ITAT CHENNAI: KEY TAX ISSUES – AY 2015-16
EXPORT COMMISSION, GOODWILL DEPRECIATION & OTHER ADDITIONS
| FORUM ITAT, Chennai (Cross Appeals) | DATE OF ORDER 08.07.2026 | ASSESSMENT YEAR 2015-16 | APPELLANTS Assessee & Revenue |
KEY SECTIONS: 9, 40(a)(i), 32(1)(ii), 68, 115JB, 250
BACKGROUND
• Assessee is engaged in manufacturing of processed sand, dolomite, float glass, automotive glass, mirror glass etc.
• Return filed on 30.11.2020 declaring Nil income after set off of brought forward loss of ₹65,04,99,021/- and book profit of ₹2,22,28,82,391/- u/s 115JB.
• Case selected for scrutiny; TP reference made. TP adjustment of ₹30,19,88,344/-.
• AO made several additions/disallowances and assessed income at ₹226,14,19,998/-.
• CIT(A) granted partial relief. • Both sides in appeal before the Tribunal.
TRIBUNAL’S OVERALL DECISION
- Delay in filing appeal condoned.
- Grounds 1 & 2 (legal issues) dismissed.
- Grounds 3 to 6 allowed.
- Grounds 7 & 8 consequential; dismissed.
Grounds 9 & 10 dismissed.Appeal partly allowed.
Order pronounced on 08th July, 2026.
| GROUND | ISSUE | ASSESSEE’S CONTENTIONN | TRIBUNAL’S FINDING & DECISION |
| 1 | Disallowance of Export Commission u/s 40(a)(i) | • Payment to Saint Gobain Exprover, Belgium for export commission not taxable in India. • Benefit under Most Favourable Nation (MFN) clause under DTAA with Belgium. | AR fairly conceded that in view of Hon’ble Supreme Court decision in A.O (International Taxation) vs. Nestle SA [2023] 458 ITR 756 (SC), issue to be decided against the assessee. DECISION: DISMISSED |
| 2 | Depreciation on Goodwill u/s 32(1)(ii) | • Goodwill arose on amalgamation of 4 companies. • Covered by Hon’ble Supreme Court in CIT v. Smifs Securities Ltd. [2012] 348 ITR 302 (SC). • Coord. Bench and CIT(A) in assessee’s own case for AY 2016-17 allowed the depreciation; Revenue appeal dismissed. | • Following decision of Hon’ble Supreme Court and consistent view of coordinate benches. • Working of goodwill and depreciation accepted (details in table below). DECISION: ALLOWED |
| 3 to 5 | Computation of LTCG (Transfer of Land under JDA – Timing) | • JDA dated 05.02.2016. • Clause (5) requires removal of encumbrances (MSEB DP box, electricity lines, drainage etc.) before possession to developer. • Encumbrances not removed in AY 2015-16. • Commencement Certificate: 01.01.2020. • RERA Registration: 14.12.2020. • No possession handed over in AY 2015-16; no flats received. | • No transfer of capital asset during AY 2015-16 as per Section 2(47). • No capital gain can arise in absence of transfer u/s 45. • Relied on: – CIT-9 v. Eastern Ceramics Ltd. (Bom HC) – Balasaheb Popatrao Phadol v. ITO (ITAT Pune). DECISION: ALLOWED |
| 6 | Addition of Credit Card Payments & Investment (₹2,25,040 & ₹444) | • Payments made through banking channel from income duly reported. | • Assessee established by evidence that payments were through banking channel and from disclosed income. DECISION: ALLOWED |
| 7 & 8 | Interest u/s 234A & 234B & Other Consequential Issues | • Consequential to deletion of additions. | • Consequential; no separate adjudication required. DECISION: DISMISSED |
| 9 & 10 | Other Grounds | • Various other grounds. | • No merit. DECISION: DISMISSED |
GOODWILL – WORKING ACCEPTED BY TRIBUNAL
Particulars
| Goodwill on Amalgamation of Saint-Gobain Gyproc Ltd. w.e.f. 01.04.2013 |
| Goodwill on Amalgamation of Saint-Gobain SEVA Engineering Ltd. w.e.f. 01.04.2013 |
| TOTAL GOODWILL (A) [2,45,03,15,307 + 2,47,54,683]* |
| Less: Depreciation @ 25% |
| WDV as on 01.04.2014 (B) |
| Goodwill on SEPR Refractories India Pvt. Ltd. |
| Goodwill on Saint-Gobain Crystals & Detectors India Ltd. |
| TOTAL GOODWILL FOR DEPRECIATION (C) [B + 2,69,61,49,719 + 36,41,87,244] |
DEPRECIATION @ 25% (C × 25%)
KEY TAKEAWAYS
▪ MFN benefit cannot override when issue is decided by Supreme Court contrary to assessee’s claim.
▪ Depreciation on goodwill allowable following CIT v. Smifs Securities Ltd. (SC) and coordinate benches.
▪ Under JDA, no transfer without handing over possession and fulfilment of conditions.
No transfer u/s 2(47) ⇒ No capital gain u/s 45.
▪ Additions for credit card payments and investments deleted when paid through banking channel from disclosed income.
▪ Real income principle prevails; notional income cannot be taxed.
Note: The document text mentions goodwill claimed as ₹1,22,91,83,652, whereas the detailed working table computes depreciation as ₹1,22,91,59,864. Tribunal accepted the working in the table.
Radhika Goyal is Author of Taxconcept Gurugram head office, for deeply reported tax, gst and income tax articles on issues that matter. He splits her time between New Delhi and Bengaluru, and has worked as a reporter, a podcaster and an editor for publications across India.