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TMI Blog2024 (1) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, for maintaining judicial discipline, we are not expressing our view on the merit of issue, same is kept opened. The AO is hereby directed to re-compute the disallowance after the decision of Hon ble High Court. Hence, this issue is restored to the AO. Accordingly, Ground No.3 raised by the assessee is allowed for statistical purposes. Disallowance of depreciation on goodwill under normal provisions - HELD THAT:- As per in assessee s own case in [ 2023 (2) TMI 1113 - ITAT DELHI] taking the consistent view, hereby direct the AO to delete the impugned addition and allow the depreciation on goodwill as claimed by the assessee. Non- allowance of claim of additional depreciation @ 10% made during assessment proceedings - AO did not discuss this claim and Ld.CIT(A) also did not entertain the claim - HELD THAT:- Tribunal was pleased to remit the matter back to the AO in the assessee s own case for AY 2014-15 [ 2021 (12) TMI 1428 - ITAT DELHI] as held no distinguishing features in the facts of the case in the year under consideration and that of the earlier years has been pointed out by Revenue. Revenue has also not placed any material on record to demonstrate tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e couldn't have been made by Ld. AO as delay in filing Form no.3CK is not attributable to the appellant. 3.3 The Ld. CIT (A) has erred in law and facts of the case, in not appreciating that no disallowance could have been made u/s 35(2AB) of the Act read with Rule 6(7A) as the extant provisions of Rule 6(7A) did not permit DSIR to quantify the expenditure incurred on in-house research and development facility for the relevant assessment year. 4. Disallowance of depreciation on Goodwill 4.1 The Ld. CIT(A) has erred in law and in facts and in the circumstances of the appellant's case by upholding the disallowance made by Ld. AO in respect of depreciation of 19,15,183/- on goodwill arisen on account of acquisition of Business Units from SRF Polymers Ltd during financial year 2008-09. 4.2 The Ld. CIT(A) has failed to appreciate that such depreciation has been claimed on written down vale (WDV) of goodwill which has been brought forward from the preceding years since its acquisition in financial year 2008-09. 5. Non-allowance of claim of balance additional depreciation made during the assessment proceedings 5.1 The Ld. CIT(A) has grossly e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiny assessment and a notice u/s 143(2) of the Income Tax Act, 1961 ( the Act ) was issued and served upon the assessee. In response to the statutory notices, Ld. Authorized Representative ( AR ) of the assessee attended the proceedings and furnished the requisite details as called by the Assessing Authority. The Assessing Officer ( AO ) while framing the assessment u/s 143(3) of the Act dated 27.12.2017, made various additions on account of disallowance u/s 14A of the Act amounting to INR 23,00,192/- excess claim made in return of income in respect of Research and Development expenditure u/s 35(2AB) of the Act amounting to INR 6,17,97,008/- and disallowance of depreciation Goodwill amounting to INR 19,15,183/-. Thus, he computed total taxable income at INR 1,11,67,86,173/-. The AO recorded that since the tax payable on income assessed under MAT Act is higher than tax payable under normal provision of the Act, the assessee is liable to pay MAT under section 115JB of the Act. 4. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A), who after considering the submissions, partly allowed the appeal of the assessee. Thereby, the Ld.CIT(A) deleted the addition which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. ([2018] 96 taxmann.com 576 (Pune-Trib.)) (P. no. 263-286 of Case Law Compilation); f) Crest Composites Plastics Pvt. Ltd. (ITA No. 28/Ahd/2017) (P. no. 287-295 of Case Law Compilation); g) Force Motors Ltd. ([2021] 133 taxmann.com 71 (Pune-Trib.)) (P. no. 296-308 of Case Law Compilation); h) Natural Remedies Pvt. Ltd. (TS-36-ITAT-2021(Bang)) (P. no. 309-322 of Case Law Compilation): i) Crest Composites Plastics Pvt. Ltd. (2022-TIOL-675-ITAT-AHM) (P. no. 323-328 of Case Law Compilation). 6. Ld. Counsel for the assessee further contended that it is settled law that claim of the assessee in the form of deduction u/s 35(2AB) of the Act cannot be denied on account of non-receiving of approval in Form No.3CL from DSIR. In this regard, he relied upon following case laws:- (a) DCIT vs M/s. STP Ltd. (2021-TIOL-128-ITAT-KOL) (P.No. 214-221 of Case Law Compilation); (b) CIT vs Sun Pharmaceutical Industries Ltd. [2017] 85 taxmann.com 80 (Gujarat) [P.No.222-227 of Case Law Compilation]; and (c) Special Leave Petition by revenue against ruling of Hon ble Gujarat High Court, has been dismissed by Hon ble Supreme Court [2018- YIOL-282-SC-IT] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 35(2AB) of Rs. 52,62,21,008/-. The deduction as approved by the prescribed authority (DSIR) as submitted by the assessee on 06.11.2017 was Rs. 46,44,24,000/-. The assessee has claimed excess deduction of Rs. 6,17,97,008/- [Rs. 52,62,21,008/- (-) Rs. 46,44,24,000/-]. Therefore, I do not find any infirmity in the finding of the AO, the disallowance of excess claim is confirmed and ground of appeal is dismissed. 8.1. It is evident from the above finding that lower authorities disallowed the claim of deduction on the ground that the deduction claimed by the assessee in Income Tax Return u/s 35(2AB) of the Act amounting to INR 52,62,21,008/-. However, the Prescribed Authority (DSIR) approved a sum of INR 46,44,24,000/-, thus amount of INR 6,17,97,008/- was claimed excessive. 9. The case of the assessee is that the lower authorities have failed to appreciate the fact that law does not require approval by DSIR. It is contended on behalf of the assessee that as per the AO, approval by DSIR is a pre-condition for allowability of claim. However, statute does not prescribed it as a pre-condition, only requirement is that in house R D activities should be approved by DSIR. Also pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Provincial Act and filing an application for a patent under the Patents Act, 1970 (39 of 1970).] (2) No deduction shall be allowed in respect of the expenditure mentioned in clause (1) under any other provision of this Act. (3) No company shall be entitled for deduction under clause (1) unless it enters into an agreement with the prescribed authority for co-operation in such research and development facility and [fulfils such conditions with regard to maintenance of accounts and audit thereof and furnishing of reports in such manner as may be prescribed]. (4) The prescribed authority shall submit its report in relation to the approval of the said facility to the [Principal Chief Commissioner or Chief Commissioner or] [Principal Director General or] Director General in such form and within such time as may be prescribed.] (5) [***] (6) No deduction shall be allowed to a company approved under sub-clause (C) of clause (iia) of sub-section (1) in respect of the expenditure referred to in clause (1) which is incurred after the 31 st day of March, 2008]. 11. As per this section, deduction is allowable if the assessee satisfied condition as stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of three (03) businesses. The assessee has claimed Goodwill of INR 19,15,183/- for the period under appeal. The assessee duly submitted the requisite facts and evidences during the course of assessment proceedings. The AO disallowed the claim of depreciation of goodwill on the ground that it is balancing figure and not goodwill which the assessee paid in excess of its valuation to its group company. The assessee had not furnished any reasons as to why valuation of assets liabilities were not made before purchase. Further, goodwill was not there in given schedule of assets liabilities in agreement for transfer of business dated 01.01.2009. Such excess amount may be treated as a book entry. Ld.CIT(A) confirmed this finding. Ld. Counsel for the assessee submitted that the identical issue came before the Co-ordinate Bench of this Tribunal in earlier years and the issue is squarely covered in favour of the assessee for the decision rendered in assessee s own case for Assessment Years 2009-10, 2014-15 2012-13. He submitted that even otherwise also documentary evidences with regard to claim of depreciation of goodwill was duly furnished vide submission dated 06.11.2017 and 20.09.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Rs. 150,31,26,228/- as slump sale on 31st December 2008. It was submitted that the businesses was purchased from M/s SRF Polymers Limited on lump sum basis and the amount of goodwill appearing in the Balance Sheet as at 31.03.2009 represents the total consideration paid for acquiring business which exceeds the value of assets taken over by the assessee. Assessee also relied on various decisions in respect of its claim for depreciation. The submissions of the assessee were not found acceptable to AO. AO noted that the assessee had purchased three business for a consideration of Rs. 150,31,26,228/- as slump sale without making its valuation. He noted that assessee, after the purchase had made valuation of the assets and liabilities which was determined at Rs. 146,62,32,222/- and the balancing amount of Rs. 3,68,94,006/- was treated as Goodwill. AO was of the view that the aforesaid amount of Goodwill was a balancing figure and was not Goodwill for which assessee had paid in excess of its valuation to its group companies. He was of the view that since the assets and liabilities has not been valued; no Goodwill can be purchased by the assessee. He accordingly disallowed the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that order since the claim of depreciation was made as an additional claim before the Tribunal, the matter was remitted to the AO for examination. In the year under consideration, we are of the view that since the claim was already made in the return of income and was denied by AO and DRP, we are of the view that ratio of the decision rendered by Hon ble Apex Court in the case of Smifs Securities is squarely applicable to the facts of the case. We are therefore direct the AO to grant the depreciation of such goodwill. Thus the ground of assessee is allowed. 44. Before us, Learned DR has inter alia contended that since the issue of goodwill is arising in the year under consideration for the first time, the issue may be remitted back to AO for verification and adjudication. We do not find merit in the aforesaid contention of the Learned DR in view of the fact that the issue of depreciation also arose before the tribunal in assessee s own case in A.Y. 2012-13 (ITA No.5784/Del/2016 order dated 24.02.2020) wherein the coordinate Bench of Tribunal by relying on the decision of Hon ble Apex Court in the case of SMIFS Securities (2012) 24 taxmann.com 222 (SC) had held that assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd AO also quantified amount of additional depreciation for the year under appeal. 24. On the other hand, Ld. CIT Dr relied on the orders of lower authorities. 25. We have heard the rival submissions and perused the material available on record. Under the identical facts, the Tribunal was pleased to remit the matter back to the AO in the assessee s own case for AY 2014-15 by observing as under:- 57. We further find that following the decision of the tribunal for A.Y. 2010-11, the claim was allowed in A.Y. 2012-13. Before us, no distinguishing features in the facts of the case in the year under consideration and that of the earlier years has been pointed out by Revenue. Revenue has also not placed any material on record to demonstrate that the ITAT orders in assessee's own case for earlier years has been stayed/ set aside/ overruled by higher judicial forum. We therefore, following the reasoning of the Co-ordinate Bench for A.Y. 2010-11 and for similar reasons set aside the issue back to the file of AO to consider the same on merits after considering the submissions made by assessee and in accordance with law. The AO shall be free to call for such information and expl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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