2018 (9) TMI 615 - AT - Income Tax

Admissibility of claim in revised return u/s. 139(5) - Depreciation on goodwill disallowed - AO made the disallowance holding that the enhanced claim in the revised return cannot be allowed, as the same was in violation of the provision of section 80 and section 139(1) - CIT(A) confirmed the action of the A.O. on the ground that the return has been filed beyond the time specified and no condonation has been sought u/s.119(2) - Held that - The revised return was filed on 15.03.2013 and the same was within the due date of filing the revised return in the extant period. There is no dispute about the validity of revised return inasmuch as the A.O. has made the assessment subsequent to the filing of the revised return and the revised return has not been treated as nonest. Moreover, there was no reason to treat the same as nonest as the same was filed within the time mandated u/s. 139(5) of the Act. When the revised return was filed on time as per section 139(1) and 139(5), in our considered opinion, the ld. CIT(A) has erred in holding that the assessee required any condonation u/s. 119(2)(b). The assessee has duly filed the return u/s. 139(1) within the due date. Thereafter, the assessee claimed the depreciation on goodwill in the revised return u/s. 139(5) which was filed on time. This claim of deprecation in the revised return cannot be denied solely on the ground that it was not claimed in the original return. The issue raised by the ld. CIT(A) for seeking condonation for delay in filing in term of section 119(2)(b) is irrelevant CIT(A) while confirming the disallowance has only referred to the time factor involved and he has not made any adverse observation on the validity of assessee s claim otherwise. He has in fact admitted that on merits the Hon ble Apex Court s decision in the case of Smifs Securities Ltd. 2012 (8) TMI 713 - SUPREME COURT is in favour of the assessee which is an undisputed fact. Accordingly, we set aside the orders of the ld. CIT(A) and decide the issue in favour of the assessee.

Summary

Issues:
Claim of depreciation on goodwill in revised return filed beyond due date.

Analysis:
The appellant's appeal was against the order of the Commissioner of Income Tax (Appeals) regarding the claim of depreciation on goodwill amounting to ?23,93,31,090 for the assessment year 2011-12. The original return of income was filed on 29.11.2011, revised on 15.03.2013, and the assessment order passed on 09.03.2015 restricted the total loss to ?35,69,59,530. The Assessing Officer disallowed the depreciation claimed, citing violation of Section 80 and Section 139(1) due to filing the revised return beyond the due date. The issue revolved around the claim of depreciation on goodwill and the submission of the revised return.

The Assessing Officer disallowed the depreciation claim as it was filed beyond the due date specified in Section 139(1) and Section 80 of the Income Tax Act. The claim was also not specified in the tax audit report, leading to the disallowance. The Commissioner of Income Tax (Appeals) upheld the disallowance, emphasizing the need for condonation under Section 119(2)(b) for late filing. The appellant's eligibility to claim depreciation on goodwill was denied due to the absence of a condonation application.

Upon appeal, the Tribunal noted that the revised return was filed within the due date specified in Section 139(1) and 139(5). The Tribunal highlighted the appellant's right to revise the return under Section 139(5) on discovering any omission or wrong statement. Citing a relevant High Court decision, the Tribunal emphasized that the claim in the revised return cannot be denied solely on the ground of not being in the original return. The Tribunal found no error in the appellant's claim and set aside the Commissioner's order, deciding in favor of the appellant.

The Tribunal concluded that the appellant's claim for depreciation on goodwill in the revised return, filed within the specified time frame, was valid. The non-quantification of the depreciation amount in the tax audit report did not invalidate the claim supported by the Supreme Court's decision. The Tribunal overturned the Commissioner's decision, emphasizing the appellant's right to revise the return and allowing the appeal in favor of the assessee.