Aramark India P.Ltd, Navi Mumbai vs Assessee

1 Aramark India P Ltd ITA 3839/M/2013

आयकर अपीलीय अिधकरण "ए" यायपीठ मुब ं ई म।

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH "A", MUMBAI ी संजय अरोरा, लेखा सद य एवं ी अिमत शु ला, याियक सद य के सम । BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBERITA ITA No. : 3839/Mum/2013 (Assessment year: 2009-10) Aramark India P Ltd, Vs Income Tax Officer- 6(1)(3), 437-438, Sector -4, Ghansoli, Mumbai Navi Mumbai -400 701 थयी लेखा सं.:PAN: AAGCA 4383 F अपीलाथ (Appellant) यथ (Respondent) Appellant by : Ms Aarti Vissanji Respondent by : Shri Sachidanand Dube

सुनवाई क तार ख /Date of Hearing : 25-02-2015 घोषणा क तार ख /Date of Pronouncement : 01-05-2015

आदेश ORDER ी अिमत शु ला, या स: PER AMIT SHUKLA, JM:

The aforesaid appeal has been filed by the assessee against the order dated 22.02.2013 passed by CIT(A) -14, Mumbai for the quantum of assessment passed u/s 144 for the AY 2009-10. In the grounds of appeal, no. 1 to 5, the assessee has mainly challenged the assessment order passed by the AO u/s 144 on various counts. Besides this, the assessee has raised following as additional grounds which is on merits.

"Petitioner Company prays that depreciation on goodwill be allowed for the Assessment Year 2009-10. Goodwill of Rs. 28,79,57,469/- was written off during the Assessment Year in question. The depreciation at 25% on WDV basis was not claimed in the nature filed. Thus a plea is filed to allow such amount of depreciation to the Petitioner Company".

2. The facts in brief are that, the assessee is a subsidiary of Aramark Corporation USA, engaged in the business of rendering integrated food and facility management to Corporate customers in India.

2 Aramark India P Ltd ITA 3839/M/2013

3. Before us, the Ld. Counsel submitted that, so far as the issue of depreciation on goodwill, relevant facts are that the assessee company had entered into an agreement with three group companies of the Patman Group for acquiring the goodwill, business and other rights. In consideration, the assessee company had paid a sum of Rs. 29,56,32,498/- towards acquiring of goodwill, business rights etc. Such a payment was made towards the end of the year ending on 31.03.2008, hence the benefit of the depreciation on goodwill was to be claimed from AY 2009-10. However, the assessee had written off the amount of goodwill in the books in the AY 2011-12. Thus the depreciation on the same was to be claimed from the AY 2009-10. Particulars of value of goodwill, amount of depreciation claimed and WDV was given in the following manner:

Particulars Amount in INR Value of Goodwill 287,957,469 Depreciation for FY 2007-08 Not claimed as Payment was delayed

WDV for 31st March 2008 287,957,469 Depreciation for FY 2008-09 71,989,367 unclaimed

WDV for 31st March 2009 215,968,102 Depreciation for FY 2009-10 53,992,025

WDV for 31st March 2010 161,976,076 Dep. For FY 2010-11 40,494,019

WDV for 31st March 2011 121,482,057 Depreciation for FY 2011-12 30,370,514

Thus the depreciation on goodwill was to be claimed from AY 2009-10, @ 25% of WDV, which could not be claimed, hence such claim should be allowed. Now in view of the decision of Hon'ble Supreme Court in the case of CIT vs. Smiff Securities Ltd [2012] 348 ITR 302, it is quite settled that depreciation is allowable on goodwill.

3 Aramark India P Ltd ITA 3839/M/2013

4. Regarding various other grounds challenging the best judgment assessment order passed u/s 144, no argument has been put forth by the Ld. Counsel before us.

5. Ld. DR submitted that so far as the issue raised from the ground No. 1 to ground no. 5, the Ld. CIT(A) has given very detailed reasons justifying the action of the AO for passing the order u/s 144 and making the best judgment assessment. Thus, the grounds raised by the assessee in the absence of any proper rebuttal should be dismissed.

6. Regarding depreciation on goodwill, he submitted that since this issue has not been raised by the assessee before the authorities below, therefore, same should be restored back to the file of the CIT(A) or AO.

7. After considering the rival submissions and on perusal of the impugned orders, we find that so far as the issue regarding passing of best judgment assessment u/s 144, the Ld. CIT(A) has dealt, with the entire objections of the assessee in a very detailed manner and there being no proper rebuttal submissions before us, we do not find any reason from deviating from such finding of the CIT(A). Accordingly, Ground no. 1 to Ground no. 4 is treated as dismissed.

8. So far as Ground no. 5 is concerned, the assessee has raised the contention that the Ld. CIT(A) has erred in upholding the initiation of penalty proceedings u/s 271A, the same is pre-mature as the assessee can raised the objections before the AO at the time of penalty proceedings. Hence, Ground no. 5 is dismissed.

9. As regard the issue raised in additional ground, we find that the same is purely a legal ground, arising out of the facts available on record and accordingly, the same is admitted. The issue, whether the depreciation on goodwill is allowable or not, the same stands concluded by the decision of Hon'ble apex Court in the case of Smiff Securities Ltd (supra), wherein the Hon'ble Supreme Court 4 Aramark India P Ltd ITA 3839/M/2013 held that goodwill is an asset under the expression used in Explanation 3(b) to section 32(1) and therefore, depreciation is allowable on such an asset. Thus, the depreciation on the goodwill should be allowed. However, the facts regarding computation of WDV and the amount of depreciation, which is to be allowed in the assessment year 2009-10, needs verification at the end of the AO, therefore, this matter is restored back to the file of the AO to examine the contention of the assessee and allow the claim of depreciation in accordance with the Supreme Court decision. Accordingly, additional ground raised by the assessee is partly allowed for statistical purposes.

10. In the result, appeal of the assessee is partly allowed for statistical purposes.

Order pronounced in the open court on 1st May, 2015.

Sd/- Sd/- (संजय अरोरा) (अिमत शु ला) लेखा सद य याईक सद य (SANJAY ARORA) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Date: 1st May, 2015

त/Copy to:- 1) अपीलाथ /The Appellant. 2) यथ /The Respondent. 3) The CIT(A) -14, Mumbai.

4) The CIT-6, Mumbai/CIT -6, Mumbai.

5) िवभागीय ितिनिध "ए", आयकर अपीलीय अिधकरण, मुब ं ई/ The D.R. "A" Bench, Mumbai.

6) गाड फाईल Copy to Guard File.

आदे शानस ु ार/By Order / / True Copy / / उप/सहायक पंजीकार आयकर अपील य अ धकरण, मब ुं ई Dy./Asstt. Registrar I.T.A.T., Mumbai *च हान व.िन.स *Chavan, Sr.PS