THE DY. CIT., CIRCLE-1(1)(1), AHMEDABAD V. ADANI GAS LTD., AHMEDABAD

MA 126/AHD/2020

AI Insights

The case involves the Deputy Commissioner of Income-tax, Circle-1(1)(1), Ahmedabad as the appellant and M/s. Adani Gas Ltd. as the respondent. The core issues pertained to the depreciation on goodwill and disallowance under section 14A read with Rule 8D of the Income Tax Act. Initially, the Tribunal had allowed the depreciation on goodwill based on the assessee's claim for AY 2010-11 and had also allowed the disallowance under section 14A. However, upon review, it was found that the depreciation should have been calculated based on the WDV from AY 2007-08, the first year it was allowed by the Revenue, and that the disallowance under section 14A should have been upheld as per the decision in AY 2014-15. Consequently, the Tribunal recalled its earlier order to correct these mistakes.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775333 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-09-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 16-06-2020
• Other Referred Cases: ITA No. 1637/Ahd/2018, ITA No. 1806/Ahd/2017, ITA No. 775/Ahd/2014
• Laws Referred To: Income Tax Act, Companies Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Rule 8D
• Section: 14A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before: Shri T.R. Senthil Kumar, Judicial Member And Shri Narendra Prasad Sinha, Accountant Member The Dy. Commissioner of Income-tax Circle-1(1)(1), Ahmedabad (Appellant) Vs M/s. Adani Gas Ltd. Adani House, Nr. Mithakhali Circle, Navrangpura, Ahmedabad-380009 PAN: AAFCA3788D (Respondent) Assessee Represented: Shri Vartik Chokshi, A.R. Revenue Represented: Shri Uday KishnRao Kakne, Sr. D.R. Date of hearing : 22-08-2025 Date of pronouncement : 08-09-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This Miscellaneous Application is filed by the Revenue in respect of order of this Tribunal in ITA No. 1637/Ahd/2018 dated 06-12-2019. 2. Ld. Sr. D.R. Shri Uday Krishan Rao Kakne appearing for the Revenue explained that the assessee had filed the appeal for the A.Y. 2015-16 on two issues i.e. depreciation on goodwill and M.A. No: 126/Ahd/2020 (in ITA No: 1637/Ahd/2018) Assessment Year: 2015-16 Printed from counselvise.com M.A. No. 126/Ahd/2020 (in ITA No. 1637/Ahd/2018) A.Y. 2015-16 DCIT Vs. Adani Gas Ltd. 2 disallowance u/s 14A read with Rule 8D of the Act. He explained that the Tribunal in the order dated 06-12-2019 had allowed the claim of the assessee in respect of depreciation on goodwill following the earlier decision in the case of the assessee in A.Y. 2014-15 in ITA No. 1806/Ahd/2017 dated 12-07-2019. The Revenue has pointed out that the decision in ITA No. 1806/Ahd/2017 was taken on the basis of earlier decision of the Tribunal in the assessee’s own case in ITA No. 775/Ahd/2014 and Others, in which the depreciation on goodwill was allowed to the assessee in the A.Y. 2009-10, even though the assessee had not claimed any such depreciation in its return. The Revenue has pointed out that since the depreciation on goodwill was allowed by the Tribunal in A.Y. 2009-10, the WDV as worked out in that year should have been considered for allowing the depreciation for all the subsequent years. Therefore, there was a mistake apparent from record in the order of the Tribunal dated 06-12-2019 for the A.Y. 2015-16, whereby the depreciation on goodwill was allowed on the basis of first claim of such depreciation made by the assessee in its return of income for AY 2010-11. 3. On the other issue of disallowance u/s. 14A read with Rule 8D of the Act, the Ld. Sr. D.R. has pointed out that the Tribunal had allowed the ground taken by the assessee following the earlier decision in ITA No. 1806/Ahd/2017. He pointed out that in the said decision for A.Y. 2014-15, the ground taken by the assessee in respect of disallowance u/s 14A of the Act was dismissed, whereas in the present appeal, the ground of the assessee was allowed. Printed from counselvise.com M.A. No. 126/Ahd/2020 (in ITA No. 1637/Ahd/2018) A.Y. 2015-16 DCIT Vs. Adani Gas Ltd. 3 Thus, there was a mistake apparent from record in the order of the Tribunal on this issue as well. 4. On the other hand, Shri Vartik Chokshi Ld. A.R. of the assessee submitted that the Tribunal had passed the order in ITA No. 1637/Ahd/2018 for A.Y. 2015-16 by correctly following the decision of the earlier year and there was no mistake apparent from record in the order of the Tribunal. 5. We have carefully considered the contention of the Revenue and gone through the order dated 06-12-2019. There is no dispute to the fact that depreciation on goodwill was admissible to the assessee, which was allowed by the Revenue as well. The dispute is only about the quantum of depreciation. The assessee had claimed depreciation on goodwill for the first time in its return of income for the A.Y. 2010-11, in which the order of Hon’ble High Court approving the demerger was received. However, the Revenue had allowed depreciation on goodwill for the first time in the A.Y. 2007- 08 for the reason that the appointed date of demerger in the order u/s. 394 of the Companies Act passed by the Hon’ble Gujarat High Court was fixed at 01-01-2007. The assessee has not disputed the fact that the depreciation on goodwill was allowed by the Revenue for the first time in the A.Y. 2007-08. In fact, the assessee had claimed depreciation on goodwill in A.Y. 2009-10 on that basis, in the appeal proceeding, even though no such depreciation was claimed by the assessee in the return of income. Considering the fact that the Revenue had already allowed the depreciation on goodwill in the A.Y. 2007-08, the Tribunal vide order in ITA No. Printed from counselvise.com M.A. No. 126/Ahd/2020 (in ITA No. 1637/Ahd/2018) A.Y. 2015-16 DCIT Vs. Adani Gas Ltd. 4 775/Ahd/2014 and Others had directed the Revenue to grant depreciation on goodwill in the A.Y. 2009-10 as per the WDV worked by the A.O. himself. 6. In the current year, the assessee had claimed depreciation on goodwill of Rs.2,35,25,149/- in the return on the basis of the first year of claim being A.Y. 2010-11. In the assessment order, the A.O. had reworked the depreciation on goodwill of Rs.99,24,672/- on the basis of the first year of claim being A.Y. 2007-08 and on the basis of the WDV in the subsequent years. Accordingly, the excess depreciation of Rs. 1,36,00,477/- claimed by the assessee was disallowed by the A.O. which was upheld by the Ld. CIT(A). The assessee had raised ground before this Tribunal to allow the full amount of deprecation at Rs.2,35,25,149/- as claimed in the return. The Tribunal while adjudicating this ground of the assessee had deleted the addition of excess depreciation of Rs. 1,36,00,477/- made in this year. As already discussed earlier, the Tribunal had upheld the action of the Revenue for allowing depreciation on goodwill for the first time in the A.Y. 2007-08 and on that basis, the depreciation on goodwill was also allowed in the A.Y. 2009-10, even though no such depreciation was claimed by the assessee in the return of income. This being the undisputed factual position, the depreciation on goodwill was correctly restricted by the AO in the assessment order on the basis of WDV as determined for the first time in AY 2006-07. The A.O. had, therefore, rightly disallowed the excess claim of depreciation on goodwill of Rs.1,36,00,477/- made in the return for the current year. The decision of this Tribunal in ITA No. 775/Ahd/2014 and Others was quoted in the order dated Printed from counselvise.com M.A. No. 126/Ahd/2020 (in ITA No. 1637/Ahd/2018) A.Y. 2015-16 DCIT Vs. Adani Gas Ltd. 5 06-12-2019. Nevertheless, the fact was not considered in the right perspective and the claim of the assessee to allow the full depreciation on the basis of first year of claim being A.Y. 2010-11, was allowed. This is clearly a mistake apparent from record. Since the assessee was already allowed depreciation on goodwill from A.Y. 2007-08, the WDV for that year was rightly considered by the AO for allowing the claim in all subsequent years. Considering the mistake apparent from record on this issue in the order of the Tribunal, we deem it appropriate to recall the order of the Tribunal in order to rectify the same. 7. The second issue pertains to disallowance u/s. 14A read with Rule 8D of the Act. The A.O. had made disallowance of Rs. 49,29,884/- u/s. 14A of the Act. The Ld. CIT(A) had upheld the disallowance to the extent of Rs. 4,68,733/- in respect of administrative expense only. The Tribunal in the order in ITA No. 1806/Ahd/2017 dated 12-07-2019 for A.Y. 2014-15 had upheld the disallowance u/s 14A in respect of administrative expense and dismissed the appeal of the assessee. However, in ITA No. 1637/Ahd/2018 dated 06-12-2019 for AY 2015-16 the ground taken of the assessee was allowed. This also is found to be the mistake apparent from record, since the identical addition made in A.Y. 2014-15 was upheld by the Tribunal. Even though the relevant portion of the judgment in ITA No. 1806/Ahd/2017 was reproduced in the order whereby the appeal of the assessee on this issue was dismissed, in the order dated 06-12-2019, the appeal of the assessee is found to be wrongly allowed in the current year. Printed from counselvise.com M.A. No. 126/Ahd/2020 (in ITA No. 1637/Ahd/2018) A.Y. 2015-16 DCIT Vs. Adani Gas Ltd. 6 This being a mistake apparent from record, we deem it appropriate to recall the order to rectify this mistake. 8. Accordingly, the order of the Tribunal in ITA No. 1637/Ahd/2018 dated 06-12-2019 is recalled to rectify the mistakes as discussed above. 9. In the result, the Miscellaneous Application filed by the Revenue is allowed. Order pronounced in the open court on 08 -09-2025 Sd/- Sd/- (NARENDRA PRASAD SINHA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 08/09/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद Printed from counselvise.com "