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2021 (9) TMI 361
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....s 143(3) of the Act vide order dated 21.12.2017 and the total income was determined at Rs. 79,13,26,782/- and book profit u/s 155JB of the Act at Rs. 85,40,55,343/-. Aggrieved by the order of AO, assessee carried the matter before the CIT(A) who vide order dated 31.08.2018 (Appeal No.322/17-18/CIT(A)-22, New Delhi) granted partial relief to the assessee. Aggrieved by the order of CIT(A), assessee is now in appeal before us and has raised the following grounds: 1. "That on the facts and circumstances of the case and in law, the Assessing Officer ["AO"] erred in assessing income of the appellant at Rs. 79,13,26,782 as against returned income of Rs. 71,70,53,304 and the Commissioner of Income Tax (Appeals) ["CIT(A)"] erred in confirming the said action of the AO. 2. That on the facts and circumstances of the case and in law the CIT(A) has erred in disallowing depreciation on goodwill amounting to Rs. 7,10,40,132, merely following the appellate order for the assessment year 2013-14 and further erred in not following the order of the Hon'ble Income Tax Appellate Tribunal ["Hon'ble ITAT"j for A.Y. 2010-11, especially when there was no change in facts. 2....
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.... craves leave to add to, alter, amend or vary from the above grounds of appeal before or at the time of hearing." 4. Assessee has made a request for admission of additional grounds of appeal under Rule 11 of the I.T. Rules and the same reads as under: "That on the facts and circumstances of the case and in law, the assessing officer education cess paid by the appellant should be directed to be allowed as deduction, in terms of the law clarified by the Hon'ble Bombay High Court in the case of Sesa Goa Ltd. vs. JCIT: 117 taxmann.com 96 and other decisions." 5. Before us, at the outset, Learned AR submitted that Ground No.1 is general in nature and therefore requires no adjudication and the Ground No.4 is with respect to penalty which is premature and requires no adjudication at present. In view of the submissions, the aforesaid grounds are dismissed. 6. He thereafter submitted that Ground No.2 and the sub grounds relates to the issue of disallowance of depreciation on Goodwill and the Ground No.3 and its sub grounds relates to disallowance u/s 14A r.w.r 8D of the Act. 7. We first take up Ground No.2 and sub grounds relating to disallowance of deprecation on Goodw....
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....ts was recognized as 'goodwill', amounting to Rs. 76,97,89,365/- in the books of the assessee. He submitted that the depreciation on goodwill was disallowed by the AO in the draft assessment order for A.Y. 2010- 11 but when the matter was carried before the DRP, the same was deleted. He further submitted that the Hon'ble Tribunal in assessee's own case for A.Y. 2010-11 in ITA No. 302/Del/2015 and after relying on the decision of the Hon'ble Supreme Court in the case of CIT vs. Smifs Securities Ltd. (2012) 348 ITR 302 and Hon'ble Delhi High Court in the case of Areva T & D India Ltd. vs. DCIT (2012) 345 ITR 421 held that depreciation was admissible on 'goodwill' and thereby dismissed the Revenue's appeal. He submitted that the aforesaid order of Tribunal was followed in subsequent year i.e. A.Y. 2012-13, 2013-14 and 2015-16 by the Co-ordinate Bench of Tribunal. He pointed to the copies of the relevant order placed in the paper book. He thereafter submitted that CIT(A) had confirmed the addition made by the AO by following the order of his predecessor for A.Y. 2012-13 & 2013- 14. He submitted that since in A.Y. 2012-13, the issue has already been decided in favour of the assessee ....
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..... 16. We have given thoughtful consideration to the orders of the authorities below. At the very outset, we have to state that this is not the initial year of claim of depreciation. In our considered opinion, unless the claim is disturbed in the initial year of claim, subsequent years cannot be disturbed. 17. Most importantly, in earlier A.Ys, claim of depreciation has been allowed by the Tribunal in ITA Nos. 1482/DEL/2016 and 1708/DEL/2016. The relevant findings of the co-ordinate bench read as under: " 38. Ground number 2 of the appeal of the AO is against the disallowance of depreciation on goodwill amounting to 168,391,424 which resulted into on account of an asset purchase agreement dated 4/11/2009 and its subsequent amendment with American Express India private limited to acquire the global travel service centre as a going concern for a lump sum consideration. The fact shows that during the assessment year 2000 - 11 the assessee entered into an asset purchase agreement with American Express India private limited to acquire the global travel service centre as a going concern for a lump sum consideration of 1 350 million. The aforesaid consideration w....
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.... A.Y 2010-11, in ITA Nos. 302/DEL/2015 and 615/DEL/2015, this issue was considered by the co-ordinate bench at para 65 and onwards of its order and the relevant findings of the Tribunal read as under: "71. We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is noticed that the ld. DRP directed the AO to allow the depreciation on the goodwill by following the decision of the ITAT wherein the judgment of the Hon'ble Apex Court in the case of CIT Vs Smifs Securities Ltd. reported at 348 ITR 302 and the decision of the Hon'ble Jurisdictional High Court in the case of Areva T&D India Ltd. Vs DCIT reported at 345 ITR 421 has been followed. We, therefore, by considering the totality of the facts, do not see any valid ground to interfere with the findings given by the ld. DRP on this issue. As such do not see any merit in this appeal of the department on this issue." 19. Coming to the facts which have been considered by the Assessing Officer/ld. CIT(A), we find that in the balance sheet as on 31.03.2010, goodwill has been shown at Rs. 769 millions and under Schedule IX under the head "Other Curre....
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....us the ground of assessee is allowed. 14. Ground No.3 and its sub grounds are with respect to disallowance u/s 14A of the Act. 15. During the course of assessment proceedings, AO on perusing the details furnished by the assessee noted that assessee had earned dividend income of Rs. 6,02,33,907/- which was claimed as exempt income. The assessee was asked to explain as to why the disallowance u/s 14A r.w.r 8D of the Act should not be made to which assessee inter alia submitted that it had made investment in the mutual funds, namely ICICI Prudential Plan and Birla Sunlife Mutual Fund and had earned dividend on daily basis from such investment. It was further submitted that since the daily dividend was reinvested in the same mutual funds on a daily basis automatically, it did not incur any direct expenses for making and maintaining the investments and earning exempt dividend income. It was further submitted that no indirect expenses have been incurred by the assessee for earning the exempt income. Assessee further submitted that it had not incurred any expenditure by way of interest for the purpose of earning exempt income. The submissions of the assessee was not found acceptable....
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.... of claim of the assessee of having not incurred any expenditure. She thus supported the order of lower authorities. 18. We have heard the rival submissions and perused the materials available on record. The issue in the present grounds is with respect to the disallowance u/s 14A r.w.r 8D of the Act. AO while disallowing the expenses had noted that it was not believable that for earning exempt income of Rs. 6 crore, no expenditure was incurred by the assessee. We find that identical issue of disallowance u/s 14A of the Act arose in assessee's own case in A.Y. 2012-13 & 2013-14 (ITA Nos. 5435/Del/2017 and others) and the Co-ordinate Bench of Tribunal vide order dated 08.03.2021 has noted as under: "21. Second common grievance relates to disallowance made u/s 14A r.w.r 8D of the Rules. 22. We are taking the facts for A.Y 2012-13 in which year the assessee earned dividend income of Rs. 3,70,22,149/- from investments held in mutual funds which was claimed to be exempt u/s 19(34) of the Act. The investments are in mutual funds namely, ICICI Prudential Plan, Birla Sunlife Cash Plus Institutional Plans and HDFC Mutual Fund and earned dividend on daily basis on such in....
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....against the disallowance of 1,252,630 u/s 14A read with rule 8D of the income tax rules. The fact shows that during the year the appellant has earned a dividend income of Rs. 1 86,74,678 from investment held in mutual funds which was exempt u/s 10 (34) or (35) of the income tax act. The details of the above dividend income show that assessee has earned such dividend income on mutual funds of liquid plan, cash plus plan and other mutual funds. The learned assessing officer noted that it is unbelievable that no expenditure was incurred by the appellant in earning such income and made disallowance of 1,252,630 being 0.5% of the average value of investment related to the tax free income in terms of Section 14 A of the act by invoking the provisions of rule 8D (iii) Of the income tax rules. The learned dispute resolution panel on objection before it followed its own order for assessment year 2010 - 11 and upheld the findings of the learned assessing officer. 23. The learned authorized representative challenged the above addition on the fact that no satisfaction was recorded by the assessing officer having regard to the accounts of the assessee, which is mandatory. He relied upo....
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....e. On the basis of this the learned assessing officer straightway asked the assessee to explain as to why the disallowance u/s 14 A read with rule 8D should not be made. The assessee submitted its reply on 6th January 2015 stating that the assessee has not incurred any expenditure in relation to the earning of such exempt income. The learned assessing officer in para number 7.2 held that it is unbelievable that for earning an income of 1.86 crores no expenditure was made by the assessee. He noted that it is pertinent that the assessee has not provided the details of such expenses as are directly attributable to and which are necessarily required for making / maintaining investment in shares and mutual funds and earning there from. Therefore, he held that he is not satisfied with the correctness of the claim of the assessee that no expenditure has been incurred in respect of such expenditure in relation to income, which does not form part of the total income under this act. Thereafter he proceeded to compute the disallowance applying the provisions of rule 8D and computed such disallowance at 1,252,630. On careful consideration of the reasons given by the learned assessing officer w....
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....O to delete the disallowance of expenses. Thus the ground of assessee is allowed. Now we take up additional ground: 20. Before us, Learned AR submitted that assessee in the return of income did not claim deduction for the education cess paid amounting to Rs. 70,98,828/- before the due date of filing return of income. He submitted that Hon'ble Rajasthan High Court in the case of Chambal Fertilisers and Chemicals Ltd. vs. JCIT D.B ITA No.52/2018, vide order dated 31.07.2018 has held that education cess is an allowable deduction while computing the income under the head "profits and gains from business or profession" as it does not fall within section 40(a)(ii) of the Act. He further submitted that identical issue arose in assessee's own case for A.Y. 2012-13, 2013-14 and 2015-16 in ITA Nos. 8452/Del/2019, 5435 & 5436/Del/2017 wherein the Co-ordinate Bench of Tribunal allowed the additional ground raised in this regard and directed the AO to allow claim of deductibility of cess as deductible business expenditure. He pointed to the copy of relevant order placed at Page No.49. He therefore submitted that by following the order of Tribunal on identical facts in assessee's own case ....