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2020 (2) TMI 505 - AT - Income TaxDepreciation on intangibles - sale as slump sale and offered profit derived therefrom as Long term capital gain in the return of income filed for the impugned assessment year - HELD THAT:- AO apparently has not obtained such approval of the Joint Commissioner before determining the value of the asset at ‘Nil’. Atleast, no such material has been placed before us by the Revenue to show that the Assessing Officer has obtained any approval of Joint Commissioner of Income tax. Even, a reading of paragraph 3.3 of the assessment order reveals that the Assessing Officer by referring to a wrong/incomplete provision has proceeded to exercise his power in determining the value of the asset at ‘Nil’. For this reason alone, the disallowance made by the Assessing Officer cannot be sustained. As rightly observed by Commissioner (Appeals), there cannot be any doubt with regard to the genuineness of the transaction as M & M Ltd. has treated the sale as slump sale and offered profit derived therefrom as Long term capital gain in the return of income filed for the impugned assessment year. Even, the business transfer agreement also clearly speaks of transferring not only the physical assets but various other intangible assets such as contractual rights, licenses, customer base etc. All these intangible assets transferred to the assessee have a commercial value and a part of sale consideration has to be allocated to such assets. For the purpose of such allocation the assessee has obtained valuation report from a technically qualified person. If the Assessing Officer was not satisfied with the valuation report, he should have got the assets valued through another technically qualified person instead of rejecting the valuation report purely on the basis of conjectures and surmises. Further, the observations of the Assessing Officer that the assessee has designed the transaction in a manner to create fictitious asset is without any material basis. In the case of ACIT vs. Dorma India Pvt. Ltd. (2019 (11) TMI 1139 - ITAT CHENNAI), the co-ordinate Bench while considering a dispute of similar nature has observed, a consolidated payment made by the assessee over and above net assets acquired by it under a composite contract is to be viewed as towards goodwill and has to be treated as intangible asset on which depreciation is allowable. assessee is eligible to claim depreciation on the intangible assets acquired by way of congeries of rights. Therefore, the order of learned Commissioner (Appeals) on the issue is upheld. The ground raised is dismissed. Allowance of depreciation on goodwill - HELD THAT:- Undisputedly, the depreciation claimed by the assessee is on goodwill. As held by the Hon’ble Supreme Court in the case of CIT vs. Smif Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] goodwill is an intangible asset as defined u/s. 32(1)(ii) of the Act, hence, eligible for depreciation. In view of the ratio laid down by the Hon’ble Supreme Court as discussed above, assessee’s claim of depreciation has been rightly allowed by learned Commissioner (Appeals). Hence, no interference is called for. This ground is also dismissed. Allowance of fees paid towards valuation report - HELD THAT:- Though, it may be a fact that expenditure incurred by the assessee was for valuation of the assets, however, such expenditure, per se, is not for acquiring any capital asset. Therefore, in our considered view, learned Commissioner (Appeals) was justified in allowing assessee’s claim. This ground is dismissed. Disallowance of expenditure under the head services/operations - notices issued u/s. 133(6) have returned back un-served - HELD THAT:- As it appears from the orders of the Assessing Officer as well as learned Commissioner (Appeals) due to non-response to the notices issued u/s. 133(6) of the Act, a part of the expenditure has been disallowed and added back. However, it is a fact on record that all payments have been made by the assessee in cheque and the assessee has furnished the name, address, PAN etc., of all payees. In fact, the assessee has also deducted tax in applicable cases, which is evident from the TDS certificates filed in the paper-book. Non-response to the notices issued u/s. 133(6) of the Act could be for various reasons. However, that itself would not lead to the conclusion that the payments made are non-genuine, particularly, when the payments have been made through banking channels. Moreover, considering the nature of business and the turnover involved, we are of the view that the disallowance made is not justified. - Decided in favour of assessee.
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