TMI Blog2021 (4) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... as the agreement for acquiring the business of AFL and UFL was between the assessee and AFL/UFL and none of the affiliates of the FedEx Group were a party to the same thus, it cannot be said that the affiliates had acquired the goodwill along with the assessee. Thus the controversy in hand had its genesis in A.Y. 2011-12, we find, that the CIT(A) had rightly, observed that now when the order of the Pr.CIT under Sec. 263, dated 21.02.2016 had been quashed by the Tribunal, therefore, the disallowance of depreciation on goodwill made by the A.O by relying on the order passed by his predecessor under Sec. 143(3) r.w.s 263, dated 30.12.2016, cannot survive on a standalone basis and was liable to be vacated. Accordingly, finding no infirmity in the view taken by the CIT(A), we herein uphold his order. - Decided against revenue. - ITA No. 6872/Mum/2018 & 848/Mum/2019 (Assessment Years: 2014-15 & 2015-16) - - - Dated:- 24-2-2021 - SHRI RAJESH KUMAR (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) Assessee by : Shri Dhanesh Bafna, A.R Revenue by : Ms. Leena Srivastava, D.R ORDER PER RAVISH SOOD, J.M: The captioned appeals filed by the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid intangible assets were collectively referred by the assessee as goodwill in its fixed assets schedule of its audited financial statements. It was observed by the A.O that the assessee during the year in question i.e A.Y. 2014-15 had claimed depreciation of ₹ 48,72,74,082/- on goodwill under Sec. 32 of the Act. On being called upon to justify its aforesaid claim of depreciation the assessee vide its reply dated 02.12.2016 tried to impress upon the A.O that its aforesaid claim was in order. However, the A.O was not inclined to accept the aforesaid explanation of the assessee. It was observed by the A.O that the issue pertaining to valuation of a goodwill and admissibility of depreciation of goodwill had earlier came up before his predecessor during the course of the scrutiny assessment proceedings under Sec. 143(3) r.w.s 263 in the case of the assessee for A.Y. 2011-12. It was noticed by the A.O, that the Pr.CIT vide his order passed under Sec. 263, dated 21.02.2016 in the case of the assessee for A.Y. 2011-12 had observed that as the assessee was a subsidiary of FedEx Corporation which was world s largest transport company having a global ground and air network fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld a conviction that now when the findings given by the Pr.CIT vide his order passed under Sec. 263, dated 21.02.2016 for A.Y. 2011-12 had been quashed thus, the order passed by the A.O for the year in question i.e A.Y. 2014-15 which w.r.t the issue under consideration was based on A.Y. 2011-12 had to meet the same fate and would not survive. Accordingly, the CIT(A) directed the A.O to delete the disallowance of depreciation on goodwill of ₹ 36,54,55,562/-. 5. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short A.R ) for the assessee at the very outset of the hearing of the appeal submitted that the issue herein involved was squarely covered by the order of the Tribunal in the assessee s own case for A.Y. 2011-12 in ITA No. 3621/Mum/2016. Our attention was drawn by the ld. A.R to the observations that were arrived at by the Tribunal while disposing off the assessee s appeal for A.Y. 2011-12. It was submitted by the ld. A.R that the A.O had disallowed the assessee s claim for depreciation on goodwill on the standalone basis that a view to the said effect was taken by his predeces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 30th December 2016 wherein the AO has accepted the valuation of the goodwill and also accepted the claim of depreciation on the goodwill. In the light of these subsequent facts, what survives to the adjudicated is whether the CIT was justified in giving a direction in para 10.5 of his order on apportionment of goodwill between the assessee and its affiliates. The assessee relied upon the decision of the Bombay High Court in the case of Herdillia Chemicals reported in 221 ITR 194 and based on this decision submitted that since there is a specific direction on merits by the CIT to the AU, the Tribunal ought to adjudicate this issue. On perusal of the CITs order and applying the decision of the jurisdictional High Court, the assessee is justified in raising this issue before us. The direction of the CIT on this issue is without any material on record and based on surmises and conjectures. The agreement for acquiring the business of AFL and UFL is between the assessee and AFL/LJFL. None of the affiliates of the FedEx group are a party to this agreement. Therefore, it cannot be said that the affiliates have acquired the goodwill along with the assessee. Provisions of section 43(1) wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order on the following grounds of appeal before us: 1. Whether on the facts and in the circumstances of the case and in law, was Ld. CIT(A) right in deleting the disallowance made by the A.O on account of depreciation on goodwill? 2. Whether on the facts and in circumstances of the case and in law, was L. CIT(A) in not appreciating the fact that goodwill acquired y the assessee enhances the value of entire FedEx brand? 10. Briefly stated, the assessee company had e-filed its return of income for A.Y. 2015-16 on 28.11.2015, declaring a loss of ₹ 203,80,20,850/-. The return of income filed by the assessee was initially processed as such under Sec. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act. 11. During the course of the assessment proceedings, the A.O following the view taken by his predecessor in A.Y.2011-12 restricted the goodwill attributable to the assessee company to 25% of that as was shown in its books of account for the year in question. Accordingly, the sum of ₹ 30,05,46,047/- i.e 75% of total claim of depreciation on goodwill amounting to ₹ 40,07,28,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
