9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (11) TMI 1215 - AT - Income TaxRevision u/s 263 - directions issued by the CIT to treat return filed under section 139(1) as invalid and therefore cannot be revised under section 139(5) - Held that - The assessee have got their accounts audited on 28th May 2012 which is within the time limits specified under section 166 read with section 210 of the Companies Act, 1956 and till that time the tax audit could not have been done. The assessee also filed detailed legal submissions on the validity of the revised return and relied upon various decisions of the High Court and the Tribunal in its submissions. Furthermore, the assessee in its return uploaded on 30th September 2011 had in columns relating to audit information stated that the audit was done on 29th September 2011 when, in fact, it was not so. The assessee has explained the reason why this was done. The reason being unless this column was filled up the return could not have been uploaded which would have resulted into the claim of carry forward of loss being lost. The site of the revenue requiring c-filing did not have the mechanism of uploading the return it a particular column is not filled. This reason has not been controverted by the revenue till today. It was under these circumstances that the assessee was compelled to fill a wrong date which was subsequently rectified in the revised return along with the actual date of audit along with other reasons mentioned by the assessee for revising the return. In the light of these facts it cannot be said that the issue of validity of revised return has not been examined by the AO in the course of the assessment proceedings. The AO had raised a specific query which was followed by a detailed response of the assessee and since same was accepted after due application of mind same did not find place in the assessment order. Therefore in our view the jurisdiction exercised by the CIT on the issue of validity of revised return cannot be upheld. In view of above, the CIT was not justified in exercising jurisdiction under section 263 of the Act on this issue. Goodwill acquired should be apportioned between the appellant and the international affiliates of the appellant - Held that - The Hon ble Delhi High Court in the case of Maruti Suzuki 2015 (12) TMI 634 - DELHI HIGH COURT while dealing with transfer pricing adjustment on AMP expenses incurred by Indian company has negative the contention that such expenses, in the absence of any understanding with AE empower the revenue to make adjustment. It is also important to note that if there are any transactions between the assessee and its affiliates that would be a subject matter of transfer pricing regulation. In our view, the CIT was not justified in giving a direction for apportionment of goodwill and the said direction is without any material or any basis and therefore the directions given by the CIT on apportionment of goodwill between the assessee company and its affiliates are contrary to law and hence such a finding is quashed. Wrong claim of non-compete fees being allowed as revenue expenditure - Held that - The issue of non-compete fees was examined by the AO and accepted in the course of the assessment proceedings and therefore the CIT was not justified in exercising jurisdiction oil issue. Furthermore, the AO has accepted one of the possible views and such an action cannot be treated by CIT as erroneous and prejudicial to the interest of the revenue. In this connection we are supported by the decision of the Supreme Court in the case of Malabar Industrial Company Ltd. 2000 (2) TMI 10 - SUPREME Court and Max India Ltd. 2007 (11) TMI 12 - Supreme Court of India Assessee appeal allowed.
Issues Involved:
1. Jurisdiction under Section 263 of the Income Tax Act. 2. Validity of the revised return filed under Section 139(5) of the Income Tax Act. 3. Depreciation on goodwill. 4. Treatment of non-compete fees. Detailed Analysis: 1. Jurisdiction under Section 263 of the Income Tax Act: The primary issue in the appeal was the jurisdiction exercised by the Commissioner of Income Tax (Appeals) [CIT(A)] under Section 263 of the Income Tax Act. The CIT(A) held that the order of the Assessing Officer (AO) was erroneous and prejudicial to the interests of the revenue. The CIT(A) directed the AO to re-examine the validity of the revised return filed by the assessee and the claim of depreciation on goodwill. The Tribunal found that the AO had raised specific queries regarding the revised return and the assessee had provided detailed explanations. The AO had accepted the explanations after due consideration, and thus, the order was not erroneous or prejudicial to the interests of the revenue. Therefore, the Tribunal concluded that the CIT(A) was not justified in exercising jurisdiction under Section 263. 2. Validity of the Revised Return Filed Under Section 139(5): The CIT(A) questioned the validity of the revised return filed by the assessee, stating that the original return was based on unaudited accounts. The Tribunal noted that the original return was filed to protect the claim of carry forward losses under Section 80 of the Act. The revised return was filed after the accounts were audited and based on the subsequent decision of the Supreme Court in the case of Smifs Securities Ltd., which allowed depreciation on goodwill. The Tribunal held that the AO had examined the validity of the revised return during the assessment proceedings and accepted it after due application of mind. Therefore, the CIT(A)'s direction to treat the return filed under Section 139(1) as invalid was not justified. 3. Depreciation on Goodwill: The assessee claimed depreciation on goodwill arising from the acquisition of transportation businesses from AFL Pvt. Ltd. and Unifreight India Pvt. Ltd. The CIT(A) directed the AO to apportion the goodwill between the assessee and its international affiliates. The Tribunal found that the agreement for acquiring the business was between the assessee and AFL/UFL, and none of the affiliates were parties to the agreement. The Tribunal noted that the provisions of Section 43(1) and Section 38 of the Income Tax Act do not provide for such apportionment of cost. The Tribunal also referred to the Supreme Court's decision in the case of Vodafone International, which stated that parent and subsidiary companies are independent taxpayers. Therefore, the Tribunal quashed the CIT(A)'s direction on the apportionment of goodwill. 4. Treatment of Non-Compete Fees: The assessee claimed non-compete fees as revenue expenditure, which was accepted by the AO. The CIT(A) questioned this treatment, suggesting that the non-compete fees should be treated as an intangible asset eligible for depreciation. The Tribunal noted that the AO had examined the issue and accepted the assessee's claim based on the Karnataka High Court's decision. The Tribunal referred to the Supreme Court's decision in the case of Madras Industrial Investment Corporation Ltd., which allowed the spreading of expenditure over a period. The Tribunal held that the AO's acceptance of one of the possible views could not be treated as erroneous and prejudicial to the interests of the revenue. Therefore, the CIT(A) was not justified in exercising jurisdiction under Section 263 on this issue. Conclusion: The Tribunal allowed the appeal of the assessee, setting aside the CIT(A)'s order under Section 263 of the Income Tax Act. The Tribunal found that the AO had duly examined and accepted the revised return, the claim of depreciation on goodwill, and the treatment of non-compete fees, and thus, the CIT(A)'s directions were not justified. The appeal was pronounced in the open court on 17.11.2017.
|
