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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI G. MANJUNATHA
आदेश /O R D E R PER MAHAVIR SINGH, VP: This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals)-15, Chennai in ITA No.274/A.Y.2012-13/CIT(A)-15/2015-16 dated 27.03.2017. The assessment was framed by DCIT, Corporate Circle 6(1), Chennai for the assessment year 2012-13 u/s. 143(3) of the Income Tax Act (herein after referred to as the Act), vide his order dated
16.02.2015. The penalty under dispute was levied by DCIT, Corporate Circle – 6(1), Chennai u/s. 271(1)(c) of the Act, vide his order dated 31.08.2015 (the penalty under dispute).
The only issue in this appeal of the assessee is levy of penalty u/s.271(1)(c) of the Act, confirmed by CIT(A) on disallowance of depreciation on intangibles. For this, assessee has raised various grounds, which we need not to reproduce.
At the outset, the ld.counsel for the assessee stated that the quantum appeal in for assessment year 2009-10 was decided by the Tribunal vide order dated 06.06.2019, whereby Tribunal has deleted the disallowance by observing as under in para No.5 as under:- 5. It is now well settled that consideration by way of issuance of shares on the entire value of net assets and liabilities is a valid consideration. Reliance in this regard is placed on the decision of Hon’ble Kerala High Court in the case of Commonwealth Trust (India) Ltd vs CIT reported in 306 ITR 356 (Ker). The Hon’ble Kerala High Court had categorically observed that: if shares were transferred to the shareholders of the foreign company, then the transfer of property to the appellant company is against consideration in the form of value of shares allotted to the shareholders of the amalgamating company. Share capital is a liability of the company to the shareholders and so much so, value of shares allotted constitute value of the property acquired by the company in the course of amalgamation.
In view of the aforesaid findings in the facts and circumstances of the case and respectfully following the judicial precedents relied upon herein above, we direct the Ld.AO to grant depreciation on revalued portion of intangible assets for all the years in appeal before us. Accordingly the Ground Nos.1 to 7 raised by the assessee for the assessment year 2009-10 are allowed.
This quantum deletion in assessment year 2009-10 was applied in this assessment year 2012-13 also. Once, the quantum is deleted, penalty levied by AO and confirmed by CIT(A) u/s.271(1)(c) of the Act, on account of disallowance of depreciation on intangible assets will not survive. Hence, we delete the penalty and set aside the orders of lower authorities i.e., AO & CIT(A).
In the result, the appeal of the assessee is allowed.
Order pronounced in the court on 18th February, 2021 at Chennai.