TaxTMI 
TaxTMI 
2023 (3) TMI 658
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....the appellant's case, the Learned Pr. Commissioner of Income-tax- 1 Ahmedabad has grossly erred in passing revision order u/s.263 of Income-tax Act, though assessment order dt.23-12-2017 is neither erroneous nor prejudicial to the interest of revenue. In the circumstances, revision order passed u/s.263 of I.T. Act is null and void and held to be quashed. 4. In law and in facts and circumstances of the appellant's case, the Learned Pr. Commissioner of lncome-tax-1 Ahmedabad has grossly erred in passing revision order u/s.263 of I.T. Act in connection with claim of depreciation on goodwill though the very issue was raised during the course of assessment proceedings for which the appellant submitted written reply. Having considered the issue at length by Id. Assessing Officer, ld. Pr. Commissioner of Income-tax has no jurisdiction u/s.263 of I.T. Act on the very issue. 5. In law and in facts and circumstances of the appellant's case, the Learned Pr. Commissioner of Income-tax- 1 Ahmedabad has grossly erred in passing revision order u/s.263 of Income-tax Act, though in the assessment order dt. 23-12-2017 the income assessed was as per returned loss of Rs.104,49,70,098/-....
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....sioner of Income-tax-1 Ahmedabad has grossly erred in holding that depreciation amounting to Rs.51,63,70,941/- on goodwill is not allowable for deduction. 7) In law and in facts and circumstances of the appellant's case, the Learned Pr. Commissioner of Income-tax-1 Ahmedabad has grossly erred in directing the Ld. Assessing Officer to pass fresh Assessment Order on the claim of depreciation on die goodwill. 8) Your appellant reserves the right to add, alter, amend all or any of the above grounds of appeal as may be advised from time to time." 3. Since the common issues are involved in both the appeals, the same are being disposed of by way of a common order. We shall first take up the appeal for assessment year 2015-16. 4. The brief facts of the case are that the assessee company has filed return of income for assessment year 2015-16 declaring total loss of Rs. 1,04,49,70,098/-. The case was selected for complete scrutiny and assessment was completed u/s. 143(3) of the Act vide order dated 23-12- 2017 accepting the return of income filed by the assessee. Subsequently, the Pr. CIT noticed that pursuant to the order of Hon'ble High Court of Gujarat dated 20-04-2015 sanctioni....
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....e of demerger scheme without examining the provisions of explanation 2 to section 43(6) r.w.s. 32 of the Act due to which the assessment order passed u/s. 143(3) of the Act has become erroneous in so far as prejudicial to the interest of the Revenue within the meaning of section 263 of the Act. Accordingly, show cause notice was issued to the assessee, and after taking this submission to the assessee on record, the Pr. CIT set aside the assessment order with the following observations:- "4. In the light of discussions elaborated in preceding paras, it emerges that the Assessing Officer ought to have considered that the aforesaid claim of depreciation of Rs.68,84,94,588/- on goodwill created by virtue of demerger is not eligible for deduction under the extant provisions of the statute and should have disallowed such claim made by the assessee. Therefore, the order passed u/s 143(3) of the Act dated 23.12.2017 is held erroneous insofar as prejudicial to the interest of revenue. 5. In the light of the aforementioned discussions and bearing in mind the entirety of the case, I am of the opinion that the assessment order passed by the A.O. 143(3) of the I.T. Act, 1961 on 23.12.2017 i....
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....as on 15-3-2020, if any, shall become available with effect from 15-3-2021. In view of the above, since the delay of 75 days in filing appeal is falling within the Covid pandemic period, the delay is hereby being condoned. 6. On merits, before us, the counsel for the assessee submitted that the order passed by the Assessing Officer is correct since the ld. Assessing Officer has relied upon the Supreme Court case in the case of Smifs Securities Pvt. Ltd. 348 ITR 302 (SC) and also for the reason that the Assessing Officer had made detailed inquiries on this aspect before passing the assessment order. The counsel for the assessee drew our attention to page 18 of the paper book- " fixed assets schedule" of the assessee company for the impugned assessment year, in which goodwill on demerger has been duly reflected and same was produced and examined by the ld. Assessing Officer during the course of assessment proceedings. The counsel for the assessee then drew our attention to notice u/s. 142(1) of the Act dated 06-10- 2017 issued by the Assessing Officer and pointed out that at para 10 of the said notice the ld. Assessing Officer had specifically called for details regarding additions ....
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.... of depreciation in the hands of the demerged company was inquired during the course of assessment proceedings. Further, we also observe that during the course of assessment, the assessee had furnished various factual and legal submissions in respect of its claim of depreciation on goodwill vide submission dated 19- 12-2017, wherein the assessee relied on the case of Smifs Securities 348 ITR 302 (SC) in support of its claim for deprecation of goodwill by assessee company. We also observe that the extract of board resolution passed by the meeting of board of directors and order passed by the Hon'ble Gujarat High Court granting approval to the aforesaid said of demerger and also the valuation report prepared by the approved valuer dated 04-10-2014 were all submitted before the Assessing Officer during the course of assessment proceedings, for his consideration. Accordingly, in the light of the above, we are of the considered view that the Assessing Officer had examined the aspect of assessee's claim of depreciation during the course of assessment proceedings, factually as well as legally, while allowing the assessee's claim of depreciation on goodwill . 9. Now, the second issue that....
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....the case of CIT vs. Smifs Securities supra, while deciding the issue in favour of the assessee. While passing the order, the Hon'ble Gujarat High Court observed as under:- "6. With respect to the of depreciation, the of Supreme Court in of Securities Ltd. (supra) would squarely apply There is no to by the Assessing Officer to hold that the claim of depreciation was fictitious. If we read his entire in respect, he seems to be suggesting that being an acquisition thereof would not qualify for depreciation. If that be so, the view of the Assessing Officer was opposed to decision of the Supreme Court in case of Smifs Securities Ltd, (supra). On the other hand, if the observations of the Assessing Officer can be seen as his findings that the claim itself was baseless, there was no discussion or reference to any material to enable him to come to such a conclusion. 7. In the result, tax appeal is dismissed." 9.2 In view of the above decisions, we are of the considered view that the Ld. Assessing Officer has placed reliance on the case of Smifs Securities supra while allowing the claim of depreciation on goodwill for the impugned assessment year and hence the view taken by ld. Assessi....