PRINCIPAL COMMISSIONER OF INCOME TAX 4 vs. TRIO ELEVATORS COMPANY (INDIA) LTD

Revenue is in appeal against the judgment of the Income   Tax   Appellate   Tribunal   dated   22.09.2017, raising following questions for our consideration: “[A] Whether the Tribunal is correct in law and on   facts   in   setting   aside   the   matter   on   the issue of disallowance of the claim of provision for   doubtful   debt   of   Rs.31,57,448/­   and provision for doubtful advances of Rs.5,57,805/­ to adjudicate afresh ? [B] Whether the Tribunal is correct in law and on facts in directing the assessing officer to allow the claim of depreciation on goodwill?”

The first question pertains to the disallowance of   claim   towards   provision   for   doubtful   debt   and doubtful advances.  Assessing Officer as well as the Commissioner   of   Income   Tax   (Appeals)   both   having disallowed   such   claim,   the   assessee   approached   the Tribunal.  Tribunal by the impugned judgment, merely remanded the issue before the Assessing Officer for deciding   it   afresh   in   light   of   the   Full   Bench judgment   of this   Court  in  case  of  Commissioner   of Income­Tax v. Vodafone Essar Gujarat Ltd. reported in [2017] 397 ITR 55 (Guj) [FB].

The   judgment   of   full   bench   was   not   available when the issue was decided by the Assessing Officer and Commissioner of Income Tax (Appeals).  We see no error   in   the   order   of   the   Tribunal   and   therefore, there is no question of asking the Assessing Officer to decide it again in light of the said judgment. Even the Revenue's representative before the Tribunal had   raised   no   objection   to   this   modality.     No question of law in this respect arises.

The   second   issue   pertains   to   the   assessee's the Tribunal had referred to Explanation­3 to sub­ section (1) of section 32 which contains two clauses (a)   and   (b)   explaining   the   expression   'asset'   and 'block of asset'.  The Tribunal was of the view that goodwill   would   be   included   as   an   asset   under Explanation­3(b) to sub­section (1) of section 32 of the Act and also held that in the present case, the difference was paid for acquisition of such goodwill. The Tribunal referred to the judgment of the Supreme Court in case of  Smifs Securities Ltd.  (supra) and held the issue in favour of the assessee.

It can, thus, be seen that the Tribunal had come to   the   conclusion   that   excess   payment   was   towards goodwill and that by settled law, goodwill would also be a depreciable asset.

No   question   of   law   arises.     Tax   Appeal   is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH