THE ACTI , CIRCLE-3(1)(1),, AHMEDABAD vs. NIRMA LIMITED,, AHMEDABAD

ITA 1437/AHD/2019Status: DisposedITAT Ahmedabad28 August 2025AY 2016-1733 pages
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What did the Tribunal hold?

The Tribunal held that the assessee's grounds of appeal concerning the disallowance of delayed ESIC/PF payments were not pressed and were dismissed as such. Regarding the disallowance of depreciation on goodwill, the Tribunal respectfully followed a coordinate bench's decision in the assessee's own case, holding that the assessee is entitled to depreciation on goodwill arising from the amalgamation of Saurashtra Chemicals Ltd. The reasoning was that once depreciation is granted in earlier years, the resultant Written Down Value (WDV) becomes final and cannot be altered by the Assessing Officer. Depreciation is a statutory allowance linked to the block of assets, and the WDV must be carried forward. Therefore, the disallowance made by the Assessing Officer and sustained by the CIT(A) for both assessment years was directed to be deleted. The assessee's grounds on this issue were allowed. The cross objections filed by the assessee were dismissed as not pressed, except for the ground relating to the exclusion of sales tax subsidy in the computation of book profits under Section 115JB, which was adjudicated in earlier paragraphs (not detailed in the provided text).

What were the facts?

The assessee, Nirma Limited, is a public limited company engaged in manufacturing and marketing consumer and industrial products. The appeals by the Revenue and cross-objections by the assessee are against the orders of the CIT(A) for Assessment Years (AY) 2015-16 and 2016-17. For AY 2015-16, the assessee filed a revised return declaring total income of Rs. 46,72,792/-. The assessment order under Section 143(3) determined total income at Rs. 103,21,96,073/-, with additions including sales-tax subsidy, excess depreciation on intangible assets, disallowance under Section 14A, product registration expenses, delayed ESIC/PF payments, depreciation on goodwill from SCL amalgamation, and disallowance of deduction under Section 80IA. For AY 2016-17, the assessment order determined total income at Rs. 550,48,81,113/-, with additions for excess depreciation on intangible assets, Section 14A disallowance, depreciation on goodwill, adjustment of income relatable to a subsequent year, and Section 80IA disallowance.

What were the issues?

1. Whether the CIT(A) erred in confirming the disallowance of delayed payment of ESIC for Rs. 9,70,103/- for AY 2015-16 and Rs. 9,70,103/- for AY 2016-17, as per Section 43B of the Income Tax Act, 1961. The assessee argued that the payments were made within the due date for filing the return of income, and thus the disallowance was not warranted. The Revenue contended that the payments were delayed beyond the statutory due dates for payment, attracting disallowance under Section 43B. 2. Whether the CIT(A) erred in confirming the disallowance of depreciation on goodwill arising from the amalgamation of Saurashtra Chemicals Ltd. (SCL) for AY 2015-16 (Rs. 9,71,72,064/-) and AY 2016-17 (Rs. 7,28,79,048/-), as per Section 32 of the Income Tax Act, 1961. The assessee argued that goodwill is an intangible asset on which depreciation is allowable, citing precedents. The Revenue argued that goodwill is not a depreciable asset, especially in light of subsequent amendments to the Act.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 115JB,Section 14A,Section 80IA,Section 32,Section 43B

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Cases cited in this judgment(11)Show list

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आयकर अपीलीय अधिकरण, अहमदाबाद न्यायपीठ “ A", अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “ A " BENCH, AHMEDABAD BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं/ITA Nos.1412 & 1413/Ahd/2019 निर्धारण वर्ष / Assessment Years: (2015-2016 & 2016-17)

Nirma Limited, Nirma House, Ashram Road, Ahmedabad-380009. (Gujarat) बनाम / v/s.

The Deputy Commissioner of Income Tax, Circle 3(1)(1), Ahmedabad. स्थायी लेखा सं./PAN : AAACN5350K निर्धारण वर्ष / Assessment Years : (2015-16 & 2016-17)

The Assistant Commissioner of Income Tax, Circle 3(1)(1), Ahmedabad.

Nirma Limited, बनाम / v/s.

Nirma House, Ashram Road, Ahmedabad-380009. (Gujarat) स्थायी लेखा सं./ PAN: AAACN5350K AND C.O Nos.11-12/Ahd/2020 In निर्धारण वर्ष / Assessment Years : (2015-16 & 2016-17)

Nirma Limited, Nirma House, Ashram Road, Ahmedabad-380009. (Gujarat)

The Deputy Commissioner of बनाम/ v/s.

Income Tax/The Assistant Commissioner of Income Tax, Circle 3(1)(1), Ahmedabad. स्थायी लेखा सं./ PAN: AAACN5350K अपीलार्थी/ (Appellant) प्रत्यर्थी / (Respondent) ITA Nos.1412-1413/Ahd/2019 with others Nirma

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