THE COMMISSIONER OF INCOME TAX, V. M/S MANIPAL UNIVERSAL LEARNING PVT LTD

ITA/1063/2008

AI Insights

The case revolves around an appeal by the Commissioner of Income-Tax and the Deputy Commissioner of Income-Tax against Manipal Universal Learning Pvt Ltd concerning the entitlement of the assessee to claim depreciation on goodwill for the assessment year 2004-05. The primary legal question was whether the Appellate Authorities were correct in allowing the depreciation as computed in the earlier assessment year without the Assessing Officer re-examining the transaction's genuineness. The Tribunal had previously ruled in favor of the assessee, a decision which was contested by the Revenue in the High Court. The High Court, referencing a Supreme Court decision, upheld the Tribunal's decision, affirming the depreciation claim on goodwill.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 728955 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 23-09-2014
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax And Another Vs. Manipal Universal Learning Private Limited (2013) 359 ITR 369 (Karn), Commissioner of Income Tax, Dolkata Vs. SMIFS Securities Ltd. (2012) 24, TAXMANN.COM 222(SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JINITA CHATTERJEE
• Assessee Lawyers: K V ARAVIND
• Keywords: Assessment Year 2004-05; Depreciation; Goodwill; Income tax appeal
• Section: 32(1); 260-A

Judgement Text

" - 1 - IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 23RD DAY OF SEPTEMBER 2014 PRESENT THE HON’BLE MR.JUSTICE N.KUMAR AND THE HON’BLE MRS.JUSTICE RATHNAKALA INCOME TAX APPEAL NO.1063 OF 2008 BETWEEN: 1. THE COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE C.R. BUILDING, QUEENS ROAD, BANGALORE. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE – 2(3) C.R. BUILDING, QUEENS ROAD, BANGALORE. …APPELLANTS (BY SRI K.V.ARAVIND, ADV.) AND: M/S MANIPAL UNIVERSAL LEARNING PVT LTD NO.14, MANIPAL TOWERS AIRPORT ROAD BANGALORE. ...RESPONDENT (BY SMT.JINITA CHATTRJEE FOR SRI S.PARTHASARATHI, ADVS.) THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961, ARISING OUT OF ORDER DATED 26- 06-2008 PASSED IN ITA NO.1048/BNG/2007, FOR THE - 2 - ASSESSMENT YEAR 2004-05, PRAYING THAT THIS HON'BLE COURT MAY BE PLEASED TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, II. ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BANGALORE IN ITA NO. 1048/BNG/2007, dated 26-06- 2008, CONFIRM THE ORDERS OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), BANGALORE IN THE INTEREST OF JUSTICE AND EQUITY. THIS ITA COMING ON FOR FINAL HEARING THIS DAY, N.KUMAR J., DELIVERED THE FOLLOWING: J U D G M E N T This appeal is preferred by the Revenue challenging the order passed by the Tribunal. 2. The substantial question of law which arise in this appeal is as under: “Whether the Appellate Authorities were correct in holding that the assessee would be entitled to claim depreciation as computed in the earlier assessment year and the Assessing Officer is not entitled to re-examine the transaction and hold that the same is not a genuine one?” 3. The tribunal has answered the said question in favour of the assessee following its earlier judgment in the - 3 - case of the same assessee. The Revenue aggrieved by the earlier judgment of the tribunal, preferred an appeal before this Court in ITA No.61/2007 (Commissioner of Income Tax And Another Vs. Manipal Universal Learning Private Limited reported in (2013) 359 ITR 369 (Karn). This Court upholding the findings recorded by the tribunal, dismissed the said appeal. This Court in the aforesaid judgment, at para No.5 has held as under: “5. The Apex Court in the case of Commissioner of Income Tax, Dolkata Vs. SMIFS Securities Ltd., reported in (2012) 24, TAXMANN.COM 222(SC) has held that Explanation 3 to Section 32(1) of the Act, which defines the expression ‘asset’ includes intangible asset like goodwill. Therefore, the goodwill is an asset under Explanation 3(b) to Section 32(1) of the Act. Therefore, the depreciation is leviable even on the goodwill. In view of the law declared by the Apex Court in the aforesaid judgment, the substantial question of law framed is answered in favour of the assessee and against the Revenue. No merits. Dismissed.” - 4 - 4. Therefore, we find no merit in this appeal and the same is dismissed. The substantial question of law is answered in favour of the assessee and against the Revenue. Sd/- JUDGE Sd/- JUDGE nvj "