C/Taxap/177/2018 Order v. Vodafone Essar Gujarat Ltd. Reported In [2017] 397 Itr 55 (Guj) [Fb

C/TAXAP/177/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 177 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX 4VersusTRIO ELEVATORS COMPANY (INDIA) LTD ==========================================================Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHIand HONOURABLE MR.JUSTICE B.N. KARIA Date : 21/03/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal dated 22.09.2017, raising following questions for our consideration: “[A] Whether the Tribunal is correct in law and on facts in setting aside the matter on the issue of disallowance of the claim of provision for doubtful debt of Rs.31,57,448/- and provision for doubtful advances of Rs.5,57,805/- to adjudicate afresh ? [B]Whether the Tribunal is correct in law and on facts in directing the assessing officer to allow the claim of depreciation on goodwill?” 2.The first question pertains to the disallowance of claim towards provision for doubtful debt and doubtful advances. Assessing Officer as well as the Commissioner of Income Tax (Appeals) both having disallowed such claim, the assessee approached the Tribunal. Tribunal by the impugned judgment, merely remanded the issue before the Assessing Officer for deciding it afresh in light of the Full Bench judgment of this Court in case of Commissioner of Income-Tax v. Vodafone Essar Gujarat Ltd. reported in [2017] 397 ITR 55 (Guj) . 3.The judgment of full bench was not available when the issue was decided by the Assessing Officer and Commissioner of Income Tax (Appeals). We see no error in the order of the Tribunal and therefore, there is no question of asking the Assessing Officer to decide it again in light of the said judgment. Even the Revenue's representative before the Tribunal had raised no objection to this modality. No question of law in this respect arises. 4.The second issue pertains to the assessee's claim of depreciation at a prescribed rate on a sum of Rs.6.24 crores (rounded off) after filing the return of income. In the return of income, the assessee had not raised such a claim. During the course of assessment proceedings, the assessee wrote a letter dated 07.01.2014 to the Assessing Officer and contended that the assessee had paid excess consideration of Rs.6.24 crores for acquisition of assets and liabilities of an amalgamated company. This additional sum was paid on account of goodwill. While filing the return, assessee had not claimed depreciationonsuchinvestment.However, subsequently the Supreme Court in case of CIT vs. Smifs Securities Ltd. reported in 348 ITR 302 (SC) has held that the assets referred to in the Explanation to Section 232(1) would include goodwill. The assessee therefore seeks depreciation on such investment. 5.The Assessing Officer rejected the claim only on the ground that the assessee has not filed revised return and without filing revised return, such additional claim cannot be entertained. 6.In appeal, the Commissioner of Income Tax (Appeals) dismissed the claim on merits. He was of the opinion that the assessee was not claiming depreciation on any commercial rights but on the difference of consideration paid for acquisition of the new business. It is not explained how this excess payment can be considered for goodwill. 5.The Assessing Officer rejected the claim only on the ground that the assessee has not filed revised return and without filing revised return, such additional claim cannot be entertained. 6.In appeal, the Commissioner of Income Tax (Appeals) dismissed the claim on merits. He was of the opinion that the assessee was not claiming depreciation on any commercial rights but on the difference of consideration paid for acquisition of the new business. It is not explained how this excess payment can be considered for goodwill. 7.The issue was carried in further appeal by the assessee. The Tribunal relied on its judgment in case of the assessee for the earlier assessment year and allowed the claim. The Tribunal has reduced the relevant portion of the earlier judgment, in which, the Tribunal had referred to Explanation-3 to sub-section (1) of section 32 which contains two clauses (a) and (b) explaining the expression 'asset' and 'block of asset'. The Tribunal was of the view that goodwill would be included as an asset under Explanation-3(b) to sub-section (1) of section 32 of the Act and also held that in the present case, the difference was paid for acquisition of such goodwill. The Tribunal referred to the judgment of the Supreme Court in case of Smifs Securities Ltd. (supra) and held the issue in favour of the assessee. 8.It can, thus, be seen that the Tribunal had come to the conclusion that excess payment was towards goodwill and that by settled law, goodwill would also be a depreciable asset. C/TAXAP/177/2018 ORDER 9.No question of law arises. Tax Appeal is dismissed. (AKIL KURESHI, J) ANKIT SHAH (B.N. KARIA, J)