FIND ANY REASON FROM DEVIATING FROM SUCH FINDING OF THE CIT(A). ACCORDINGLY, GROUND NO. 1 TO GROUND NO. 4 IS TREATED AS DISMISSED. 8 . SO FAR AS GROUND NO. 5 IS CONCERNE D , THE ASSESSEE HAS RAISED THE CONTENTION THAT THE LD. CIT(A) HAS ERRED IN UPHOL D ING THE INITIATION OF PENALTY PROCEEDINGS U/S 27 1 A, THE SAME IS PRE - MATURE AS THE ASSESSEE CAN RAISED THE OBJECTIONS BEFORE THE AO AT THE TIME OF PENALTY PROCEEDINGS . H ENCE, G ROUND NO. 5 IS DISMISSED. 9 . AS REGARD THE ISSUE RAISED IN ADDITIONAL GROUND, WE FIND THAT THE SAME IS PURELY A LEGAL GROUND, ARISING OUT OF THE FACTS AVAILABLE ON RECORD AND ACCORDING L Y , THE SAME IS ADMITTED. THE ISSUE , WHETHER THE DEPRECI A TION ON GOODWI LL IS ALLOWABLE OR NOT, THE SAME STANDS CONCLUDED BY THE DEC I SION OF HONBLE APEX COURT IN THE CASE OF SMI FF SECURITIES LTD ( SUPRA ), WHEREIN THE HONBLE SUPREME COURT ARAMARK INDIA P LTD ITA 3839 / M/20 1 3 4 HELD THAT GOODWILL IS AN ASSET UNDER THE EXPRESSION USED IN EXPLANATION 3(B) TO SECTION 3 2(1) AND THEREFORE , DEPRECIATION IS ALLOWABLE ON SUCH A N ASSET. THUS, THE DEPRECIATION ON THE GOODWILL SHOULD BE ALLOWED. HOWEVER, THE FACTS REGARDING COMPUTATION OF WDV AND THE AMOUNT OF DEPRECIATION, WHICH IS TO BE ALLOWED IN THE ASSESSMENT YEAR 2009 - 10, NEEDS VERIFICATION AT THE END OF THE AO, THEREFORE, THIS MATTER IS RESTORED BACK TO THE FILE OF THE AO TO EXAMINE THE CONTENTION OF THE ASSESSEE AND ALLOW THE CLAIM OF DEPRECIATION IN ACCORDANCE WITH THE SUPREME COURT DECISION. ACCORDINGLY, ADDITIONAL GRO UND RAISED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 1 0 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST MAY , 2015. SD/ - SD/ - ( ) ( ) ( SANJAY ARORA ) ( AMIT SHUKLA ) ACCOUNTANT MEMB ER JUD ICIAL MEMBER MUMBAI, DATE: 1 ST MAY , 2015 / COPY TO: - 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A) - 14 , MUMBAI. 4) THE CIT - 6 , MUMBAI/CIT - 6 , MUMBAI . 5) , , / THE D.R. A BENCH, MUMBA I. 6) COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS