2019 (10) TMI 1529 - HC - Income Tax

High Court overturns ITAT decision disallowing depreciation on brand value, orders reexamination with detailed reasoning.

M/s. V.V.V & Sons Edible Oils Limited. Versus The Assistant Commissioner of Income Tax Central Circle -1, The Secretary, Income Tax Appellate Tribunal, Chennai.

M/s. V.V.V & Sons Edible Oils Limited. Versus The Assistant Commissioner of Income Tax Central Circle -1, The Secretary, Income Tax Appellate Tribunal, ... Issues Involved:Challenge to common order by ITAT in Stay Petitions, Disallowance of depreciation on brand value, Disallowances in assessment orders, Dismissal of stay petitions, Proper reasoning in passing orders by ITAT.Analysis:Challenge to Common Order by ITAT in Stay Petitions:The writ petitions challenged a common order by the ITAT in Stay Petitions related to Assessment Years from 2010-11 to 2016-17. The facts and issues in the petitions were found to be identical and intertwined, leading to a joint hearing and decision.Disallowance of Depreciation on Brand Value:The petitioner, a firm converted into a limited company, claimed depreciation on brand value from Assessment Year 2012-13 onwards. However, the first respondent disallowed the depreciation on brand value for the years 2012-13 to 2016-17, stating that no cost was incurred to acquire the brand value. This disallowance was part of several other disallowances made by the first respondent in the assessment orders.Dismissal of Stay Petitions:The stay petitions filed by the petitioner seeking to stay the recovery of alleged tax arrears were dismissed by the ITAT, citing a previous judgment by a co-ordinate Bench of the Tribunal. The petitioner challenged this dismissal, arguing that the Tribunal erred in not considering the case in a proper perspective and without examining other aspects.Proper Reasoning in Passing Orders by ITAT:The High Court found fault with the ITAT's order, noting that it lacked proper reasoning and failed to consider each issue independently. The Court emphasized the importance of providing adequate reasons for decisions, stating that the Tribunal's passing of the order without detailed reasoning was unacceptable.In conclusion, the High Court set aside the ITAT's order, subject to the petitioner making specified payments within a given timeframe. The ITAT was directed to take up the main appeals for disposal within a set period after the payment, ensuring a fair hearing to all parties. An interim stay on recovery was ordered until the main appeals were disposed of.