Zuari Cement Limited, Kadapa District, Kadapa V. DCIT, Circle-2(1), Tirupathi

MA 78/HYD/2015

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 3446 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 31-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 25-06-2015
• Court: TRIBUNAL
• Department Lawyers: KIRAN KATTA
• Assessee Lawyers: K R VASUDEVAN
• Keywords: Depreciation; Transfer pricing; Scheme of amalgamation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER M.A. NO. 78/HYD/2015 (ARISING OUT OF ITA.NO.471/HYD/2014) ASSESSMENT YEAR : 2009-2010 ZUARI CEMENT LIMITED, YERRAGUNTLA, KADAPA DIST. [PAN: AAACZ1270E] VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE-2(1), TIRUPATI (APPLICANT) (RESPONDENT) FOR ASSESSEE : SHRI K.R. VASUDEVAN, AR FOR REVENUE : SHRI KIRAN KATTA, DR DATE OF HEARING : 31-07-2015 DATE OF PRONOUNCEMENT : 12-08-2015 O R D E R PER B. RAMAKOTAIAH, A.M. THIS MISCELLANEOUS APPLICATION FILED BY ASSESSEE I S AGAINST THE ORDER OF ITAT IN ITA NO. 471/HYD/2014 DATED 17-04-2 015. IN THE MISCELLANEOUS APPLICATION, ASSESSEE HAS RAISED TWO ISSUES, ONE ON ADDITIONAL GROUND ON DEPRECIATION ON GOODWILL AND O THER ON LEVY OF INTEREST U/S. 234C IN GROUND NO. 16. 2. WHILE ADMITTING THAT THE TRIBUNAL ADJUDICATED ON VARIOUS ISSUES INCLUDING THE ADDITIONAL GROUND OF APPEAL AT GROUND NO. 17, THE PETITIONER CONTENDS THAT THE FACTS RELATING TO DEPR ECIATION ON GOODWILL, EVEN THOUGH WAS ON RECORD AND PLACED ON RECORD IN T HE COURSE OF HEARING, THE SAID FACTS WERE NOT CONSIDERED. IT WA S CONTENDED THAT: 2 M.A.NO.78/H/15 IN ITA.NO.471/H/14 ZUARI CEMENT LTD., 3. DURING THE COURSE OF THE PROCEEDINGS, WHEN THE HONBLE TRIBUNAL WANTED TO KNOW WHETHER THE FACTS RELATED TO THE DEP RECIATION ON GOODWILL WAS ON RECORD, THE ANNUAL ACCOUNTS, COPY OF SCHEME OF AMALGAMATION, COMPUTATION OF GOODWILL IN THE BOOKS OF ACCOUNTS WA S SHOWN TO THE HONBLE MEMBERS. WITH THE PERMISSION OF THE BENCH, THE COPIES OF THE SAME WERE SUBMITTED ON THE SAME DAY, VIDE SUBMISSIO N DATED FEBRUARY 9, 2015. 4. HOWEVER, IT APPEARS THAT THESE DETAILS, WHICH W OULD EVIDENCE TO THE FACT THAT THE DETAILS RELATED TO THE CLAIM OF D EPRECIATION ON GOODWILL WERE ON RECORD, HAVE ESCAPED CONSIDERATION OF THE H ONBLE TRIBUNAL. 5. THE PETITIONER SUBMITS THAT THE PETITIONER HAD MADE A CLAIM OF DEPRECIATION ON GOODWILL PERTAINING TO AY. 2009-10 ONLY. AND THE FACTS PERTAINING TO THE CLAIM WAS ON RECORD. 6. THE APPELLANT FURTHER SUBMITS THAT THE PROCEED ING FOR AY. 2007- 08 IN THE CASE OF THE APPELLANT IS STILL PENDING BE FORE THE COMMISSIONER OF INCOME-TAX (APPEALS) [CIT(A)]. HENCE, BASED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SMIFS SECURITIES LIMIT ED VS. COMMISSIONER OF INCOME-TAX, KOLKATA, [2012] [348 ITR 302 (SC)], THE APPELLANT HAD MADE A CLAIM FOR DEPRECIATION ON GOODWILL FOR THE AY. 2007 -08 BEFORE THE CIT(A). COPY OF THE SAME IS ENCLOSED AS ANNEXURE B. THE OR DER FROM THE CIT(A) IS STILL PENDING. 3. AFTER CONSIDERING THE ABOVE AND ALSO THE ARGUMEN TS OF THE LD. COUNSEL, WE ARE OF THE OPINION THAT NO MISTAKE HAS OCCURRED IN THE ORDER OF ITAT WHILE CONSIDERING THE ADDITIONAL GROUND. IN FACT THE ORDER OF ITAT IN PARA 15.2 AND 15.3 ARE AS UNDER: 3 M.A.NO.78/H/15 IN ITA.NO.471/H/14 ZUARI CEMENT LTD., 15.2 WE HAVE TO ACCEPT THAT JUDICIAL PRINCIPLES RE LIED ON BY ASSESSEE ARE VERY CLEAR THAT ASSESSEE CAN RAISE ANY ADDITIONAL GROUND ON LEGAL MATTERS, HOWEVER, RIDER IS THAT THE FACTS SHOULD BE AVAILABLE ON RECORD. ASSESSEE SUBMITTED THAT THE M ERGER TOOK PLACE W.E.F. 01-01-2007 I.E., IN A.Y.2007-08. WE ARE CON SIDERING APPEAL IN AY.2009-10. HOW, THE GOODWILL AROSE WHAT IS THE AMOUNT AND WHY ASSESSEE HAS NOT CLAIMED DEPRECIATION AND OTHER ISSUES REQUIRE EXAMINATION IN AY.2007-08. IN AY.2009-10, IF A DEP RECIATION WAS ALLOWED ON AN ASSET WHICH IS IN THE BLOCK OF ASSETS IN EARLIER YEAR, ONLY CONSEQUENTIAL DEPRECIATION CAN BE ALLOWED. SI NCE ASSESSEE IS CLAIMING FRESH DEPRECIATION ON THE GOODWILL, WHICH AROSE IN AY.2007-08, WE CANNOT ALLOW THE GROUND IN THIS ASSE SSMENT YEAR. AS RIGHTLY HELD BY THE HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS LTD., [289 ITR 26 (SC)], ADDITIONAL GROUND CANNOT BE CONSIDERED, IN THE ABSENCE OF ANY FACTS ON RECORD. 15.3 IN VIEW OF THIS, SINCE THE ISSUE DID NOT ARISE IN THE YEAR UNDER CONSIDERATION AND THE FACTS PERTAINING TO THE QUANTIFICATION OF THE CLAIM ARE NOT ON RECORD, WE CANNOT ENTERTAIN TH E ADDITIONAL GROUND, JUST BECAUSE LAW ON THIS WAS SETTLED ON LEG AL PRINCIPLES. IF AT ALL ASSESSEE'S CLAIM TO DEPRECIATION WAS ALLOWED IN AY.2007-08, THEN, ASSESSEE CAN CLAIM CONSEQUENTIAL DEPRECIATION IN THIS ASSESSMENT YEAR, BEFORE THE AO, THE ADDITIONAL GROU ND IS ACCORDINGLY REJECTED. 4. AS CAN BE SEEN FROM THE ABOVE, THE ITAT HAS CONS CIOUSLY NOT CONSIDERED THE GROUND AS THE FACTS WERE NOT ON RECO RD. JUST BECAUSE AN AMOUNT WAS SHOWN IN THE BALANCE SHEET AND CLAIMED D EPRECIATION ON THE BASIS OF ENTRIES IN BOOKS OF ACCOUNTS, IT CANNOT BE CONSIDERED THAT ALL FACTS ARE ON RECORD. IN FACT IN PARA 15.2 ITSELF, DOUBT HAS BEEN EXPRESSED HOW THE GOODWILL AROSE, WHAT IS THE AMOUNT, WHY AS SESSEE HAS NOT CLAIMED DEPRECIATION AND OTHER ISSUES REQUIRE EXAMI NATION IN AY. 2007- 08. THE CLAIM OF DEPRECIATION HAS TO BE EXAMINED IN THE YEAR IN WHICH SUCH ASSET BECOMES PART OF BLOCK OF ASSETS. THEN IN LATER YEARS ONLY CONSEQUENTIAL DEPRECIATION ON WDV HAS TO BE ALLOWED . ADMITTEDLY THE GOODWILL CAME INTO ASSESSEE BOOKS IN AY 2007-08. SI NCE, WE WERE ADJUDICATING THE ISSUES IN AY. 2009-10, BENCH ALSO GAVE A CLEAR FINDING THAT CONSEQUENTIAL DEPRECIATION CAN BE ALLOWED IN A Y. 2009-10. 4 M.A.NO.78/H/15 IN ITA.NO.471/H/14 ZUARI CEMENT LTD., ASSESSEE ALSO ADMITS THAT ISSUE AND THE CLAIM FOR A Y. 2007-08 IS STILL PENDING BEFORE THE CIT(A). IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THERE IS NO MISTAKE APPARENT FROM RECORD AND A CCORDINGLY, THE CONTENTIONS RAISED BY ASSESSEE ARE REJECTED. 5. NEXT ISSUE WHICH WAS AGITATED IN THE APPLICATION IS WITH REFERENCE TO LEVY OF INTEREST U/S. 234C. IT WAS CONTENDED TH AT INTEREST CAN BE LEVIED ONLY ON THE RETURNED INCOME AND NOT ON THE A SSESSED INCOME AS WAS DONE BY THE AO. EVEN THOUGH GROUND NO. 16 WITH REFERENCE TO LEVY OF INTEREST U/S. 234C WERE LISTED IN PARA 3 OF THE ORDER IN PAGE 3, ADJUDICATION ON THE ISSUE WAS NOT MADE SUBSEQUENTLY . THEREFORE, THIS CONTENTION OF ASSESSEE IS CORRECT. WITH REFERENCE T O THE INTEREST U/S. 234C, AO CAN EXAMINE LEVY AS PER PROVISIONS OF ACT IN THE CONSEQUENTIAL ORDER AS MANY ISSUES WERE RESTORED TO AO IN THE ORD ER. ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY AND THE CALCULATION OF INT EREST SHOULD ALSO BE INCORPORATED SO AS TO EXAMINE THE CORRECTNESS OF TH E CALCULATIONS. 6. IN THE RESULT, MISCELLANEOUS APPLICATION IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST, 2015 SD/- SD/- (P. MADHAVI DEVI) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 12 TH AUGUST, 2015 TNMM 5 M.A.NO.78/H/15 IN ITA.NO.471/H/14 ZUARI CEMENT LTD., COPY TO 1. ZUARI CEMENT LIMITED, KRISHNA NAGAR, YERRAGUNTLA, KADAPA DIST-516 311. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1), TIRUPATI. 3. DISPUTE RESOLUTION PANEL (DRP), HYDERABAD. 4. DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATION, INC OME TAX TOWERS, 10-2-3, A.C. GUARDS, HYDERABAD. 5. ADDL. COMMISSIONER OF INCOME TAX (TRANSFER PRICING) , HYDERABAD. 6. D.R. ITAT, HYDERABAD.