Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (9) TMI 284 - AT - Income TaxDepreciation on goodwill - amalgamation - acquisition of the deferred sales tax liabilities - MOU agreed to purchase the Assets consisting the Immovable properties - As per revenue deferred sales tax liability claimed by the assessee under the head of goodwill sought to be depreciated by the assessee is not proper and not in accordance with law and this is the liability which was existed on the date purchase and it was known liability ,therefore, it cannot be treated as goodwill - HELD THAT:- On the one hand the assessee submits that it is a part of fixed assets included in the cost of the fixed assets and on the other hand, he submits that it is a goodwill which has been arisen towards excess consideration paid for the discharging of liabilities in future date, therefore, it is goodwill and to be named as intangible assets, which are contrary in nature. On the date of execution of MoUs, the liability was a known liability, therefore, it cannot be treated that it is a intangible asset and cannot be treated as a goodwill. Before us the assessee has not produced any details in regard to how he has arrived the value of assets and entry in the books of accounts. Therefore the contention of the assessee is rejected. Entire assets and liabilities were not taken over by the assessee as per MOUs therefore, the assets and deferred sales tax liabilities which are not in the nature of amalgamation. In the impugned case, it appears that the assessee has tried to pass entry in its books of account only giving corresponding effect in the assets side in the balance sheet of the said liability as goodwill, which is a self-creating in nature. The liability will always remain the liability and the liability cannot change in the form of assets. Therefore, the creation of goodwill in the books of account is completely wrong and charging depreciation on the goodwill is also wrong, hence, the depreciation claim of the assessee on the goodwill is not allowable as per the IT Act - assessee is not eligible for claiming depreciation on goodwill since its inception i.e. first year of claiming of depreciation and accordingly, the grounds raised by the assessee on this issue are dismissed. Alternatively, that the assessee may claim the deduction when it is actually paid to the concerned department subject to the First party had claimed it as expenditure and suo motto disallowed under section 43 B(a) of the Income Tax Act. 1961, if it satisfies the conditions stipulated in section 43B(a) of the income tax act. The AO is directed to ensure to avoid double deduction on this count.
|