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2015 (12) TMI 836 - GUJARAT HIGH COURT

2015 (12) TMI 836 - GUJARAT HIGH COURT - TMI - Allowability of depreciation on goodwill - whether the Tribunal was justified in permitting the respondent assessee to for the first time raise an additional ground on the issue of liability of depreciation on goodwill before it? - Held that:- Any ground, legal contention or even a claim would be permissible to be raised for the first time before the appellate authority or the tribunal when the facts necessary to examine such ground, contention or c .....

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mstances, the above decision of this court in the case of Commissioner of Income Tax v. Mitesh Impex (2014 (4) TMI 484 - GUJARAT HIGH COURT ) would be squarely applicable to the facts of the present case.

The impugned order passed by the Tribunal, being in consonance with the principles laid down in the above decision, the question is required to be answered in the affirmative, that is, in favour of the assessee and against the revenue. - TAX APPEAL NO. 115 of 2015 - Dated:- 2-11-2015 .....

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the first time and whether learned Tribunal is justified in law and on facts in admitting fresh/new claim on depreciation of goodwill as additional ground raised by the assessee for the first time, without recording any reasons permitting the assessee to raise the same for the first time before the learned Tribunal? 2 The facts stated briefly are that the assessee is a company engaged in the business of manufacturing of fertilizers, various chemicals for industrial use and information technolog .....

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mined at ₹ 447,06,15,430/-. The assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals), who, by an order dated 25th October, 2010 granted partial relief to the assessee. Both, the assessee as well as the revenue, carried the matters in appeal before the Tribunal. Before the Tribunal, the assessee submitted that the merger of erstwhile Narmada Chematur Petrochemicals Co. Limited effective from 1st April, 2005, under the scheme approved by the Gujarat High Cour .....

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the Tribunal. It was submitted that the additional ground was purely a legal ground and did not require further facts apart from the facts which were already available on record. On behalf of the revenue an objection was raised against entertaining the additional ground of appeal. 3 The Tribunal, after hearing the rival submissions and the material on record, found that the additional ground was a purely legal ground and accordingly, admitted such ground for adjudication. The Tribunal took note .....

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mitted that when the additional ground had not been raised before the Assessing Officer as well as the Commissioner (Appeals), the Tribunal was not justified in admitting such ground raised by the assessee for the first time before it, without recording proper reasons for doing so merely on the count that it was purely a legal ground. It was submitted that the merger took place with effect from 1st April, 2005 and the assessee was aware that the claim of depreciation on goodwill had arisen, desp .....

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on of facts is required whereas the facts regarding acquisition of any goodwill and its cost of acquisition within the meaning of section 43(1) of the Act are not on record, which is a prerequisite for claiming depreciation. It was submitted that the additional ground is a factual ground warranting in depth investigation of facts pertaining to goodwill. 4.1 Referring to the impugned order, it was submitted that the Tribunal, without recording any reasons, has in breach of rule 11 of the Income T .....

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ound unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground. The appellant was not permitted to urge a point not set forth in the memorandum of appeal without the leave of the Tribunal. Even otherwise, the Tribunal has to exercise such discretion judiciously and not arbitrarily. It has discretion in appropriate cases to allow any party to the appeal to raise a new ground before it. The powers of the Tribunal referable to rule 11 are judicial i .....

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not a pure legal ground, but is a mixed question of law and facts and that the Tribunal was, therefore, not justified in remitting the issue to the file of the Commissioner (Appeals) to decide the issue as per law. 5. Opposing the appeal, Mr. Manish Shah, learned advocate for the respondent submitted that the issue involved in the present case is no longer res integra inasmuch as this court in the case of Commissioner of Income Tax v. Mitesh Impex, (2014) 367 ITR 85 (Guj), has held that any new .....

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reciation on goodwill. However, the said issue is now concluded by the decision of the Supreme Court in the case of Commissioner of Income Tax, Kolkata v. Smifs Securities Limited, 2012 (348) ITR 302, whereby the controversy became clear that the assessee is entitled to claim depreciation on the goodwill acquired on account of merger. Reference was made to the decision of the Supreme Court in the case of National Thermal Power Company Limited v. Commissioner of Income Tax, (1998) 229 ITR 383, wh .....

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bility of an assessee. Mr. Shah submitted that therefore, the Tribunal did not commit any error in permitting the respondent assessee to raise an additional ground for the first time before it. As regards the contention that the Tribunal has not recorded any reasons while permitting the additional ground, it was submitted that the Tribunal has recorded a finding that the additional ground raised by the assessee is a purely legal ground and had accordingly admitted the same for adjudication. Unde .....

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he issue of liability of depreciation on goodwill before it. As can be seen from the impugned order, the Tribunal, after considering the rival submissions and material on record, has recorded that the additional ground raised is purely a legal ground. The Tribunal has further recorded the submissions of the learned counsel for the assessee that the additional ground sought to be raised by the assessee is a purely legal ground and the facts necessary to examine such ground are already on record. .....

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in the case of Commissioner of Income Tax v. Mitesh Impex (supra), wherein, after considering the decision of the Supreme Court in the case of National Thermal Power Company Limited v. Commissioner of Income Tax (supra) and in the case of Goetze (India) Limited v. Commissioner of Income-tax, 2006 284 ITR 323 (SC), the court has held thus: 32 In case of National Thermal Power Co. Ltd. vs. Commissioner of Income-tax reported in [1998] 229 ITR 383(S.C.) when the question of law was raised for the .....

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sidering the questions of law arising in assessment proceedings although not raised earlier. 38.In case of Goetze (India) Ltd. vs. Commissioner of Income-tax(supra) the Supreme Court distinguished the judgment in the case of National Thermal Power Co. Ltd. vs. Commissioner of Income-tax (supra) on the ground that the same pertained to the power of the Tribunal under section 254 of the Act to entertain a point of law for the first time and commented that such decision does not relate to the power .....

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Income-tax Act, 1961. There shall be no order as to costs. 40.It thus becomes clear that the decision of the Supreme Court in the case of Goetze (India) Ltd. vs. Commissioner of Income-tax (supra) is confined to the powers of the assessing officer and accepting a claim without revised return. This is what Supreme Court observed in the said judgment while distinguishing the judgment in the case of National Thermal Power Co. Ltd. vs. Commissioner of Income-tax (supra) and that is how various High .....

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dispute about the facts. Not only such additional ground or contention, the Courts have also, as noted above, recognized the powers of the Appellate Commissioner and the Tribunal to entertain a new claim for the first time though not made before the assessing officer. Income Tax proceedings are not strictly speaking adversarial in nature and the intention of the Revenue would be to tax real income. 41. This is primarily on the premise that if a claim though available in law is not made either in .....

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re already on record. In such a case the situation would be akin to allowing a pure question of law to be raised at any stage of the proceedings. This is precisely what has happened in the present case. The Appellate Commissioner and the Tribunal did not need to nor did they travel beyond the materials already on record, in order to examine the claims of the assessees for deductions under section 80IB and 80HHC of the Act. 41. In the decisions that we have noted above, the Courts have considered .....

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clusion that even if facts necessary to examine such a claim are not placed before the assessing officer and, therefore, not on record, there would be no impediment in the Commissioner (Appeals) entertaining such a claim. Such an issue does not arise in these appeals. We would, therefore, reserve our opinion on this limited aspect of the matter if and when in future the question presents before us in such form. For the present, we answer Questions (3) and (4) against the Revenue and in favour of .....

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