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2018 (12) TMI 315 - AT - Income TaxDepreciation on intangible assets - case of conversion of partnership firm into a company - determination of WDV / cost of acquisition - binding force of contradictory decision of ITAT for earlier years - Held that:- In all the three circumstances above, the erstwhile company ceases to exist and a new company comes into existence. In the case on hand also, on account of conversion, the erstwhile partnership firm ceased to exist while the company has come into existence. Therefore, the assets come to vest in the hands of the company and there is no cost of assets to the company on such vesting. When the transaction itself has been treated to be not a transfer, but is akin to succession, in our opinion the 5th proviso to subclause (ii) of sec. 36(1) applies and the depreciation has to be calculated as if there is no transfer. Further, as there is no transfer, there is no cost to the assessee. Depreciation is allowable on the WDV of the asset and WDV has been defined u/s 43(6) to mean in the case of assets acquired in the previous year, the actual cost to the assessee. As actual cost to the assessee was ‘Nil’, the WD value of the assets in the hands of the predecessor firm shall be considered for the allowance of depreciation. Therefore, we do not see any reason to interfere with the orders of the authorities below. Although in Assessment Year 2013-14, the Tribunal has stated in para no. 10 of that Tribunal order which has been reproduced above that the Tribunal finds no reason to take a contrary view in this appeal and therefore, following the Tribunal order for earlier years, the AO was directed to allow depreciation on intangible assets. When the issue was decided by the Tribunal against the assessee for Assessment Years 2005-06 and 2008-09 and also for Assessment Year 2012-13, this Tribunal order for Assessment Year 2013-14 in which, it is stated that the earlier tribunal orders are being followed, it cannot be considered as binding precedence and hence, by respectfully following the earlier Tribunal orders for Assessment Years 2005-06, 2008-09 and 2012-13, the issue in dispute is decided against the assessee.- decided against assessee.
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