How can deferred sales tax liability be claimed under the head of Goodwill and sought to be depreciated?

IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES “A”: HYDERABAD
(THROUGH VIRTUAL CONFERENCE)
BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER
and
LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
ITA Nos. 650 & 651/H/2015 and 463/Hyd/2017
Assessment Years: 2009-10, 2010-11 & 2012-13

M/s Toshali Cements Pvt. Ltd., Hyderabad.
PAN – AABCT 8989K

vs

1. Income-tax Officer,
Ward – 2(2), Hyderabad.
2. DCIT, Circle – 2, Hyd.
3. ITO, Ward – 2(4), Hyd.

Assessee by:
Shri V. Siva Kumar
Revenue by:
Shri Sunil Kumar Pandey
Date of hearing: 27/04/2021
Date of pronouncement: 02/09/2021

ITA No. 2346/H/2018
Assessment Year: 2014-15

M/s Toshali Cements Pvt. Ltd., Hyderabad.
PAN – AABCT 8989K

Vs.

Dy. Commissioner of Income-tax,
Circle – 2(2), Hyderabad

Assessee by: Shri V. Siva Kumar
Revenue by: Smt. M. Narmada
Date of hearing: 23/06/2021
Date of pronouncement: 02/09/2021

O R D E R

The order of the Commissioner of Income Tax (Appeals)-2, Hyderabad, dated 23.02.2015 on the issue of depreciation on goodwill, is erroneous, contrary to law and facts of the case.

2. The appellant entered into an agreement in November, 2004 for purchase of plant and machinery. It agreed to take over the sales tax deferral liability to the extent of Rs11,OO,81,342/- from the seller. It has discharged the liability taken over by it along with further liability that arose after the plant and machinery were purchased by it. The relevant payments were made subsequent to the date of assessment. The, correspondence with the sales tax department took place in the year 2016.

3. The ld. DR, on the other hand, besides relying on the orders of revenue authorities submitted that the deferred sales tax liability claimed by the assessee under the head of goodwill sought to be depreciated by the assessee is not proper and not in accordance with law. This is the liability which was existed on the date purchase and it was known liability ,therefore, it cannot be treated as goodwill . He further submitted that the every year is a separate assessment year and res judicata does not apply in the assessment proceedings.

4. Further, the contention of the ld. AR of the assessee’s is not acceptable that for AY 2011-12, the revenue has accepted the depreciation on goodwill claimed by the assessee for the reason that res-judicata does not apply in the income-tax proceedings as every assessment year is a separate assessment year.

5.Pronounced in the open court on 2nd September , 2021.

Please find attached the enclosed file for the full judgement