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2019 (11) TMI 699 - AT - Income TaxDepreciation on goodwill - HELD THAT - As decided in own case from the above advantages accrued by the assessee is nothing but various intangible assets and business advantages, this is nothing but an intangible asset as enumerated in S.32 as per this definition, it includes know-how, patents, copyrights, trademarks, licenses, franchises, etc., any other business or commercial rights of similar nature. Therefore, all the rights are similar to the rights mentioned in section 32 is acquired by the assessee in this case. Thus goodwill is a business or commercial rights of similar nature and the assessee is benefited by amalgamation by acquiring that commercial value being intangible assets which the assessee has paid on amalgamation i.e excess consideration over and above the excess of assets over liabilities is a goodwill which is an asset entitled for depreciation u/s 32. As such, assessing officer is justified in granting the depreciation on goodwill Excess claim of depreciation on printer and scanner holding that same constitutes integral part of computer system for granting higher rate of depreciation - HELD THAT - CIT(A) allowed the appeal of the assessee following the order of the ITAT, Hyderabad Bench in assessee s own case and also the decision of the ITAT, Kolkatta Bench in the case of Samiran Majumdar 2005 (8) TMI 293 - ITAT CALCUTTA-B Computer consists of input devices, connecting wires, the CPU assembly along with memory and various data processing cards and output devices. It is not logical to treat one part of the computer for 60% depreciation and another part as plant and machinery - assessing officer is incorrect in denying proper depreciation on computer systems and he is directed to allow the same Claim made u/sec. 80IA for the steam generated out of steam and used for captive consumption - assessee claimed that the power generated using the steam is also eligible for deduction u/sec. 80IA of the act - HELD THAT - Steam generated by the appellant and used for captive consumption in various processes is also entitled for the aforementioned deduction. The assessing officer is however directed to quantify the value of steam at an arm's length price as has to be done in the case of electricity generation and as discussed in the various judgments supra. I'm also fortified in my view by the decision of the Hon'ble ITAT, Jaipur B Bench in DCIT vs. Maharaja Shree Umaid Mills 2008 (6) TMI 255 - ITAT JAIPUR-B subject to the aforementioned calculations. In the case of electricity generation and also about and also subject to the direction of carry forward losses etcetera as discussed supra, deduction u/s 8OIA is allowed to the appellant with respect to steam generation. Foreign exchange liability and application of section 43A - HELD THAT - The coordinate Bench of ITAT, Chennai in the case of SCM Garments (P) Ltd. 2015 (8) TMI 366 - ITAT CHENNAI considered the identical issue and held that any loss or gain arising out of foreign currency fluctuation during any previous year shall be deducted or added from the actual cost of the asset of asset on actual payment or repayment of loan. The ITAT, Visakhapatnam Bench in the case of Andhra Petrochemicals Ltd., 2008 (5) TMI 340 - ITAT VISAKHAPATNAM expressed the view that the amended provisions of section 43A are not clarificatory in nature and applicable from 01/04;2003. Thus it clear that as per section 43A of the act, the increase or decrease in foreign exchange fluctuation with regard to purchase of asset required to be considered on actual payment basis. In the instant case, the Assessing Officer proposed to make the adjustments as at the end of the year as per the system of account followed by the assessee instead of making the adjustment at the time of actual payment. Case law relied on by the ld.AR supports the decision of the ld.CIT(A). No other case law was brought on record by the Revenue to controvert the case-law relied on by the ld.AR. Therefore, we do not find any infirmity in the order of the ld.CIT(A) and the same is uphold. Disallowance u/sec. 14A r.w.r. 8D - HELD THAT - As per Rule 8D(2)(iii), the disallowance required to be made is 0.5% of the investments which worked out to ₹ 8,32,000/- against the addition, confirmed by the ld. CIT(A) for ₹ 8,00,000/, the difference was only ₹ 32,000/-. In the instant case, the assessee has not disputed with regard to earning of income u/sec. 14A of the Act. As per Rule 8D(2)(iii), the disallowance required to be made is 0.5% of the investments which the Assessing Officer rightly disallowed. Therefore, we set aside the order of the ld.CIT(A) and uphold the addition made by the Assessing Officer. Computation of income as per normal provision after making the necessary adjustments of mark to market gains in respect of fluctuation for foreign exchange on acquisition of capital assets - HELD THAT - In revenues appeal we, have upheld the order of the Ld.CIT(A) for making adjustments of the cost of asset on actual payment of loan. Accordingly we, direct AO to make necessary adjustments to the cost of the asset on actual payment basis and recompute the income after allowing the correct depreciation under the normal provisions. Thus, this ground of cross objection of the assessee is allowed. Carry forward of unabsorbed depreciation consequent to making adjustments to the cost of assets as a consequence to making adjustments under section 43A - Assessing Officer is directed to determine the correct unabsorbed depreciation and allow the same to be carried forward for the subsequent years Revised computation of income submitted by the company at the time of assessment proceedings - HELD THAT - The assessee did not chose to file appeal before the ld.CIT(A) with regard to non-acceptance of second revised return of income. As per the provisions of Income-tax Act, the assessee required to file the revised return of income as provided u/sec. 139(4) of the Act within one year from the end of the relevant assessment year. There is no provision in the Income-tax Act to file the revised computation of income reducing the income returned by the assessee during the pendency of income tax proceedings after expiry of the time limit allowed under the act. The second revised return was filed beyond the time limit allowed under the act as observed from the assessment order. Therefore the AO did not consider the revised computation of income which was beyond the limitation allowed under the Act. The said ground was not raised before the ld.CIT(A) and the assessee did not file any petition for admission of additional ground, therefore, this ground raised by the assessee in this cross objection is not maintainable, hence, dismissed. Computation of normal income after giving effect to the foreign exchange gain or loss after making necessary adjustments u/sec. 43A - HELD THAT - The assessee requested for making necessary adjustments in depreciation schedule and to compute the normal income after determining the correct amount of depreciation as per the normal provisions of Income-tax Act. In the instant case, the Assessing Officer proposed to make adjustment in respect of depreciation after giving effect to the provisions of section 43A of the Act. The ld.CIT(A) has directed the Assessing Officer to make necessary adjustments of foreign exchange gain or loss on actual payment basis which we have upheld. Therefore, we direct the Assessing Officer to make necessary adjustments and recompute the income as per the normal provisions after allowing the correct Depreciation and make necessary rectifications. This ground of CO of the assessee is allowed. Granting of short credit of tax deducted at source while determining the balance income tax payable or refundable to the assessee - HELD THAT - It is the obligation of the Assessing Officer or the Income Tax Authorities to determine the correct amount of tax and allow due credit for taxes paid or tax deducted/collected at source. The assessee should not be forced to knock the doors of courts for their legitimate rights. Therefore, we, direct the Assessing Officer to allow the credit for the taxes paid/ TDS made while determining the tax liability Charging of interest u/sec. 234C and section 244 - HELD THAT - The similar issue is involved in the A.Y. 2009-10 also. Charging correct interest on taxes payable and refund due is the statutory obligation of the Income-tax Authorities, therefore we direct the Assessing Officer to charge the interest correctly u/sec. 234C and allow the due interest against the amounts due to the assessee. Exemption of income under the normal provisions in respect of dividend income received by the assessee - assessee contended that the Assessing Officer did not allow exemption u/sec. 10(34) - HELD THAT - Assessing Officer is directed to verify the claim of the assessee with regard to dividend income received and allow exemption u/sec. 10(34) of the Act after considering the disallowance u/s 14A of the act. Thus, this ground of cross objection raised by the assessee is allowed for statistical purpose. Not providing depreciation on assets capitalised vide assessment order dated 2008-09 - HELD THAT - The Assessing Officer disallowed which was claimed as revenue expenditure by the assessee. However as per the computation of income, it is seen that the Assessing Officer had allowed the depreciation ₹ 9,56,068/- on the purchases capitalized by the assessee. Ld.AR did not bring any error in the order of the Assessing Officer at the time of presenting the appeal, no such ground was raised by the assessee before the ld. CIT(A). The assessee also did not file any petition for admission of additional ground, therefore, we do not find any reason to interfere with the order of the ld. CIT(A) and hold that the ground raised by the assessee is not maintainable and is dismissed accordingly. Non adjustment of exempt income u/sec. 10(34) while computing the income u/sec. 115JB - HELD THAT - This ground was not raised before the ld. CIT(A) and no petition for admission of additional evidence is filed, therefore this ground raised by the assessee is not maintainable and hence dismissed. MAT liability consequent to the adjustments made - HELD THAT - This ground was not raised before the ld. CIT(A). Since the issue is factual issue and consequential in nature, we direct the Assessing Officer to verify the same and decide the issue afresh on merits. This ground stands allowed for statistical purpose. Short credit of tax deducted at source and not allowing the credit for the advance tax paid - HELD THAT - AO is directed to verify the taxes paid by the assessee or taxes deducted at source and allow the due credit for the taxes paid/deducted/collected while giving effect to the order of this tribunal. Accordingly, cross objection on this ground is remitted back to the file of the Assessing Officer for limited purpose of verification of taxes paid/deducted/collected and allow the credit. These grounds of cross objection filed by the assessee are allowed for statistical purposes.
Issues Involved:
1. Depreciation on Goodwill 2. Excess Depreciation on Printer and Scanner 3. Deduction u/s 80IA for Steam Generated and Used for Captive Consumption 4. Foreign Exchange Liability and Application of Section 43A 5. Disallowance u/s 14A r.w.r. 8D 6. Cross Objections by the Assessee Issue-wise Detailed Analysis: 1. Depreciation on Goodwill: The Revenue challenged the allowance of depreciation on goodwill claimed by the assessee. The Assessing Officer (AO) disallowed the depreciation, considering the excess consideration paid during the acquisition of Coastal Papers Private Ltd. (CPL) as accumulated losses. However, the CIT(A) allowed the appeal of the assessee, following the ITAT's decision in the assessee's own case, which recognized goodwill as an intangible asset eligible for depreciation under Section 32 of the Income Tax Act. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal on this ground. 2. Excess Depreciation on Printer and Scanner: The AO disallowed the excess depreciation claimed on printers, UPS, and other computer peripherals, treating them separately from the computer block. The CIT(A) allowed the appeal, treating these items as integral parts of the computer system eligible for higher depreciation. The Tribunal upheld the CIT(A)'s decision, following the ITAT's earlier ruling in the assessee's case and the Kolkata Bench's decision in Samiran Majumdar. 3. Deduction u/s 80IA for Steam Generated and Used for Captive Consumption: The AO disallowed the deduction u/s 80IA for steam generated and used for captive consumption, viewing it as part of the paper manufacturing activity. The CIT(A) allowed the appeal, following the ITAT's decision in the assessee's own case, which recognized steam as a form of power eligible for deduction under Section 80IA. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal on this ground. 4. Foreign Exchange Liability and Application of Section 43A: The AO reduced the foreign exchange gain from the cost of assets, affecting depreciation. The CIT(A) directed the AO to verify the dates of payments and apply Section 43A accordingly. The Tribunal upheld the CIT(A)'s decision, following the ITAT's rulings in similar cases, emphasizing adjustments based on actual payment dates. 5. Disallowance u/s 14A r.w.r. 8D: The AO disallowed 5% of the average investment under Rule 8D(2)(iii), amounting to ?8,32,000/-. The CIT(A) restricted the addition to ?8,00,000/-. The Tribunal set aside the CIT(A)'s order and upheld the AO's disallowance, noting the minor difference of ?32,000/-. 6. Cross Objections by the Assessee: - A.Y. 2007-08: The Tribunal directed the AO to adjust the cost of assets on actual payment basis and recompute the income, allowing the assessee's cross objections. - A.Y. 2008-09: The Tribunal dismissed the assessee's ground on revised computation filed beyond the time limit but directed the AO to adjust depreciation as per Section 43A and determine the correct carry forward losses. - A.Y. 2009-10: The Tribunal allowed the assessee's ground for exemption of dividend income u/s 10(34) for statistical purposes and directed the AO to verify and allow the correct credit for taxes paid/deducted. Conclusion: The Tribunal partly allowed the Revenue's appeals and the assessee's cross objections, providing detailed directions on each issue, ensuring compliance with relevant legal provisions and previous judicial decisions.
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