2015 (8) TMI 1567 - AT - Income Tax

Rectification of mistake - Depreciation on goodwill - as per assessee Tribunal adjudicated on various issues facts relating to depreciation on goodwill even though was on record and placed on record in the course of hearing the said facts were not considered - HELD THAT - As can be seen from the above the ITAT has consciously not considered the ground as the facts were not on record. Just because an amount was shown in the balance sheet and claimed depreciation on the basis of entries in Books of Accounts it cannot be considered that all facts are on record. Doubt has been expressed how the goodwill arose what is the amount why assessee has not claimed depreciation and other issues require examination 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. Since we were adjudicating the issues in AY. 2009-10 Bench also gave a clear finding that consequential depreciation can be allowed in AY. 2009-10. Assessee also admits that issue and the claim for AY. 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 accordingly the contentions raised by assessee are rejected. Levy of interest U/s. 234C - As contended that interest can be levied only on the returned income and not on the assessed income as was done by the AO - HELD THAT - Even though Ground 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 to 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 order. Assessee should be given due opportunity and the calculation of interest should also be incorporated so as to examine the correctness of the calculations. Miscellaneous Application is partly allowed.

Summary

Issues:
1. Additional ground on depreciation on goodwill.
2. Levy of interest U/s. 234C.

Analysis:
1. Additional Ground on Depreciation on Goodwill:
The appellant raised concerns regarding the depreciation on goodwill for AY 2009-10, emphasizing that the facts related to the claim were on record but not considered by the ITAT. The appellant argued that the ITAT failed to acknowledge the evidence provided during the proceedings, including the annual accounts and computation of goodwill. The ITAT, however, maintained that no mistake occurred in considering the additional ground. The ITAT highlighted the necessity for facts to be available on record to entertain additional grounds on legal matters. Referring to judicial principles, the ITAT emphasized that if depreciation was allowed on an asset in a prior year, only consequential depreciation could be claimed in subsequent years. Since the appellant's claim for AY 2007-08 was pending, the ITAT rejected the additional ground for AY 2009-10, as the facts regarding the quantification of the claim were not on record.

2. Levy of Interest U/s. 234C:
The appellant contested the levy of interest U/s. 234C, arguing that interest should only be imposed on the returned income, not the assessed income as done by the AO. Despite the issue being listed in the order, the adjudication on this matter was not addressed subsequently. The ITAT agreed with the appellant on this contention, stating that the AO can examine the levy of interest in the consequential order as several issues were referred back to the AO. The ITAT directed the AO to provide the appellant with a fair opportunity to review the interest calculation for correctness.

In conclusion, the Miscellaneous Application was partly allowed by the ITAT, emphasizing the importance of factual evidence on record for considering additional grounds and directing a reevaluation of the interest levy under section 234C to ensure accuracy in calculations.