Income Tax Appellate Tribunal - Ahmedabad
Vodafone India Services Private Ltd.,, ... vs The Acit, Circle-4(1)(2),, Ahmedabad on 19 March, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "D" BENCH AHMEDABAD
BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER,
AND SHRI S. S. GODARA, JUDICIAL MEMBER.
ITA No. 2638/Ahd/2017
(Assessment Year : 2013-14)
Vodafone India Services Private Ltd.
[formerly known as 3 Global Services
Private Ltd. ('GSPL'/ '3GSPL'],
127 Maker Chamber - III, Nariman Point,
Mumbai - 400 021, Maharashtra, India. Appellant
Vs.
Assistant Commissioner of Income Tax,
Circle - 4(1)(2), B Wing, 2nd Floor,
Pratyaksh Kar Bhavan, Near Polytechnic,
Ambawadi, Ahmedabad - 380015,
Gujarat, India Respondent
PAN: AAACZ1849D
आवेदक क ओर से / By Assessee : Shri S. N. Soparkar, Shri Parin Shah
& Shri Mrunal Parekh, A.R.
राज
व क ओर से / By Revenue : Smt. Vasundra Upmanyu, Sr. D.R.
सन
ु वाई क तार ख/Date of Hearing : 15.03.2018
घोषणा क तार ख/Date of
Pronouncement : 19.03.2018
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
This assessee's appeal for assessment year 2013-14, arises against the Asstt. Commissioner of Income Tax, Circle 4(1)(2), Ahmedabad's assessment ITA No. 2638/Ahd/2017 (Vodafone India Services P. Ltd. vs. ACIT) A.Y. 2013-14 -2- order dated 26.10.2017 passed u/s. 143(3) r.w.s. 144C of the Income Tax Act, 1961, hereinafter 'the Act'.
Heard both the parties. Case file perused.
2. Learned counsel representing assessee files a chart of all the issues raised in the instant appeal. The Revenue is fair enough in not disputing correctness thereof. It emerges therefrom that the assessee's first substantive grievance is that the Assessing Officer has erred in law as well as on facts in disallowing its depreciation claim of Rs.14,65,48,090/- in respect of goodwill relating to acquisition of call center business of M/s. Vodafone Essar Gujarat Limited "VEGL". Both the parties fairly state that a co-ordinate bench's order in assessee's case itself of preceding assessment year 2012-13 dated 23.01.2018 reported as (2018) 89 taxmann.com 299 (Ahmedabad-Trib.) has restored the very issue back to the Assessing Officer as under:
"161. In ground nos. 15 and 16 plead that both the lower authorities have erred in law as well as on facts in denying depreciation on goodwill amounting to Rs.19,53,97,454/- on account of its amortization. These grounds are as follows:-
"15. That the AO and DRP erred in making a disallowance of Rs.19,53,97,454/- in respect of depreciation claimed by the appellant on goodwill relating to acquisition of call centre business of VGEL, by mechanically following the DRP directions for AY 2011-12, without appreciating that goodwill is an 'intangible asset' under Section 32 of the Act.
16. That the AO and DRP erred in following order of AY 2011-12 and not considering the bifurcation of assets and liabilities acquired by the appellant details of which were provided to the AO vide submission dated 29.02.2016."
162. There is no dispute about the assessee having acquired M/s. "VEGL" call center business on 08.11.2008 by way of a business transfer agreement (BTA) as a going concern on slum sale basis effective from 01.11.2008. Its case throughout has been that the said agreement defines "business assets" to mean assets and liabilities, working capital, employees and assumed contracts pertaining to the above call center business. The assessee further pleaded to have paid consideration amount of Rs.160.54crores to the above entity. It ITA No. 2638/Ahd/2017 (Vodafone India Services P. Ltd. vs. ACIT) A.Y. 2013-14 -3- computed net assets value at Rs.1.84 crores whereas the remaining consideration was recorded as "goodwill". This followed assessee's impugned depreciation claim. The Assessing Officer declines the same in assessment order in view of his corresponding findings in all preceding assessment years right from 2009-10 onwards disallowing the very claim as reproduced in assessee's written submissions before us.
163. Learned senior counsel vehemently contends that the issue as to whether the goodwill in question forms an intangible asset u/s.32(1)(ii) of the Act or not to be entitled for depreciation relief is no more res integra as hon'ble apex court's land mark judgment in CIT v. Smiffs Securities Ltd. case [2012] 24 taxmann.com 222/210 Taxman 428/348 ITR 302 (SC) has settled the law in assessee's favour. We see no substance in the instant argument since there is no change so far as all facts pertinent to this issue vis-a-vis those involved in preceding assessment years are concerned. The authorities below have already adopted the very reasoning as in said earlier years to reject assessee's instant claim. It is not clear as to what is the fate of these assessment years before this Tribunal. Learned counsel at this stage submits that assessee's appeal for the said earlier assessment year 2011-12 is pending but the position of the earlier years is not clear. In any event, there is no independent adjudication on this issue by the Assessing Officer. In view of these discussions, in our considered view, the matter is required to be remitted to the file of the Assessing Officer for adjudication de novo by dealing with the specific issues raised by the assessee and in the light of whatever is the position in respect of earlier assessment years- particularly as we have donot have the benefit of knowing the precise status of outcome of appeals before this Tribunal. As learned counsel states that 2011-12 is pending before this Tribunal, the Assessing Officer is directed to take into account the decision of this Tribunal for the assessment year 2011-12, as indeed any other assessment year, as may be available to the Assessing Officer at the point of time when he so decides the matter afresh.
164. In the result, Ground Nos. 15 to 16 are allowed for statistical purposes.
3. There is no distinction either on facts or law pointed at both the parties' behest qua the instant substantive ground. We therefore restore the instant issue back to the Assessing Officer for afresh adjudication taking into account the relevant consequential assessments framed in said earlier assessment years. The assessee's instant first substantive ground is therefore accepted for statistical purposes.
4. The assessee's second substantive ground is that Assessing Officer has erred in law as well as on facts in making Section 14A r.w. Rule 8D ITA No. 2638/Ahd/2017 (Vodafone India Services P. Ltd. vs. ACIT) A.Y. 2013-14 -4- disallowance of Rs.8,30,32,750/- in relation to its exempt income. Learned senior counsel submits that assessee's exempt income in the impugned assessment year is only Rs.1,18,301/-. He then refers to tribunal's co-ordinate bench's decision in Cadila Pharmaceuticals Ltd. vs. DCIT [2017] 85 taxmann.com 354 (Ahmedabad-Trib.) following hon'ble Delhi high court's judgment in Joint Investments Pvt. Ltd. vs. CIT (2015) 372 ITR 694 (Delhi) thereby restricting the impugned disallowance to the extent of exempt income only. Learned Departmental Representative on the other hand vehemently contends that Assessing Officer has rightly made the impugned disallowance. He however fails to dispute the abovestaed facts regarding assessee's exempt income coming to Rs.1,18,301/- as well as the judicial pronouncements hereinabove restricting the impugned disallowance to the extent of exempt income only. We thus follow similar course of action herein as well to partly accept assessee's instant substantive ground for upholding the amount in question to the extent of exempt income only. The assessee's other arguments challenging application of Section 14A r.w. Rule 8D in principle are therefore rendered infructuous at this stage.
5. The assessee's next contention challenges correctness of Assessing Officer's action in adding the above disallowance of Rs.8,30,32,750/- for the purpose of computing its book profit u/s. 115JB of the Act. We notice that this tribunal's recent special bench's decision in ACIT vs. Vireet Investment Pvt. Ltd. ITA No. 502/Del/2012 has held that such an addition in computation of book profits is not sustainable. We therefore accept assessee's instant argument. The Assessing Officer is directed to delete the impugned book profit adjustment addition.
6. Learned counsel lastly submits that the assessee no more wishes to press for its last substantive ground challenging addition of Rs.1,888/- on account of mismatch in income credited to P&L account and Form 26AS keeping in mind ITA No. 2638/Ahd/2017 (Vodafone India Services P. Ltd. vs. ACIT) A.Y. 2013-14 -5- the smallness of the amount. This last substantive ground is accordingly rejected as not pressed.
7. This assessee's appeal is partly allowed.
[Pronounced in the open Court on this the 19th day of March, 2018.] Sd/- Sd/-
(N. K. BILLAIYA) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 19/03/2018
True Copy
S.K.SINHA
आदे श क त ल
प अ े
षत / Copy of Order Forwarded to:-
1. राज
व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आय!
ु त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।