Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (11) TMI 373 - AT - Income TaxDepreciation on goodwill - zero asset shown in the books - HELD THAT:- In the present case, the assessee has quantified the subscription fee in entirety as goodwill which is an intangible asset being service provided to its 5000 subscribers. Thus, the assessee has demonstrated that as part of market practice, there is no standard rate or standard method prescribed for acquisition of such businesses. The valuation of assets is altogether different issue and no such standard valuation method is prescribed. The acquisition price is determined through negotiation and any amount which is paid over and above the book value of assets and liabilities is recognized as Goodwill in the books of acquiring company. It works principally on one to one basis wherein factors such as synergy, weave length, future proximities, area, industry, number of years etc. are facts are considered in determining the business valuation. In this type of businesses, the valuation of business is identified generally by way of potential number of subscriber and rates of subscriber fees applicable to them. In case the subscribers decrease in subsequent to becoming the partnership firm, the depreciation is claim on that basis. These contentions of the Ld. AR are accepted. Thus, in case of Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] the claim of the assessee appears to be proper. The contention of the Ld. DR that it has zero asset shown in the books of CRAZY NETWORK appears to be incorrect when the 5000 subscriber has entered into the partnership firm through CRAZY NETWORK which has added as assets to the partnership firm's assets. AO was not right in disallowing the claim of the assessee relating to depreciation on goodwill. Thus, appeal of the assessee is allowed.
|