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.
