Appeal details
Counselvise Citation
[2022] 104 COUNSELVISE.COM (IT) 3048 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 month(s) 12 day(s)
Appellant
Respondent
Appeal Type
Miscellaneous Application
Pronouncement Date
29-08-2022
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
25-08-2022
Assessment Year
2015-2016
Appeal Filed On
17-07-2022
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER MP No.60/Bang/2022 (in ITA No.165/Bang/2021) Assessment Year : 2015-16 M/s. Dusters Total Solutions Services Private Limited, 4 th Floor, No.50, Zatakia Centre, 100 Ft. Road, Indiranagar, Bengaluru – 560 038. PAN : AACCD 5989 Q Vs. DCIT, Circle - 2(1)(1), Bengaluru. APPELLANT RESPONDENT Appellant by:Shri. Padam Chand Kincha, CA Respondent by :Shri. Sankar Ganesh K, JCIT(DR)(ITAT), Bengaluru Date of hearing:26.08.2022 Date of Pronouncement:30.08.2022 O R D E R Per N. V. Vasudevan, Vice President: This is a Miscellaneous petition (MP) filed by the assessee u/s.254(2) of the Income Tax Act, 1961 (Act) pointing out certain apparent errors in the order of the Tribunal which needs to be rectified. 2. The appeal of the assessee was against an Order passed by PCIT under section 263 of the Act. The issue in respect of which action under section 263 was initiated related to the goodwill claimed by the assessee on acquisition of two business entities. According to the PCIT, the AO, while completing assessment did not apply his mind and allowed MP No.60/Bang/2022 (in ITA No.165/Bang/2021) Page 2 of 5 the claim of the assessee without examining certain vital aspects as set out in the impugned order of the PCIT. The Tribunal in its order dated 23.05.2022 upheld the order of the CIT(A) and dismissed the appeal of the assessee with certain directions as given in para 5 to 9 of the Tribunal order. The relevant observations of the Tribunal in this regard are as follows: “5. We notice that the AO has collected the details relating to amalgamation, working of good will etc., but it is not discernible from the assessment order, whether the AO has applied his mind on the issue of claim of good will. As pointed out by Ld PCIT, it is not clear as to whether the AO has examined the claim of depreciation on the assets acquired through amalgamation in terms of requirements of sec. 43(1) and also sec. 32. It is the case of Ld PCIT that the assessee has recorded the value of assets adopting “Fair market value”, while depreciation thereon should be allowed on the WDV, as if the amalgamation has not taken place. It is not clear as to whether the AO has carried out this type of examination. 6. The assessee has contended before the PCIT that, merely because the AO has not explicitly discussed the issue in the assessment order, the same would not render the assessment order erroneous. It has also placed reliance on the decision rendered on certain decisions before the Ld PCIT to contend that the claim of depreciation is admissible and further the fifth/sixth proviso will not apply to good will. 7. However, we notice that a new explanation, viz., Explanation 2 has been inserted in sec. 263 of the Act by Finance Act, 2014 w.e.f. 1.6.2015, as per which if any order is passed without making enquiries or verification which should have been made, the said order is deemed to be erroneous in so far as it is prejudicial to the interests of the revenue. In the instant case, as noticed earlier, it is not clear as to whether the AO has examined the details of value of assets, in terms of sec. 43(1)/sec.32. Further, the value of good will is dependent upon the fair market value of various assets and it has also not been examined. Hence, in our view, the assessment order is rendered erroneous and prejudicial to the interests of revenue to this extent. 8. We notice that the Ld PCIT has expressed the view that the depreciation is not allowable on good will amount and in this regard, he has placed reliance on the MP No.60/Bang/2022 (in ITA No.165/Bang/2021) Page 3 of 5 decision rendered by the Tribunal in the case of United Breweries (supra). He has also stated that it is the ‘only possible view. Accordingly, he has directed the AO to examine the eligibility of the assessee to claim depreciation on value of good will in the light of discussions made by him. Having expressed the view that depreciation is not available on good will, in our view, the Ld PCIT has indirectly directed the AO to disallow the depreciation on good will. In our view, this kind of indirect direction cannot be sustained. 9. Accordingly, while upholding the revision order for the reasons discussed above, we modify the same giving full liberty to the assessing officer to examine the issue relating to the value of good will and also claim of depreciation on good will without being influenced by the views expressed by Ld PCIT. The assessee is free to make all submissions in support of its claim for depreciation.” 3. In this MP, the assessee has pointed out that in Ground No.9, the assessee has raised the following issue: "The PCIT has erred in not issuing any 'Show cause' notice or granting the Appellant any opportunity to the Appellant, before concluding on the applicability of Explanation 3 to section 43(1) of the Act to the facts of the present case, since the show-cause notice of the PCIT merely required the Appellant to show cause why the sixth proviso to section 32(1) should not be applied. The Order by the Ld. PCIT therefore violates Principles of Natural justice and consequently directions pertaining to applicability of Explanation 3 to section 43(1) ought to be struck down." 4. It has been pointed out in the MP that the Tribunal did not give any adjudication on this ground specifically. Besides the above mistakes, it has also been submitted that the Tribunal has at one place admitted that the AO has not applied his mind but has ultimately upheld the order of the PCIT. It has also been submitted that the assessee had argued that when two views are possible on an issue and the AO has adopted one of the possible views, action under section 263 of the Act is not warranted and this argument MP No.60/Bang/2022 (in ITA No.165/Bang/2021) Page 4 of 5 though was accepted by the Tribunal but ultimately the Tribunal has upheld the order of the PCIT. 5. The learned Counsel for the assessee reiterated the facts as stated in the MP and submitted that the Tribunal should suitably amend its order. Learned DR opposed the prayer of the learned Counsel for the assessee and submitted that a view has been taken by the Tribunal and in application under section 254(2) of the Act, it cannot be reviewed. It was submitted that the power under section 254(2) of the Act is only to correct an apparent error, the Tribunal cannot review its order. 6. We have carefully considered the submissions and are of the view that the mistakes pointed out in the MP cannot be regarded as a mistake apparent on the face of the record. The Tribunal has taken a holistic view of the issue and has come to the conclusion that the action of the PCIT was justified because the AO did not make enquires that were required to be made and in this regard has also relied on the explanation 2 to section 263 of the Act inserted by Finance Act, 2014 w.e.f. 01.06.2015. It is also noticed that in para 9 of the Order of the Tribunal, the Tribunal has given a specific finding that the AO in the set aside proceedings should examine the issue with full liberty uninfluenced by the views expressed by the PCIT in the impugned order. In these circumstances, we are of the view that the assessee has not made out a case for interference under section 254(2) of the Act. The mistake pointed out in the MP cannot be regarded as a mistake apparent on record. We, therefore, dismiss this MP. MP No.60/Bang/2022 (in ITA No.165/Bang/2021) Page 5 of 5 7. In the result, the MP is dismissed. Pronounced in the open court on the date mentioned on the caption page. Sd/- Sd/- (LAXMIPRASAD SAHU) (N. V. VASUDEVAN) ACCOUNTANT MEMBER VICE PRESIDENT Bangalore, Dated : 30.08.2022. /NS/* Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore.
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