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Income Tax Appellate Tribunal, DELHI BENCHES: ‘G’, NEW DELHI
PER NK SAINI, ACCOUNTANT MEMBER
This is an appeal filed by the Department against the Order dt. 27.04.2016 of Ld.CIT(Appeals)-22, New Delhi.
1.1. The only effective ground raised in this appeal relates to the depreciation on goodwill which reads as under.
On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred deleting the addition of Rs.10,29,60,726/- on account of disallowance of depreciation on good will by relying on the decision of Hon’ble Supreme Court in the case of M/s Goetze (India) Ltd. as the same has not been claimed in the return of income.
Facts in brief are that the assessee filed return of income on 15.10.2010 declaring loss of Rs.68,11,661/- which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act). Later on the case was selected for scrutiny. The Assessing Officer (A.O.) during the course of assessment proceedings noticed that the assessee had claimed depreciation on good will of Rs.10,29,60,726/- but the same had not been claimed in the return of income. He did not allow the claim of the assessee. Being aggrieved the assessee carried the matter to the Ld.CIT(A) who allowed the claim of the assessee by observing in para 5.3 of the impugned order as under.
5.3. The contentions of the appellant and the A.O. has been examined. The issue whether the A.O. could have entertained the claim of depreciation after the expiry of time limit for filing of revised return u/s 139(5) is irrelevant in this case as explanation 5 to Sec.32(1) makes it mandatory for the A.O. to grant depreciation irrespective of whether an assessee had claimed the same or not. When explanation 5 is read with the decision of the Apex Court in the case of Smifs Securities Ltd., the A.O. was under statutory obligation to grant depreciation. Therefore, the addition made is deleted.
Now the Department is in appeal. The Ld.Sr.D.R. strongly supported the order of the A.O. and the Ld.Counsel for the assessee strongly supported the impugned order passed by the Ld.CIT(Appeals).
We have considered the submissions of both the parties and perused material available on record. In the present case it is noticed that the Ld.CIT(A) allowed the claim of the assessee by keeping in view the provisions contained in Explanation 5 to S.32(1) of the Act which read as under.
Explanation 5 to Sec.32(1) of the Income Tax Act, 1961 “Explanation 5: For the removal of doubts, it is hereby declared that the provisions of this sub section shall apply whether or not the assessee has claimed the deduction in respect of depreciation in computing his total income.”
On perusal of the above provision it is clear that even if the assessee had not claimed any deduction in respect of depreciation in computing the total income, the deduction is allowable as per the provisions of S.32(1) of the Act. We, therefore, do not see any valid ground to interfere with the findings given by the Ld.CIT(Appeals). Hence, the departmental appeal is dismissed.
In the result the departmental appeal is dismissed. Pronounced in the Open Court on 09th November, 2017.