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2019 (10) TMI 914 - AT - Income TaxDisallowance of depreciation on the intangible assets/goodwill acquired in the scheme of amalgamation - principle of consistency - assessee claimed the depreciation 1st time on the intangible assets acquired in the scheme of amalgamation in the assessment 2006-07 - HELD THAT:- Intent of the Legislature is to make amalgamation a tax neutral scheme for companies as well as for the shareholders and not to provide a tax planning mechanism to either of them. Coming to the present facts of the case we note that Indeed there was no entry in the books of the transferor company for the intangible assets/ goodwill being self generated assets. Thus in the backdrop of the above stated facts we are of the view that impugned transaction for claiming the deduction on account of the depreciation is an arrangement for claiming the higher depreciation which is unwanted under the provisions of law. Before parting, we are conscious to the fact that the assessee was allowed for depreciation in respect of such goodwill in the 1st year of amalgamation i.e. AY 2006-07. There was no action either under section 263 or 147 of the Act by the revenue. Therefore we can safely presume that the claim of the depreciation of the assessee in the 1st year has attained finality. Admittedly the 1st year is the base assessment year from where the issue of depreciation is emanating. The question arises once the depreciation has been allowed in the 1st year then the same can be disturbed in the subsequent year without having any change in the facts and circumstances. In our considered view, in such a case the principles of consistency shall be applied as held by the Hon’ble Bombay High Court in the case of PCIT Vs. Quest Investment Advisors Ltd. [2018 (7) TMI 479 - BOMBAY HIGH COURT] - the assessee succeeds on the principle of consistency. Accordingly we set aside the order of the learned CIT (A) and direct the AO to allow the depreciation to the assessee. Hence the ground of appeal of the assessee is allowed.
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