2019 (7) TMI 1547

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....and circumstances of appellant's case, the Ld. CIT(A) has grossly erred in upholding disallowance for Rs. 2,129/- being employees' contribution to ESI, when no such disallowance is called for. It may kindly be deleted. 3. In law and facts and circumstances of the appellant's case, the Ld. CIT(A) has grossly erred in upholding disallowance of Rs. 1m81,33,969/- on account of depreciation on goodwill arising on demerger of Adani Energy Ltd. from appellant on the ground that since as per order of Hon'ble Gujarat High Court dated 09.12.2009, appointed date of demerger is 01.01.2007, depreciation on goodwill ought to have been claimed from appointed dated i.e. A.Y. 2007-08 and not from effective date i.e. A.Y. 2010-11. The Ld. Assessing Officer may be directed to allow full depreciation on goodwill amounting to Rs. 3,13,66m865/- as claimed in return of income. 3.1. In law and in facts and circumstances of the appellant's case, the Ld. CIT(A) has grossly erred in upholding the disallowance of depreciation on goodwill without appreciating the fact that Appellant Company is being assessed at maximum marginal rate and even if it is held that appellant is entitled for depreciation from ....

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....  Respectfully, following the decision of Co-ordinate bench in the case of the assessee itself on identical issue on similar facts as supra the appeal of the assessee is allowed.  Ground No. 2:-  Disallowance of Rs. 2,129/- being employees' contribution to ESI:- 6. The assessee has not pressed this ground of appeal. Therefore, the same is dismissed.  Ground No. 3:-  Disallowance of Rs. 1,81,33,969 on account of depreciation:- 7. During the course of assessment on perusal of depreciation chart annexed with the Audit Report the AO noticed that assessee has claimed depreciation on goodwill @ 25% to the amount of Rs. 3,13,66,865/- W.D.V. of Rs. 12,54,67,458/-. On query the assessee explained that the assessee company was a resultant company out of the demerger of Adani Energy Ltd. The Hon'ble High Court of Gujarat approved the scheme of demerger and ordered appointed date as 01.01.2007. Meaning that the scheme of demerger was effective from appointed date, therefore, depreciation on goodwill was required to be allowed from A.Y. 2007-08 instead of A.Y. 2010-11. The assessee has explained that Hon'ble Gujarat High Court has sanctioned the scheme....

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....of the decision of Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. vs. CIT (1998) 229 ITR 383 (SC): CIT vs. Sinhgad Technical Education Society [2017] 84 taxmann.com 290 (SC). Elaborating further, the learned AR referred para 7 of page no.33 to the assessment order passed under s. 143(3) of the Act concerning AY 2012-13 and submitted that the controversy has arisen because the scheme of the demerger was sanctioned by the order of the Hon'ble Gujarat High Court vide its order dated 09.12.2009 w.e.f. the appointed date of 01.01.2007 as mentioned in the draft scheme of demerger. The sanction was accorded by the Hon'ble High Court in FY 2009-10 i.e. AY 2010-11. The assessee claimed depreciation on the goodwill arising on the demerger in the AY 2010-11 as the order was received in FY 2009-10 relevant to AY 2010-11, the AO however complied depreciation on goodwill generated as a result of the demerger (Rs. 33.98 Crore) w.e.f. FY 200607 i.e. AY 2007-08 and consequently, calculated the WDV of the goodwill generated notionally after reducing the depreciation of the each year starting from AY 2006-07. Thus, whereas the assessee has claimed depreciation for the first ....

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....2009-10 was artificially applied which was not claimed by the assessee at all in these years. The AO accordingly re-worked the WDV of the various FYs as tabulated above. 21.2 We are concerned with AY 2009-10 in question. The AO has assumed depreciation of Rs. 5,57,63,315/- pertaining to the aforesaid assessment year while re-determining the quantum of eligible depreciation in AYs 2010-11, 2011-12. 2012-13 & 2013-14. As a result of such re-determination of quantum of goodwill, the following position emerges: Assessment Year Depreciation claimed by respondent Depreciation computed by AO 2007-08   4,24,86,335/- (Being 12.5% of value of goodwill on demerger i.e. Rs. 33,98,90,680/-) 2008-09 - 7,43,51,086/- 2009-10 - 5,57,63,315/- 2010-11 4,24,86,335/- (Being 12.5% of value of goodwill on demerger i.e. Rs. 33,98,90,680/-) 4,18,22,486/- 2011-12 7,43,51,086/- 3,13,66,865/- 2012-13 5,57,63,315/- 2,35,25,148/- 2013-14 4,18,22,486/- 1,76,43,861/- 21.3 The assessee in the captioned AY 2009-10 seeks claim of depreciation on goodwill amounting to Rs. 5,57,63,315/- based on the working of the AO although not made any claim towards such depreciation on....