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2016 (5) TMI 151 - AT - Income TaxDepreciation on goodwill - Held that:- The issue whether goodwill is an capital asset coming within the term intangible asset as provided u/s. 32(1)(ii) of the Act is no more res integra in view of the decision of the Hon’ble Supreme Court in the case of CIT vs. Smifs Securities Ltd. (2012 (8) TMI 713 - SUPREME COURT ), wherein after interpreting the explanation (3) to section 32(1) held that “goodwill would fall under the expression any other business or commercial right of a similar nature” and, hence has to be considered as a asset under Explanation (3b) to section 32(1). If we examine the facts of the case with reference to the terms of business transfer agreement it is to be seen that the net current asset value of Studio 18 at the time of sale as per the balance sheet was ₹ 2,36,64,152/- The value of fixed asset is ₹ 1,07,36,157/-. Thus, the balance amount of ₹ 69,53,343/- out of the total consideration paid by the assessee of ₹ 4,13,56,352/- is obviously on account of goodwill. Even accepting that such amount is a balancing figure but still it being in the nature of goodwill, the assessee is eligible to claim depreciation. Further it is also in accordance with the accepted accounting principle and Accounting Standard as brought on record by the learned counsel for the assessee. Even otherwise such balancing figure is on account of goodwill. - Decided in favour of assessee. Allowance of distribution expenses - non-deduction of tax u/s. 40(a)(i) - Held that:- On a perusal of the order passed by the co-ordinate Bench for A.Y. 2006-07 it is seen that as far as distribution expenses are concerned, at the time of hearing before the Tribunal the assessee made a specific claim that either they have to be allowed in A.Y. 2006-07 or in A.Y. 2008-09. Considering such claim of the assessee, the Tribunal remitted the matter back to the file of the AO for deciding assessee’s claim afresh by considering additional evidence brought on record. The learned counsel for the assessee had submitted before us that the amount claimed towards distribution expenses which are subject matter of ground nos. 2 & 3 are also part of the expenditure claimed for A.Y. 2006-07. The aforesaid factual aspect has not been opposed or disputed by the learned DR. Considering the fact that similar issue has arisen in A.Y. 2006-07, which is pending for adjudication before the CIT(A), we deem it proper to remit this issue to the file of the CIT(A) for deciding afresh along with similar issues pending for AY 2006-07 - Decided in favour of assessee for statistical purposes. Addition on account of advertisement and sales promotion expenses - CIT(A) deleted the addition - Held that:- Issue in dispute has been decided in favour of the assessee by Hon’ble Jurisdictional High Court in assessee’s own case for A.Y. 2003-04. Moreover, on a perusal of impugned assessment order, it is clearly evident that though the AO accepts the fact that the Hon’ble Jurisdictional High Court has decided the issue in assessee’s favour for A.Y. 2003-04, but stating that the department has preferred an SLP in the case of Star Plus India Pvt. Ltd. before the Hon’ble Supreme Court has disallowed a part of the advertisement and sales promotion expenses amounting to ₹ 2,75,75,739/-. In our view, this is not a valid ground to disallow part of the expenditure when the issue has been decided in favour of the assessee by the decision of the Hon’ble Jurisdictional High Court. It is mandatory principle of judicial discipline to accept the view of the Hon’ble Jurisdictional High Court, which is of binding nature. Accordingly, we do not find any infirmity in the order of the learned CIT(A) in allowing the assessee’s claim. - Decided in favour of assessee.
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