2017 (9) TMI 1650 - AT - Income Tax

Tribunal remits doubtful debt provision issue, allows goodwill depreciation claim.

Trio Elevators Company (India) Ltd. Versus The Deputy Commissioner of Income-tax Circle-4 (1) (2) Ahmedabad

The Tribunal remitted the issue of disallowance of provision for doubtful debt and advances back to the Assessing Officer for fresh adjudication. ... Disallowance of the claim of provision for doubtful debt and provision for doubtful advances - Whether it is just provision and not admissible as expenses - Held that:- In the consent of the parties, the matter is remitted back to the file of the AO for fresh adjudication in the light of decision in the case of CIT vs. Vodafone Essar Gujarat Ltd [2017 (9) TMI 51 - GUJARAT HIGH COURT]. Depreciation on the goodwill - Held that:- We uphold the grievance of the assessee and direct the Assessing Officer to allow the claim of depreciation on ‘goodwill’ acquired by the assessee referring to SMIFS Securities Limited case [2012 (8) TMI 713 - SUPREME COURT] Issues:1. Disallowance of provision for doubtful debt and advances.2. Disallowance of depreciation on goodwill.Issue 1: Disallowance of provision for doubtful debt and advancesThe appeal was filed against the order passed by the CIT(A)-8, Ahmedabad regarding the assessment under Section 143(3) of the Income-tax Act, 1961 for the Assessment Year 2011-12. The appellant raised a grievance concerning the disallowance of the claim of provision for doubtful debt and advances. During the hearing, the counsel for the assessee requested the matter to be remitted to the Assessing Officer for fresh adjudication in light of a jurisdictional High Court decision. The Departmental Representative did not object, and with the consent of both parties, the matter was remitted back to the Assessing Officer for fresh adjudication. The ground was allowed for statistical purposes.Issue 2: Disallowance of depreciation on goodwillThe appellant raised a grievance regarding the disallowance of depreciation on goodwill, citing a decision by the Hon’ble Supreme Court in another case. The representatives agreed that the grievance was covered in favor of the assessee by a decision of the Co-ordinate Bench of the Tribunal in the assessee’s own case for a previous assessment year. The Tribunal observed that goodwill falls under the expression of ‘any other business or commercial right of a similar nature’ in Explanation 3 to Section 32(1) of the Income Tax Act. The Tribunal directed the Assessing Officer to allow the claim of depreciation on goodwill acquired by the assessee, supported by a Valuation Report. The Tribunal upheld the grievance of the assessee and allowed the appeal for statistical purposes.In conclusion, the Tribunal remitted the first issue back to the Assessing Officer for fresh adjudication and directed the Assessing Officer to allow the claim of depreciation on goodwill acquired by the assessee. The appeal was allowed for statistical purposes.