2013 (5) TMI 610 - AT - Income Tax

Disallowance u/s 14A r.w.r. 8D - CIT(A) deleted the addition - Held that - The issue is concluded in favour of the assessee inasmuch as, as held by Hon ble Bombay High Court in the case of Godrej & Boyce Mfg Co Ltd VS DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT), rule 8 D is not retrospective in nature and would only apply from the assessment year 2008-09 onwards. That is precisely what the Commissioner (Appeals) has held, thereby, rejected AO s reliance on rule 8 D in computing disallowance u/s 14A. Therefore no need to disturb the well reasoned findings of the CIT(A). In favour of assessee. Disallowance of depreciation on non compete territory rights - CIT(A) deleted the addition - Held that - The disallowance of depreciation thus seems to have reached finality. The law is fairlv well settled that once AO accepts a particular position by not challenging the same in further appeal, it cannot be open to him to disturb the position having so reached finality, by appeal in another year. No doubt there is no res judicata in income tax proceedings but principles of consistency do play an important role in all walks of life as much as in the income tax proceedings. See Parashuram Pottery Works Ltd Vs ITO (1976 (11) TMI 1 - SUPREME Court). As there is not even a whisper of the reason for coming to the conclusion, on merits, as to why the depreciation on the intangible assets in question has been declined, thus approve the conclusion arrived at by the CIT(A) and decline to interfere in the matter. In favour of assessee.

Summary

Issues:
1. Correctness of deletion of addition under Rule 8D of the Income Tax Act for the assessment year 2005-06.
2. Deletion of addition on account of disallowance of depreciation on "non-compete territory rights" for the assessment year 2006-07.

Analysis:

Issue 1:
The first issue pertains to the correctness of the deletion of an addition under Rule 8D of the Income Tax Act for the assessment year 2005-06. The Assessing Officer challenged the order of the Commissioner (Appeals) regarding the addition of Rs 16,57,516. The Tribunal noted that the issue was already settled in favor of the assessee by the Bombay High Court, ruling that Rule 8D is not retrospective and applies only from the assessment year 2008-09 onwards. Consequently, the Tribunal upheld the decision of the Commissioner (Appeals) and dismissed the appeal for the assessment year 2005-06.

Issue 2:
The second issue involves the deletion of an addition on account of disallowance of depreciation on "non-compete territory rights" for the assessment year 2006-07. The Assessing Officer contested the deletion of Rs 48,44,971 depreciation claimed by the assessee on non-compete rights treated as intangible assets. The Tribunal reviewed the history of the case, including previous years' assessments and court proceedings. The Tribunal observed that the Assessing Officer had no valid reasons for disallowing the depreciation and had not challenged similar deletions in previous years. The Tribunal emphasized the importance of consistency and finality in tax proceedings, citing legal principles. Ultimately, the Tribunal upheld the decision of the Commissioner (Appeals) to delete the disallowance of depreciation on non-compete territory rights for the assessment year 2006-07, stating that the Assessing Officer's inaction had prejudiced their case. The appeal for the assessment year 2006-07 was consequently dismissed.

In conclusion, both appeals were dismissed by the Tribunal based on the specific legal grounds and factual circumstances presented in each case.