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2024 (1) TMI 22 - AT - Income TaxClaim of depreciation on goodwill - depreciation was not claimed in the original return (ITR) - Power of authorities to consider the claim for additional depreciation by way of filing revised computation of income - whether the assessee could make a claim for deduction other than by filing a revised return - HELD THAT:- Such an issue is no longer res integra and is covered by the decision of Goetze (India) Ltd [2006 (3) TMI 75 - SUPREME COURT] wherein Hon’ble Apex Court affirmed the principle that the appellate authorities can consider additional claim even if the same is not raised by the taxpayer in the original or revised return and the Tribunal under section 254 of the Act has the power to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. We are, therefore, of the considered opinion that there is no bar to consider the claim of the assessee for additional depreciation, made otherwise than by a revised return of income by the appellate authorities. Goodwill acquired pursuant to the amalgamation - The issue of depreciation on goodwill arising on amalgamation has already been dealt with by Hon'ble Supreme Court in the case of Smifs Securities [2012 (8) TMI 713 - SUPREME COURT] which is later followed in various cases by the Hon’ble High Courts and Co-ordinate Benches of the Tribunal. We find force in the submissions of the learned AR that Explanation 2 to Section 43(6) of the Act, does not affect the right of amalgamated company to claim depreciation as the explanation is applicable only where an existing block of asset is transferred to the amalgamated company, and that since here goodwill comes into existence only for the first time because of excess consideration paid, explanation does not apply. Explanation 5 to Section 32(1) of the Act clearly lays down that the provisions of such sub-section shall apply whether or not the assessee has claimed the deduction in respect of the depreciation in computing the total income. It, therefore, goes without saying that irrespective of the fact of assessee claiming or not, the depreciation shall be allowed while computing the total income of the assessee. Then it becomes the obligation on the part of the Revenue to allow depreciation on goodwill even if it is not claimed by the assessee. At the same time, the CBDT Circular No.14 (XL – 35) of 1955, date 11/04/1955, reinforces this obligation in unequivocal terms, stating that the department must not take advantage of ignorance of any assessee as to his rights and it is one of the duties of the department to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs, by taking initiative in guiding the taxpayer where the proceedings are before them indicate that some relief is due to the taxpayer. When we read Explanation 5 to Section 32(1) of the Act and the above circular issued by the CBDT in the context of Article 365 of the Constitution of India, we find it difficult to uphold the action of the authorities below in depriving the assessee of the claim for deduction of depreciation on goodwill. Thus we are of the considered opinion that disallowance of the claim for deduction of depreciation on goodwill by the authorities below cannot be sustained and the same is liable to be deleted. Appeal of assessee allowed.
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