SNB INFRASTRUCTURE PRIVATE LIMITED , MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX-14(3)(2), MUMBAI

ITA 4976/MUM/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4020 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 19-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR
• Keywords: Capital asset; Depreciation; Cost of acquisition; Bonafide mistake; Capital Gains
• Section: 142(1); 143(1); 143(2); 48

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI S . RIFAUR RAHMAN , A M AND SH RI RAVISH SOOD , J M ./ I.T.A. NO . 4976 / MUM/ 2017 ( / ASSESSMENT YEAR: 2013 - 14 ) SNB INFRASTRUCTURE PVT. LTD. 512, A - WING, KOHINOOR CI TY, COMMERCIAL - 1, KIROL ROAD, KURLA M UMBAI - 400070 / VS. DCIT 14(3 ) (2) 455, 4 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 ./ ./ PAN/GIR NO. A AFCA 7562 D ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENT BY : SHRI V. VINOD KUMAR , DR / DATE OF HEARING : 20/11 /201 9 / DATE OF PRONOUNCEMENT : 29.01.2020 / O R D E R PER S . RIFAUR RAHMAN, ACCOUNTANT MEMBER : THE PR ESENT A PPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISS I ONER OF INCOME TAX 22, MUMBAI IN SHORT LD. CIT(A) , DATED 27.02.2017 FOR AY 2013 - 14 ON THE GROUNDS MENTIONED HEREIN BELOW: - 2 ITA NO. 4976/MUM/2017 SNB INFRASTRUCTURE PVT. LTD . 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE APPELLANT WAS UNABLE TO PREFER THE APPEAL WITHIN THE STIPULATED TIME OF SIXTY DAYS. THE APPELLANT WAS UNDER A BONAFIDE MISTAKEN IMPRESSION OF HAVING FILED THE APPEAL WHEN IN FACT THE APPEAL FILED WAS FOR A Y 2011 - 12. IT IS SUBMITTED THAT TH E ISSUE AGITATED IN THIS APPEAL IS THE SUBJECT MATTER OF APPEAL FOR A Y 2010 - 11 & 2011 - 12. UPON REALISING THAT THE APPEAL HAS BEEN PREPARED BUT NOT FILED IMMEDIATELY THE STEPS WERE TAKEN TO FILE THE SAME. IT IS EARNESTLY PRAYED THAT THE DELAY IN FILING OF THE APPEAL BY 48 DAYS BE CONDONED AND IN THE INTEREST OF JUSTICE THE APPEAL BE TAKEN ON RECORD AND ADMITTED. 2. (NIL) 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) ERRED IN SUSTAINING THE ORDER OF THE AO. THE LEARNED C IT (A) OUGHT TO HAVE GRANTED THE CLAIM OF DEPRECIATION ON INTANGIBLES FOR RS.1,56,26,984/ - ON THE BASIS OF FACTS AND IN ACCORDANCE WITH THE LAW. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) WITHOUT APPRECIATING THE SU BMISSIONS MADE AND ON THE SPECIOUS GROUND OF THE FACTS AND CIRCUMSTANCES BEING IDENTICAL DENIED THE CLAIM OF DEPRECIATION. THE LEARNED AO WAS ENJOINED TO ACCEPT CLAIM WITH REGARD TO THE DEPRECIATION OF RS 1, 56,26,984/ - . 3 ITA NO. 4976/MUM/2017 SNB INFRASTRUCTURE PVT. LTD . 5. ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) ERRED IN DENYING THE CLAIM OF DEPRECIATION OF RS, 1,56,26,984/ - ON INTANGIBLES. THE LEARNED CIT (A) FAILED TO REALIZE THAT CONDITIONS PRECEDENT BEING MET FOR SUCCESSION UNDER 47(XIII) THE CLAIM FOR DEPRECIA TION MADE ON THE ASSETS ON THE DATE OF SUCCESSION WHICH INCLUDED INTANGIBLES AS WELL. 6. ALL THE ABOVE GROUNDS ARE INDEPENDENT AND WITHOUT PREJUDICE TO EACH ANOTHER. 2. AT THE VERY OUT SET, IT IS NOTICED THAT NONE APPEARED ON BEHALF OF ASSESSEE IN SPITE OF SEVERAL OCCASIONS POSTED FOR THE HEARING ON 15.10.18, 03.12.18, 07.02.19, 22.04.19, 01.07.19, 16.09.19 AND 20.11.19. FROM THE RECORDS, WE ALSO NOTICED THAT NOTICE WAS ISSUED TO THE ASSESSEE ON THE ADDRESS GIVEN BY THE ASSESSEE ON FORM NO. 36. BUT EVEN I N SPITE OF THAT , NONE HAD APPEARED ON BEHALF OF THE ASSESSEE ON THE SUBSEQUENT DATE S . ON THE OTHER HAND , L D. DR IS PRESENT IN THE COURT AND IS READY WITH ARGUMENTS. THEREFORE , WE HAVE DECIDED TO PROCEED WITH THE HEARING OF THE CASE EX - PA RTE WITH THE ASSISTANCE OF THE L D. DR AND THE MATERIAL PLACED ON RECORD. FROM THE RECORDS, WE ALSO NOTICE THAT THERE IS A DELAY OF 48 DAYS IN FILING THE APPEAL AND FOR THAT AN AFFIDAVIT WAS FILED. 4 ITA NO. 4976/MUM/2017 SNB INFRASTRUCTURE PVT. LTD . 3 . WE HAVE HEARD LD. DR AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD A S WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. AS PER THE FACTS OF THE PRESENT CASE, ASSESSEE IS ENGAGED IN THE BUSINESS OF INFRASTRUCTURE DEVELOPMENT AND FILED ITS RETURN OF INCOME ON 28.09.13 DECLARING TOTAL INCOME AT RS. 2,74,42,870/ - . THE RETURN W AS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S 143(2) AND 142(1) WERE ISSUED AND SERVED ON THE ASSESSEE. IN THIS REGARD, RELEVANT INFORMATION WAS SUBMITTED BY ASSESSEE AS CALLED FOR. BUT, AO H AS NOT ACCEPTED THE CONTENT ION OF THE ASSESSEE AND DISALLOWED THE CLAIM OF ASSESSEE. 4 . AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. C IT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND SUBMISSION WHI CH ARE DET AILED IN PARA NO. 4.2 OF ITS ORDER, HAD DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5 . BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUND RAISED BY THE ASSE SSEE IN PARA NO. 4.3 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 4.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE APPELLANT'S SUBMISSIONS. THE SAME ISSUE HAD COME UP FOR 5 ITA NO. 4976/MUM/2017 SNB INFRASTRUCTURE PVT. LTD . CONSIDERATION IN THE APPELLANT'S APPEAL FOR A.Y. 2010 - 11 WHEREIN THE UNDERSIGNE D HAD OBSERVED AND DECIDED THE ISSUE AS UNDER: '5.3 I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELLANT HAS SOUGHT TO JUSTIFY ITS CLAIM OF DEPRECIATION ON INTANGIBLE ASSETS BY REFERRING TO THE PROVISIONS UNDER SECTION 47 WHICH PROVIDE FOR CERTAIN TRANSACTIONS WHICH THOUGH ARE TRANSFER WITHIN THE MEANING OF TRANSFER UNDER 2(47) ARE NOT TREATED AS TRANSFER FOR THE PURPOSES OF DETERMINATION OF CAPITAL GAINS. ATTENTION WAS DRAWN TO CLAUSE (XIII) OF THE SAID SECTION WHICH RELATES TO THE TRAN SFER OF PARTNERSHIP BUSINESS AND SUCCESSION BY A PRIVATE LIMITED COMPANY. I T WAS CONTENDED THAT THERE IS AN EXPRESS REFERENCE TO THE INTANGIBLE ASSETS IN THE SAID SECTION WHICH INDICATES THAT THE POSSIBILITY OF INTANGIBLES BEING A PART OF ASSETS AND LIABIL ITIES WAS ENVISAGED BY THE LEGISLATURE AND THAT THE EXPRESS PROVISION OF INTANGIBLES COVERS THE TRANSFER OF INTANGIBLES WHICH IN ITS CASE ARE THAT OF COMMERCIAL RIGHTS AND REGISTRATIONS ALONG WITH GOODWILL. I FIND NO MERITS IN THE APPELLANT'S CONTENTION. N O INTANGIBLE ASSETS ON ACCOUNT OF GOODWILL AND COMMERCIAL RIGHTS AND REGISTRATION EXISTED IN THE BOOKS OF THE PARTNERSHIP FIRM BEFORE SUCCESSION. THE QUESTION OF INTANGIBLE ASSETS BEING TRANSFERRED TO THE SUCCEEDING APPELLANT COMPANY, THEREFORE, DOES NOT A RISE. THE APPELLANT ALSO DREW ATTENTION TO THE ISSUE OF TRANSFER UNDER SECTION 47(XIV) WITH REGARD TO THE 6 ITA NO. 4976/MUM/2017 SNB INFRASTRUCTURE PVT. LTD . CREATION OF INTANGIBLES AT THE TIME OF TRANSFER. IT WAS SUBMITTED THAT NO FAULT HAS BEEN FOUND ON SUCH INTANGIBLES ARISING ON THE EVE OF TRANSFER UNDE R 47(XIV) AND THAT THE ACCEPTANCE OF THE INTANGIBLES IN SUCH TRANSFER AFFIRMS THAT THE SAME IS WITHIN THE TENETS OF THE LEGAL PROVISIONS. RELIANCE WAS PLACED ON THE RULING OF MUMBAI TRIBUNAL WHEREIN THE HON'BLE ITAT IN THE CASE OF ASST. CIT V. NAYAN L. MEP ANI (MUMO (2012) 49 SOT 641 (MUMBAI) HELD THAT THE INTANGIBLES ARISING ON THE TRANSFER UNDER 47(XIV) DOES NOT VIOLATE THE PROVISIONS AND RESULTANTLY THE AMOUNTS CONSIDERED UNDER THE TRANSFER NEEDS TO BE TAKEN AS THE COST OF ACQUISITION FOR THE PURPOSES OF DEPRECIATION. THE JUDGEMENT RELIED UPON BY THE APPELLANT IS ALSO NOT APPLICABLE IN THE INSTANT CASE. IT IS PRECISELY BECAUSE OF THE FACT THAT NO CONSIDERATION WAS PAID FOR THE INTANGIBLE ASSETS WHICH WERE CREATED ON SUCCESSION THAT DEPRECIATION WAS DISALLO WED AS THERE WAS NO COST OF ACQUISITION. IN VIEW OF ALL THESE FACTS AND OBSERVATIONS, THE APPELLANT'S GROUNDS OF APPEAL ON THE ISSUE OF DEPRECIATION ON INTANGIBLE ASSETS ARE DISMISSED.' FACTS AND CIRCUMSTANCES OF THE INSTANT APPEAL BEING IDENTICAL WITH THA T OF THE EARLIER YEAR, THE APPELLANT'S GROUNDS OF APPEAL ON THIS ISSUE ARE DISMISSED FOR THIS ASSESSMENT YEAR TOO. 7 ITA NO. 4976/MUM/2017 SNB INFRASTRUCTURE PVT. LTD . 6 . AFTER HAVING GONE THROUGH THE ORDERS PASSED BY REVENUE AUTHORITIES , WE NOTICE THAT EVEN BEFORE US, ASSESSEE HAD NOT APPEARED AND NOT EVEN REBUTTED THE FINDINGS SO RECORDED BY LD. CIT(A). MOREOVER , N O NEW FACTS O R CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT(A). WE ARE INCLINED TO ACCEPT THE FINDINGS OF LD. CIT(A ) AS THE PARTNERSHIP FIRM COMES ITSELF AS PVT. LTD. CO. AND HOW THE INTANGIBLE ASSETS WILL CHANGE OR MODIFIED. AS PER LAW, THE COST RECORDED IN PARTNERSHIP FIRM OR ACTUAL COST INCURRED ALONE SHOULD BE RECORDED IN THE NEW COMPANY AND ONLY TO THAT EXTENT, AS SESSEE IS ALLOWED TO CLAIM DEPRECIATION. THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS SO RECORDED BY THE LD. CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOU S AND ARE WE LL REASONED. RESULTANTLY, THE GROUND S RAISED BY THE ASSESSEE STANDS DISMISSED . 7 . IN THE NET RESULT, APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JAN 2020. SD/ - SD/ - ( RAVISH SOOD ) (S . RIFAUR RAHMAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 29 . 01 .2020 SPS/DHANANJAY 8 ITA NO. 4976/MUM/2017 SNB INFRASTRUCTURE PVT. LTD . / COPY OF THE ORDER FORWARDED TO : 1. / THE AP PELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI