TMI Blog2022 (1) TMI 1353X X X X Extracts X X X X X X X X Extracts X X X X ..... to confirmation by the Dispute Resolution Panel. As already noticed that under sub-section (5), the Dispute Resolution Panel has the mandate to issue directions for guidance of the AO while framing the assessment and under sub-section (8) the Dispute Resolution Panel may confirm or reduce or enhance the variations proposed in the draft assessment order. Both sub-sections (5) and (8) have to be read together, and from a conjoint reading of the two provisions it is clearly discernible that the final say, in so far as the assessment is concerned, rests with the Dispute Resolution Panel. The approach of the AO as manifest in clauses (a) to (d) as extracted above, to our mind is problematic. In so far as the decision of the Income-tax Appellate Tribunal, Hyderabad A Bench, Hyderabad in respect of petitioner's own case for the assessment year 2014-15 [ 2019 (11) TMI 803 - ITAT HYDERABAD] , the Assessing Officer has stated that the Department has not accepted the said decision. The views of the Income-tax Appellate Tribunal is not acceptable to the Department, and therefore, it has been appealed before the High Court. As such, the issue of addition of depreciation claimed on g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g at this stage may not be justified as it would pre-empt decision-making by the high-powered Dispute Resolution Panel. However, we hope and trust that the Dispute Resolution Panel shall look into all aspects of the matter, more particularly, the discussions made above while passing appropriate order(s) under sub-section (8) of section 144C of the Act, and if necessary further personal hearing shall be afforded to the petitioner. DRP shall look into and consider the objections raised by the petitioner more particularly, about the decision of the Income-tax Appellate Tribunal in its own case for the assessment year 2014-15 and the judgment of the Supreme Court in Smifs (supra) keeping in mind the discussions made above. - W. P. No. 26279 of 2021. - - - Dated:- 4-1-2022 - Ujjal Bhuyan And Smt. P. Madhavi Devi JJ. For the Petitioner : Eashwar , Senior Counsel and Durga Bose Gandham For the Respondent : J. V. Prasad , Standing Counsel for Income-tax, JUDGMENT UJJAL BHUYAN J. - 1. Heard Mr. Eashwar, learned senior counsel for the petitioner and Mr. Prasad, learned standing counsel for the Revenue, appearing for the respondents. 2. The matter was heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the explanation of the petitioner. It was pointed out that in the draft assessment order respondent No. 1 had erred in seeking to disallow depreciation on goodwill. It was further pointed out that the Transfer Pricing Officer in his order for the same assessment year, i. e., 2018-19 had treated depreciation on goodwill as an operative expenditure of the petitioner, while computing the arm's length price of the international transactions undertaken by the petitioner. It was contended that if the very same depreciation on goodwill was disallowed by respondent No. 1 it would lead to an anomalous situation. 10. Pursuant to further notice dated September 21, 2021 of respondent No. 1, the petitioner filed detailed submissions on September 23, 2021 and also requested for a personal hearing. Personal hearing was granted through video conferencing on September 27, 2021 at 03 :00 p.m. 11. Thereafter, respondent No. 1 passed the impugned order dated September 28, 2021 which has been impugned in the present writ petition. The impugned order is a draft assessment order under section 144C of the Act. It is dated September 28, 2021. 11.1 After elaborate discussion, depreciation cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin the length and breath of the country and all such authorities are bound to give effect to the decision of the Supreme Court. 17. Learned senior counsel has submitted two volumes of case law in support of his submissions. In particular, he has referred to the decision of the Supreme Court in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 (SC) ; [1961] 2 SCR 241, more particularly, to paragraph No. 26 thereof and submits that where an action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Court will issue appropriate orders or directions to prevent such consequences. He has also placed reliance on a recent decision of the Bombay High Court in BA Continuum India Pvt. Ltd. v. Union of India [2021] 89 GSTR 73 (Bom) ; [2021] 85 GST 399 (Bom) and submits therefrom that violation of principles of natural justice would render an order non est in the eye of law. In such an eventuality, the right of appeal would not be so much a true right of appeal as a corrected remedy. In that case, the Bombay High Court had not only set aside the order in original while remanding the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision is germane to the lis before us, the same is extracted in its entirety, as under : 144C. (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. (2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order,- (a) file his acceptance of the variations to the Assessing Officer ; or (b) file his objections, if any, to such variation with,- (i) the Dispute Resolution Panel ; and (ii) the Assessing Officer. (3) The Assessing Officer shall complete the assessment on the basis of the draft order, if- (a) the assessee intimates to the Assessing Officer the acceptance of the variation ; or (b) no objections are received within the period specified in sub- section (2). (4) The Assessing Officer shall, notwithstanding anything c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is for warded to the eligible assessee. (13) Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, com plete, notwithstanding anything to the contrary contained in section 153 or section 153B, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received. (14) The Board may make rules for the purposes of the efficient functioning of the Dispute Resolution Panel and expeditious disposal of the objections filed under sub-section (2) by the eligible assessee. (14A) The provisions of this section shall not apply to any assess ment or reassessment order passed by the Assessing Officer with the prior approval of the Principal Commissioner or Commissioner as provided in sub-section (12) of section 144BA. (14B) The Central Government may make a scheme, by notifica t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (2), issue such directions as it thinks fit for the guidance of the Assessing Officer to enable him to complete the assessment. While issuing such directions, the Dispute Resolution Panel shall consider the factors enumerated in sub-section (6). It can also make enquiry or further enquiry before issuing any such directions. 26. This brings us to sub-section (8), as per which, the Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft assessment order. However, it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. As per the Explanation below sub-section (8), the power of the Dispute Resolution Panel to enhance the variation shall include and shall always be deemed to have included the power to consider any matter arising out of the assessment proceedings whether such matter was raised or not by the eligible assessee. 27. Sub-section (10) makes it clear that every direction of the Dispute Resolution Panel shall be binding on the Assessing Officer. Sub-section (13) says that upon receipt of the directions issued by the Dispute Resolution P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Paragraph No. 4.7.6 of the draft assessment order reads as under : 4.7.6 Show-cause notice was issued to the assessee on September 16, 2021 to which it replied on September 20, 2021 and September 23, 2021. Also since the assessee had demanded personal hearing, there fore the same was conducted through video conference on September 27, 2021. The contentions and arguments of the assessee are consi dered and the final order is being issued with the following remarks : (a) It is reiterated that since the appeal in your case is pending in the hon'ble High Court as the Department has not accepted the judg ment of the hon'ble Income-tax Appellate Tribunal, therefore the issue of addition has not yet attained finality. It is contended by the assessee that the draft order disregards all the factual findings by the hon'ble Tribunal, being the highest fact finding authority. However, it is to be noted that the hon'ble Income- tax Appellate Tribunal in its order has only mentioned the arguments presented by the learned Departmental representative such as those on net asset value being negative and the outgo in the form of pay ments to senior managers, however it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odwill in some situations which is not the case of the taxpayer. However, it is to affirm that Finance Act, 2021 has made few amendments which clearly has the effect of disallowing depreciation in any case. Had the intent of the Legislature been to allow depreciation in some circumstances of goodwill, the same would have been reflected in amendments made to the Act. Anyhow, this in no way mean that the Finance Act, 2021 is being made applicable to proceedings for the relevant assessment year. This argument is merely meant to suggest that the Amendment to Finance Act, 2021 is intending to disallow depreciation on goodwill in all cases. (f) Moreover, the Income-tax Act 1961 has various provisions which, when read comprehensively, lead to the conclusion that if cer tain conditions are satisfied in amalgamation, it has to be treated as neutral for tax purposes. If depreciation on goodwill is allowed in tax neutral amalgamations, then the entire intent of the statute, as is evi dent from the comprehensive reading of the provisions, will get vio lated. The amalgamation will not remain tax neutral if depreciation on goodwill is allowed merely because it arises out of accounting entries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a competent court. If this healthy rule is not followed, the result will only be undue harassment to the assessee and chaos in administration of the tax laws. 36. Following the above decision, the Supreme Court again in Collector of Customs v. Krishna Sales (P.) Ltd. [1994] Supp (3) SCC 73, reiterated the proposition that mere filing of an appeal does not operate as a stay or suspension of the order appealed against. It was pointed out that if the authorities were of the opinion that the goods ought not to be released pending the appeal, the straight-forward course for them is to obtain an order of stay or other appropriate direction from the Tribunal or the Supreme Court, as the case may be. Without obtaining such an order they cannot refuse to implement the order under appeal. 37. Following the above decisions of the Supreme Court, a Division Bench of the Bombay High Court in Ganesh Benzoplast Ltd. v. Union of India [2021] 16 GST-OL 519 (Bom) ; [2020] (374) ELT 552 held that non-compliance of orders of the appellate authority by the subordinate original authority is disturbing to say the least as it strikes at the very root of administrative discipline and may have the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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