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TMI Blog2012 (12) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... t Fluorescent Lamps (CFL), Automotive Lamps, Decorative and Photo-Optic Lamps and Ballasts. The assessee had filed return declaring loss of Rs. 94,35,45,902/-. 3. The Assessing Officer determined the loss at Rs. 88,76,14,210/- after making following additions: - 1) depreciation on goodwill Rs, 33,05,377/- 2) packing material consumed Rs. 5,26,26,316/- 4. Ld. CIT(A), while partly allowing the assessee s appeal, deleted both the disallowances. 5. Being aggrieved, the Department is in appeal before us and has taken following grounds of appeal: - 1. On the facts and in the circumstances of the case, the ld. Commissioner of Income Tax (Appeals) has erred in facts and in law in deleting the disallowance of Rs. 33,05,377/- made by the AO on account of depreciation on goodwill when the AO has rightly made this disallowance by observing that the goodwill is not a depreciable asset and there is no provision under the law to allow depreciation on it. 2. On the facts and in the circumstances of the case, the ld. Commissioner of Income Tax (Appeals) has erred in facts and in law in deleting the disallowance of Rs. 5,26,26,316/- made by the AO u/s 40(a)(ia) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record for valuation of these intangible assets by the assessee in the form of any comparable case or valuation by an expert etc. Otherwise, the AO will do this exercise on the basis of his best judgment. 11. Having heard both the parties, we do not find any reason to interfere with the order of ld. CIT(A) because now the issue has been settled by Hon ble Supreme Court. Ld. Counsel submits that in A.Y. 2002-03 the issue regarding valuation has been settled therefore, in line with the findings of earlier year this year s disallowance is to be recomputed. While giving effect to this order, the AO will examine the quantification part having regard to the findings for earlier years. 12. In the result, this ground is dismissed in terms of above observations. 13. Brief facts, apropos ground no. 2 are that the assessee company was required to furnish the details of raw and packing material expenses and whether any TDS was deducted or not on these expenses. The assessee furnished following details: - Amount (in Rs.) Raw Material consumed 33,04,12,895 Packing material consumed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work was done by the supplier of the material was duly supported from the bills. As such no TDS was required to be made; v. Circular No. 715 dated 08/08/1995 relied upon by the AO, was not correct because the same is applicable only with regard to printing material and not to packing material which is pre-printed. There is a difference in printing material and printing the packing material; vi. As per CBDT Circular No. 681 para 7(vi) dated 08/03/1994, the provisions of section 194C will not cover contracts for sale of goods; vii. Relying on the decision of Hon ble Punjab Haryana High Court in the case of CIT vs. Deputy Chief Account Officer, Markfed, 304 ITR 17 it was held that the purchase of packing material, both pre-printed and plain, constitutes contract of sale to which sec. 194C, is not applicable. 16. We have considered the submissions of both the parties and have perused the record of the case. Out of the total raw and packing material consumed aggregating to Rs. 38,30,39,211/-, the dispute is in respect of following items only: - Packing material consumed at factory 5,17,62,496 Packing material consumed at Branches 6,89,800 Sticker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mark Fed (supra) squarely covers the issue. We, accordingly, do not find any reason to interfere with the order of ld. CIT(A) in holding that since the purchase of packing material both pre-printed and plain constituted the contract of sale, the provisions of section 194C were not applicable. Consequently, he rightly held that the AO was not justified in making the impugned disallowance u/s 40(a)(ia). The Department has not brought on record any material to controvert the factual position in this regard. We, accordingly, confirm the order of ld. CIT(A). 18. In the result, the Department s appeal for A.Y. 2005-06 is dismissed. 19. ITA No. 2460: - The Department has taken following grounds of appeal: - 1. On the facts and in the circumstances of the case, the ld. Commissioner of Income Tax (Appeals) has erred in facts and in law in deleting the disallowance of Rs. 24,79,033/- made by the AO on account of depreciation on goodwill when the AO has rightly made this disallowance by observing that the goodwill is not a depreciable asset and there is no provision under the law to allow depreciation on it. 2. On the facts and in the circumstances of the case, the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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