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TMI Blog2014 (9) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... oper to express a determination on the issues raised in the absence of a finding thereof by the Tribunal – thus, the matter is to be remitted back to the Tribunal for fresh adjudication – Decided in favour of assessee. - Income Tax Appeal No. - 119 of 2014, Income Tax Appeal No. - 120 of 2014, Writ Tax No. - 546 of 2014, Writ Tax No. - 547 of 2014 - - - Dated:- 9-9-2014 - Hon'ble Dr. Dhananjaya Yeshwant Chandrachud, Chief Justice And Hon'ble Dilip Gupta,JJ. For the Appellant : R. S. Agrawal For the Respondent : C.S.C., It, Ashok Kumar ORDER Both these appeals by the assessee arise from a common order of the Income Tax Appellate Tribunal1 dated 28 February 2014 for assessment years 2005-06 and 2006-07. The following questions of law have been formulated in support of the appeal :- A. Whether on the facts and in the circumstances of the case the ITAT was legally correct in reversing the order passed by the CIT (A) and restoring that of AO, without adjudicating and deciding the specific grounds taken by the Revenue in their grounds of appeal nos.1, 2 and 3, involving the basic and real controversy in the appeal. B. Whether on the facts and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 32 (1) of the Act. G. Whether the Apex Court, having held in the case of Commissioner of Income Tax Vs. Smifs Securities Limited (2012 (SC)348, ITR 302) that the term any other business or commercial rights of similar nature as used in the aforesaid provision, would include even goodwill, the claim for depreciation, even on the ground of goodwill, was clearly allowable; H. Whether the Tribunal, without appreciating the material on record properly, was legally correct in coming to the conclusion that when as per the Balance Sheet, the value of post acquisition assets was shown at ₹ 56762.41 lacs, it could not go up for depreciation purpose. I.Whether the Tribunal, having failed to decide the basic issues raised before it on merits, the order passed by it is clearly illegal and unsustainable. The assessee, which is a public limited company, acquired the cement undertakings of J.K. Synthetics Limited2 as a going concern with effect from 4 November 2004 in pursuance of an order of the Appellate Authority for Industrial and Financial Reconstruction3 dated 23 January 2003. JKSL had been declared as a sick company by the Board for Industrial and Financial Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of the assessee. The assessee submitted that the aforesaid amount of ₹ 7.43 crores forms part of the purchase consideration and depreciation was allowable on it. The Assessing Officer, by his order dated 26 December 2007 under Section 143(3) of the Income Tax Act, 19617 declined to allow the enhanced claim of depreciation and restricted the quantum of depreciation to the amount of ₹ 72,32,58,987/-, as claimed in the original return. In appeal, the Commissioner of Income Tax (Appeals)8 by an order dated 7 May 2010 reversed the order of the Assessing Officer on this aspect on the ground that the issuance of shares was towards part payment of the purchase consideration and hence was included in the cost of acquisition of the cement undertaking. The CIT (A) held that the assessee could not be deprived of depreciation by merely treating the issue of shares to the goodwill account. In the alternate, the CIT (A) held that even if it was paid for the purchase of goodwill, this payment could be considered as a payment for acquiring brands of the demerged company upon which depreciation was allowable under Section 32 of the Act. In an appeal by the Revenue, the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 260(A) of the Act against every order of the Tribunal passed under Section 254(2) of the Act. In this behalf, reliance has been placed on the judgment of Hon'ble Mr. Justice H.L. Dattu, as His Lordship then was in the Karnataka High Court, in L. Sohanraj and Others Vs. Deputy Commissioner of Income Tax and Another9 and on a judgment of the Division Bench of the Karnataka High Court affirming that view in L. Sohanraj and Others Vs. Deputy Commissioner of Income Tax and Another10. Now, at the outset, it would be necessary to note the grounds which have been formulated in support of the appeal. Ground A relates to the correctness of the order passed by the Tribunal under Section 254(2) of the Act. An amendment application has also been filed for challenging the said order. Grounds B, C, D, E, F, G, H and I essentially seek an evaluation by this Court on the merits of the claim for depreciation. On a plain reading of the impugned order, it appears that the Tribunal has not dealt with the merits of the claim, which admittedly, is conceded by both the assessee and the Revenue. The only ground which has weighed with the Tribunal is that there was no basis for the assessee to fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged company. In this regard, reliance has been placed on the decision of the Supreme Court in Commissioner of Income Tax Vs. Hoogly Mills Co. Ltd.11, where it was held that the claim for depreciation on account of gratuity was not allowable under Section 32 of the Act, because it was neither a tangible nor intangible asset as defined in Explanation 3. We have considered the rival contentions which have been urged on behalf of the assessee and the Revenue on the merits of the claim for depreciation under Section 32 of the Act. Ex facie, it is clear from reading paragraph 7 of the impugned order that the Tribunal has not applied its mind to the merits which are now sought to be canvassed in questions B to I, which have been formulated in support of the appeal by the assessee. The only point which weighed with the Tribunal was that once the post-acquisition assets were shown at ₹ 567.62 crores, there was no basis for enhancing the value to ₹ 575.05 crores in the revised return. In our view, the issues which have been raised on behalf of the assessee as well as the submissions which have been urged on behalf of the Revenue would merit a primary determination by the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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