ST ANGELO'S COMPUTERS LTD, MUMBAI V. ITO 9(3)(2), MUMBAI

ITA 5828/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3701 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 17-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Keywords: Depreciation; Principle of natural justice
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI A BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NO. 5828/MUM/2014 (ASSESSMENT YEAR : 2008-09) ST. ANGELOS COMPUTERS LTD., 6 TH FLOOR, JYOTI PLAZA, ABOVE TATA MOTORS, S.V.ROAD, KANDIVALI (W), MUMBAI 400 067 APPELLANT VS. I.T.O. - 9(3)(2), AAYAKAR BHAVAN, M. K. ROAD, MUMBAI RESPONDENT PAN: AAECS9697J /BY APPELLANT : MS. DINKLE HARIYA, A.R. /BY RESPONDENT : SHRI A. RAMACHANDRAN, D.R. /DATE OF HEARING : 08.08.2016 /DATE OF PRONOUNCEMENT : 12.08.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-20, MUMBAI, DA TED 09.07.2014 FOR A.Y. 2008-09 ON FOLLOWING GROUND: 1. NATURAL JUSTICE ITA NO.5828/MUM/14 A.Y. 08-09 [ST. ANGELOS COMPUTE RS LTD. VS. ITO] PAGE 2 1.1 THE LEARNED COMMISSIONER OF INCOME - TAX (APPEA LS) - 20, MUMBAI, ['LD. CIT(A)] ERRED IN PASSING THE APPELLATE ORDER IN BREACH OF THE PRINCIPLES OF NATU RAL JUSTICE AS MUCH AS: (I) NOT PROPER, EFFECTIVE AND FAIR OPPORTUNITY HAS BEEN GRANTED TO THE APPELLANT; (II) THERE WAS NO APPLICATION OF MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT AS WELL AS THE SUBMISSIONS MADE BEFORE HIM. 1.2 IT IS SUBMITTED THAT, IN THE FACTS AND THE CIRC UMSTANCES OF THE CASE, AND IN LAW, THE ORDER IS HELD TO BE BA D IN LAW. WITHOUT PREJUDICE TO THE ABOVE 2.1 THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN LEVYING PENALTY U/S. 271(1)(C) OF THE INCOM E-TAX ACT ['THE ACT']. 2.2 THE LD. CIT (A) FAILED TO APPRECIATE THAT THE ORDER PASSED BY THE A.O. AND / OR THE PENALTY LEVIED WAS BAD AND ILLEGAL AS THE NECESSARY CONDITIONS FOR INITIAT ING THE PENALTY PROCEEDINGS AND THE COMPLETION THEREOF WERE NOT FULFILLED. WITHOUT PREJUDICE TO THE ABOVE 3.1 THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN LEVYING PENALTY U/S. 271(1)(C) OF THE ACT, TO THE EXTENT OF RS.7,33,501/-, ON THE ALLEGATION OF FILIN G INACCURATE PARTICULARS OF INCOME PARTICULARS OF INC OME BY THE APPELLANT. 3.2 IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMST ANCES OF THE CASE, AND IN LAW, ON MERIT ALSO, NO SUCH PENALTY WA S LEVIABLE. 2. IN THIS CASE, ASSESSING OFFICER LEVIED PENALTY O N THE GROUND THAT ASSESSEE HAS WRONGLY CLAIMED DEPRECIATI ON OF ITA NO.5828/MUM/14 A.Y. 08-09 [ST. ANGELOS COMPUTE RS LTD. VS. ITO] PAGE 3 RS.21,57,990/-. LD. AUTHORIZED REPRESENTATIVE BEFOR E US QUANTIFIED THAT QUANTUM ADDITION HAS BEEN DELETED B Y ITAT MUMBAI E BENCH IN ITA NO.6874/MUM/2011 & OTHERS V IDE PARA NO.6 BY OBSERVING AS UNDER: 6. WE HAVE CAREFULLY GONE THROUGH THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SMIFS SECURITIES LTD.( SUPRA) AND DECISION OF HON'BLE BOMBAY HIGH COURT AS WELL A S DECISION OF COORDINATE BENCH OF THE TRIBUNAL CITED AT BAR. THE HON'BLE SUPREME COURT IN THE CASE OF SMIFS SECU RITIES LTD.(SUPRA), HELD AS UNDER :- 'THE ASSESSING OFFICER HELD THAT GOODWILL WAS NOT A N ASSET FALLING UNDER EXPLANATION 3 TO SECTION 32(1) OF THE INCOME TAX ACT, 1961 ['ACT', FOR SHORT]. WE QUOTE HEREINBELOW EXPLANATION 3 TO SECTION 32(1) OF THE ACT: 'EXPLANATION 3.-- FOR THE PURPOSES OF THIS SUB- SECTION, THE EXPRESSIONS 'ASSETS' AND 'BLOCK OF ASS ETS' SHALL MEAN-- [A] TANGIBLE ASSETS, BEING BUILDINGS, MACHINERY, PL ANT OR FURNITURE; [B] INTANGIBLE ASSETS, BEING KNOW-HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATU RE.' EXPLANATION 3 STATES THAT THE EXPRESSION 'ASSET' SH ALL MEAN AN INTANGIBLE ASSET, BEING KNOW-HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATU RE. A READING THE WORDS 'ANY OTHER BUSINESS OR COMMERCI AL RIGHTS OF SIMILAR NATURE' IN CLAUSE (B) OF EXPLANAT ION 3 INDICATES THAT GOODWILL WOULD FALL UNDER THE EXPRES SION 'ANY OTHER BUSINESS OR COMMERCIAL RIGHT OF A SIMILA R NATURE'. THE PRINCIPLE OF EJUSDEM GENERIS WOULD STR ICTLY APPLY WHILE INTERPRETING THE SAID EXPRESSION WHICH FINDS PLACE IN EXPLANATION 3(B). IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT 'GOOD WILL' IS AN ASSET UNDER EXPLANATION 3 B) TO SECTION 32 (1 ) OF THE ACT.:' ITA NO.5828/MUM/14 A.Y. 08-09 [ST. ANGELOS COMPUTE RS LTD. VS. ITO] PAGE 4 THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S PPG ASIAN PAINTS PVT. LTD (SUPRA), HELD AS UNDER :- 'IN VIEW OF THE CATEGORICAL FINDING OF THE HON'BLE SUPREME COURT THAT THE GOODWILL ALSO. FALLS UNDER T HE EXPRESSION 'ANY OTHER BUSINESS OR COMMERCIAL RIGHT OF A SIMILAR NATURE' AND THUS WOULD BE AN ASSET UNDER EXPLANATION 3(B) TO. SECTION 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.' 7. AS THE FACTS AND CIRCUMSTANCE OF THE CASE IN ALL THE YEARS UNDER CONSIDERATION ARE SAME, FOLLOWING THE SAME REASONING, WE DIRECT THE AO TO ALLOW ASSESSEE'S CLA IM OF DEPRECIATION ON 'GOOD-WILL' IN ALL THE YEARS UNDER CONSIDERATION. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BE HALF OF REVENUE. SO, WE FIND THAT QUANTUM ADDITION IS MADE ON ACCOUNT OF DISALLOWANCE OF CLAIM OF DEPRECIATION ON GOODWILL U/S.32(1)(II) OF THE ACT, WHICH IS THE BASIS OF PEN ALTY, DOES NOT SURVIVE. IN VIEW OF THE TRIBUNALS DECISION IN QUA NTUM, PENALTY U/S.271(1)(C) OF THE ACT DOES NOT SURVIVE. SAME IS DIRECTED TO BE DELETED. 3. AS A RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS THE 12 TH DAY OF AUGUST, 2016. SD/- SD/- ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 12/08/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE ITA NO.5828/MUM/14 A.Y. 08-09 [ST. ANGELOS COMPUTE RS LTD. VS. ITO] PAGE 5 3. / CONCERNED CIT 4. - / CIT (A) 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. BY ORDER / , / , ,