Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (3) TMI 919 - AT - Income TaxDeprecation u/s 32 on goodwill - intangible assets acquired by Appellant under Business Transfer Agreement (“BTA”) and their apparent financial benefits to Appellant in early years of its operations - HELD THAT:- Assessee company acquired the micro finance business from the society Swayamkrishisangam and has paid towards customer costs, one time reimbursement of ₹ 82 lakh towards cost of Internal control systems, computer software and towards corporate, services including strategic planning, market survey, introduction of new products, impact assessment etc. AO therein took the view that the client acquisition cost of ₹ 3 .97 crores would not be eligible for depreciation as it is not in the nature of intangible asset or in the nature of commercial business rights. CIT(A) in that case took the view that the customer base acquired by the assessee cannot be termed as know-how, patent, copyright or trademark or franchise; and it cannot be considered as license. or business or commercial, right of similar nature and relied on the decision of the Hon’ble Bombay High Court in the case of CIT Vs. Techno Shares Stocks Ltd [2009 (9) TMI 18 - BOMBAY HIGH COURT] The Hon’ble Tribunal following the decision of the Hon’ ble Delhi High Court in the case of Areva T& D India Ltd. & Others [2012 (4) TMI 79 - DELHI HIGH COURT] and the Apex Court decision in the case of Smifs Securities Ltd [2012 (8) TMI 713 - SUPREME COURT] held that the client acquisition cost would fall within the category of ‘business or commercial rights’ referred in clause (ii) of Sec. 32 (1) and would be eligible for depreciation. Depreciation could not be denied to the Taxpayer merely for the reason that the assets were classified as ‘goodwill’ in the books of account without appreciating the true nature of the assets if they can fall under the scope of ‘any other business or commercial rights of similar nature’. We are of the view that the specified intangible assets acquired under slump sale agreement were in the nature of “business or commercial rights of similar nature” specified in section 32(1)(ii) of the Act and were accordingly eligible for depreciation under that section. Owing to the entire facts and circumstances of the case Viz., the value paid by the assessee, the valuation report, , the profits earned by the assessee, the tax payment by the recipient, the right and process of the assessee to raise the goodwill and the accounting thereof, the provisions relating to depreciation on intangibles, the judgments relating to treating of intangibles as goodwill, it can be concluded that the difference between the cost of the asset and the consideration paid would constitute goodwill and that goodwill is an asset eligible for depreciation under section 32 (1)(ii) of the I.T. Act. Appeal of the assessee is allowed.
|