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TMI Blog2017 (2) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... PRASAD, JUDICIAL MEMBER For The Assessee : Shri Sunil Talati, A.R. For The Revenue : Shri James Kurian, Sr. D.R. ORDER PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : Out of these six appeals, three appeals have been filed by the assessee and the other are filed by the Revenue against the order of the Commissioner of Income Tax(Appeals)-III, Baroda, all are identical dated 21/08/2012 for the Assessment Years (AYs) 2004-05, 2005-06, 2006-07 2004-05, 2005-06 2007-08. 2. Assessee has taken following Grounds of appeal in ITA No.2508/Ahd/2012 for the Assessment Year 2004-05:- i. The order passed by the Hon ble Commissioner of Income-tax (A)-III, Baroda is bad in law and contrary to legal pronouncement. The Additions/Disallowances made by the AO are unjustified and unwarranted. It be held so now. ii. Your appellant submits that the provisions of section 147 r.w.s. 148 are not applicable in the case of your appellant since the reasons recorded for re-opening the assessment are debatable. It is further submitted that the re-opening based an audit objection is unjust and uncalled for and hence, the order passed by the AO be quashed. iii. The Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance of ₹ 12,795/- amounts to double addition viz. one based on Tax Audit Report and second based on Schedule H of accounts. Based on the above facts, the addition made by AO be directed to be deleted. viii. The Hon ble CIT(A)-III, Baroda has erred in confirming the addition of ₹ 1,81,359/- being difference in accounting for job work income as per books of accounts and as per TDS certificates. It is submitted that the income has been rightly shown in the books and addition made in this behalf be deleted. 3. The facts of the cases are that the assessee is engaged in manufacturing of chemicals and chemical job work. 4. During the course of assessment proceedings, the assessee was requested to file revised return of income by notices and letters requesting to file revised return of income and made compliance to the same. In response to the notices assessee s representative appeared from time to time but did not file any document. Therefore, ex-parte assessment was made by the Ld. A.O. with the following addition depreciation on goodwill on perusal of working of statement of Depreciation, it was seen that the assessee has claimed depreciation of ₹ 1,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osit), it was seen that the unsecured loans of ₹ 60,000/- has been introduced and the Audit Report reveals that the assessee has also introduced loan of ₹ 30,05,348/- in the promoter Deposit Account. The assessee has not submitted ledger account of promoter Deposit account from its books of accounts and the assessee has also failed to furnish a confirmation proving identity, credit worthiness and genuineness of the Deposit. Therefore ₹ 30,05,348/- and ₹ 60,000/- was treated as unexplained under section 68 of the IT Act. The Ld. A.O. has considered the Addition of ₹ 30, 65,348/- as ingenuine deposits made by Suresh B Sheth as per Annexure-B of Tax Audit Report. While going through the details of promoter/Deposit Account, it is observed that through oversight the figure of the re-payment of deposits of ₹ 30,05,348/- has been wrongly shown as deposits received during the year and vice a versa (The correct amount of deposits made during the year is ₹ 24,14,410/-). In support of this mistake, we filed a copy of promoter A/c/Deposits A/c. 9. Coming back to the correct figure of addition of deposits of ₹ 2,69,056/- in Deposit account aggr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition has been made. Thereafter, finally income of ₹ 45,81,659/- was assessed by the Ld. A.O. 15. Thereafter, assessee preferred first statutory appeal before the Ld. CIT(A) who partly allowed the appeal of the assessee. 16. We have gone through the relevant record and impugned order, Ld. A.R. filed valuation Paper Book and Ground Nos. 1 and 2 are not pressed by the Assessee, therefore, these Grounds do not require any adjudication. So far Ground No.3 is concerned in our opinion, the same is covered by assessee s own case decided by the ITAT order in ITA No.2497/Ahd/2011. 17. In this case, the Assessing Officer held that goodwill was not an asset falling under Explanation 3 to Section 32(1) of the Income Tax Act,1961( the Act , for short). In the order Hon ble Members held that we quote herein below Explanation 3 of Section 32(1) of the Act: Explanation 3 For the purposes of this sub-section, the expressions assets and block of assets shall mean (a) Tangible assets, being buildings, machinery, plant or furniture; (b) Intangible assets, being know-how, patents, copyrights, trade-marks, licences, franchises or any other business or commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing based on audit objection is unjust and uncalled for and hence, the order passed by the AO be quashed. iii. The Hon ble CIT(A)-III, Baroda has erred in confirming the addition made on account of non-granting the depreciation of ₹ 1,46,413/- as claimed by your appellant on goodwill. Your appellant submits that goodwill is an intangible asset and is eligible for depreciation as per provisions of section 32(1)(ii) of the Act. It is submitted that the AO be directed to allow the claim of depreciation on goodwill. iv. The Hon ble CIT(A)-III, Baroda has erred in not deleting the addition made by AO of ₹ 1,50,811/- being notional interest calculated @ 12% on advances made to a sister concern without appreciating the fact that the such advances were made out of self-generated funds which were advance for the purpose of business. It is also submitted that there is no provision in the Income-tax Act to make such addition for notional income. It be held so now and addition made by the AO be deleted. Without prejudice to the above, your appellant submits that the rate of interest charged @ 12% PA is very harsh and same be considered @ bank rate of 9% received by your ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that goodwill is an intangible asset and is eligible for depreciation as per provisions of section 32(1)(ii) of the Act. It is submitted that the AO be directed to allow the claim of depreciation on goodwill. iv. The Hon ble CIT(A)-III, Baroda has erred in making/confirming the additions of ₹ 21,10,044/- deposits from Suresh B Sheth ₹ 1,00,000/- deposit from Hemaben S Sheth, aggregating to ₹ 22,10,044/- treating the said deposits of director/share holder as ingenuine. Your appellant submits that no new deposits have been taken from the said persons. Your appellant submitted the necessary details and documents during the assessment/remand proceedings in this regard and hence, the addition made by the AO is not justified. v. The Hon ble CIT(A)-III, Baroda has erred in confirming the disallowance of ₹ 8,601/- out of ₹ 1,03,353/-. Your appellant submits that the CIT(A) has not appreciated the facts and relying upon the remand report, made the addition. Your appellant submits that such addition is uncalled for the unjust. vi. The Hon ble CIT(A)-III, Baroda has erred in confirming the disallowance of ₹ 9,85,074/- by invoking the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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