TMI Blog2013 (12) TMI 1007X X X X Extracts X X X X X X X X Extracts X X X X ..... Partly allowed in favour of assessee. Depreciation on goodwill – Held that:- Following assessee’s own case for the A.Y. 2003-04 – Depreciation is allowable on goodwill – Following CIT vs. Smifs Securities Limited [2012 (8) TMI 713 - SUPREME COURT] - Goodwill would fall under the expression "any other business or commercial rights of similar nature" in section 32(1) Explanation 3 (b) – Decided in favour of assessee. - ITA No. 8790/MUM/2011 - - - Dated:- 20-8-2013 - I.P. BANSAL AND N.K.BILLAIYA, JJ. For the Appellant : Rajan Vora For the Respondent : Virendra Ozha And Ajit Kumar Jain. ORDER:- PER : I.P. Bansal This is an appeal filed by the assessee. It is directed against assessment order dated 28/10/2011 passed under section 143(3) r.w.s. 144C of the Income Tax Act, 1961 (the Act) for assessment year 2007-08. Grounds of appeal read a under: Based on the facts and circumstances of the case, Taj Sats Air Catering Limited (hereinafter referred to as the Appellant' or 'Taj Sats') respectfully craves to prefer an appeal against the assessment order issued by the Additional Commissioner of Income-tax, Range - 2(3), Mumbai (hereinafter referred to as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r erred in not considering allowability of depreciation on these individual intangible rights under section 32 of the Act. Ground No. 4 - Credit for taxes deducted at source The learned AO erred in granting credit for taxes deducted at source of Rs.28,80,930 as) against Rs 52,177,918 claimed in the return of income. Ground No. 5 - Levy of interest under section 234C The learned AO erred in charging interest of Rs 325,004 under section 234C of the Act. Ground No. 6 - Levy of interest under section 234B The learned AO erred in charging interest of Rs 8,513,519 under section 234B of the Act. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at the time of hearing of the appeal, so as to enable the Honorable Members to decide this appeal according to law.' 2. Apropos Ground No.1; it was submitted that this ground is covered in favour of assessee by the order of the Tribunal in the case of assessee itself for assessment year 2006-07. It is an order dated 20/1/2012 in ITA 8500/Mum/2010. Copy of this order is placed at pages 18 to 36 of the paper book. It was submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irlines that the rate for the passenger rate for Singapore Airlines is the highest and the rate for Virgin Atlantic is the third highest. Therefore we find merit in the submission of the id. counsel for the assessee that the transactions are at arm's length price. In this view of the matter we hold that the A.O. was not justified in making the adjustment of Rs. 460391/- u/s 92CA(3) of the Act. We therefore direct the A.O. to delete the addition. The ground raised by the assessee is accordingly allowed." 4. In this view of the situation after hearing both the parties, respectfully following the aforementioned decision of the Tribunal in assessee's own case for A.Y 2006-07 we delete the addition and Ground No.1 is allowed. 5. Apropos Ground No.2, this was also stated to be covered by the aforementioned decision of the Tribunal, wherein considering the facts and circumstances of the case the addition made by the AO of a sum of Rs.2,05,950/- was restricted to Rs.1,50,000/-. In the present case it is the case of Ld. AR that the total investment of the assessee in the mutual fund has decreased from Rs.21,11,54,000/- as on 31/3/2006 to Rs.11,07,23,000/- as on 31/3/2007. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Tribunal was admitted by Hon'ble High Court which has been decided vide order dated 5/9/2012 in Income Tax Appeal No.743 of 2012. Copy of this is placed at pages 46 to 50 of the paper book. Their Lordships have observed that depreciation on goodwill is allowable as per recent decision of Hon'ble Supreme Court dated 22/8/2012 in CIT v. Smifs Securities Ltd. in Civil Appeal No.5961 of 2012, wherein it has been held that goodwill would fall under expression "any other business or commercial rights of similar nature" in section 32(1),Explanation -3(b). Hon'ble Court also noted that in respect of assessment year 2003-04 the matter was remanded by the Tribunal to the file of AO which include the question of ascertaining the correctness of bifurcation furnished by valuation reports which were relied upon by the assessee. To avoid any inconsistency their Lordships directed the AO to follow same course as he will adopt in respect of A.Y.2003-04 for which year the proceedings were pending before AO. Therefore, their Lordships set aside the order of the Tribunal for assessment year 2006-07 and disposed of the appeal as per order of the Tribunal dated 28/5/2009 rendered in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter hearing rival contentions, we find that the additional evidence in question has to be admitted as this evidence is necessary to adjudicate the claim that there are a number of intangible assets along with goodwill and only goodwill would not be eligible for depreciation. This evidence in our humble opinion goes into the root of the matter. From the assessment order it can be clearly seen that the assessing officer had noticed from the recitals in the business transfer agreement, that intellectual properties which are listed out in Article 1, sub clause b, have been transferred along with other movable and immovable assets. Even in article 2, Sub clauses b, and e, mention a list of intangible assets, which have been aggregated and loosely termed as "goodwill" by the assessee in its books of account. Thus the fact that the slump sale consists of many intangible assets along with goodwill is not in dispute. It is true that no depreciation is allowable on goodwill. But at the same time, the legislature provides that depreciation should be allowed on all other intangible assets other than Goodwill. The assessee's additional evidence throws light on the valuation of each of the intan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. It is necessary to ensure consistency in respect of the same question for the different assessment orders. 8. In our view, the proper course therefore, would be to follow the same course that has been adopted in respect of the AY 2003-2004 proceedings in respect whereof the proceedings are pending before the AO pursuant to the earlier order of the Tribunal for the AY 2003-2004. 9. in the circumstances, the impugned order is set-aside. The appeal is disposed of in terms of the order of the Tribunal dated 28.5.2009 in respect of the AY 2003-2004.' It may be mentioned here that AO has passed an order giving effect to the order of Hon'ble High Court in respect of assessment year 2003-04 in which their Lordships have held that depreciation on goodwill is allowable. It will be appropriate if text of the said order is reproduced below: "Order giving effect to the Hon'ble High Court's Order. Consequent to the Hon'ble Bombay High Court's order in Income Tax Appeal (Lodging) No. 1096 of 2012 dated 03.09.2012, the total income of the assessee is revised as under: Amount (Rs) Total Income as per order u/s. 143(3) r.w.s. 254 dt.26. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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