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2015 (9) TMI 949 - ITAT AHMEDABAD

2015 (9) TMI 949 - ITAT AHMEDABAD - [2015] 41 ITR (Trib) 277 (ITAT [Ahm]) - Disallowance of depreciation of goodwill - Held that:- As find that in the case of B. Raveendran Pillai v. CIT [2010 (9) TMI 434 - Kerala High Court] the hon'ble High Court has held that when the goodwill paid was for ensuring retention and continued business, it was for acquiring a business and commercial rights and was comparable with trade mark, franchise, copyright, etc., rendered in the first part of clause 2 of sec .....

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sessee is eligible for depreciation. - Decided in favour of assessee.

Addition on account of lump sum disallowance out of milgine and factory expenses as per para 5 of the appellate order - Held that:- While confirming the disallowance, the learned Commissioner of Income-tax (Appeals) has noted that no submissions were made by the assessee in respect of the aforesaid ground. Before us also apart from the general statement, no details have been filed by the assessee in support of its s .....

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ed September 30, 2011 for the assessment years 2003-04, 2004-05, 2005-06, 2006-07 and 2008-09. 2. At the outset, before us, the learned Departmental representative submitted that though the appeal of the assessee relates to 5 different assessment years but the facts and circumstances of all the cases are similar except for the assessment years and amounts and the submissions are also common for all the appeals and therefore all the appeals can be heard together. We therefore proceed to dispose o .....

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y. The assessee filed its return of income on June 30, 2003 for the assessment year 2003-04 declaring total loss of ₹ 2,18,480. The return of income was initially accepted under section143(1). Subsequently, the case was reopened by issuing notice under section 148 and thereafter assessment was framed under section 147 read with section 143(3) vide order dated October 22, 2010 and the total income was determined at ₹ 5,94,680. Aggrieved by the order of the Assessing Officer, the asses .....

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f the appellate order. 5. On perusing the depreciation chart furnished along with the return of income, it was noticed by the Assessing Officer that the assessee had claimed depreciation of ₹ 4,86,443 on the "goodwill". The Assessing Officer was of the view that the assessee was not eligible to claim depreciation of goodwill and accordingly disallowed the claim of depreciation on "goodwill". Aggrieved by the order of the Assessing Officer, the assessee carried the matte .....

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d on this. It was the contention of the appellant that the payment had been made to acquire commercial rights which are intangible assets and therefore eligible for depreciation. This issue has been decided by me against the assessee in my order in appeal No. CASIV/164/09-10, for the assessment year 2002-03. For the detailed reason given in that order, it is held that the appellant was not eligible for depreciation on goodwill. The disallowance is upheld. This ground fails. 6. Aggrieved by the a .....

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ommercial rights is eligible for depreciation with effect from April 1, 1999 and the payment made for the purpose of acquiring commercial rights was eligible for depreciation. Reliance was also placed on the decision of the Kerala High Court in the case of B. Raveendran Pillai v. CIT [2011] 332 ITR 531 (Ker). The learned Departmental representative on the other hand supported the order of the Assessing Officer and the learned Commissioner of Income-tax (Appeals) and further submitted that the si .....

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order in the assessee's own case for the assessment year 2002-03 disallowed the claim of depreciation. Before us, the aforesaid decision of the learned Commissioner of Income- tax (Appeals) for the assessment year 2002-03 has not been placed by either parties. Further the learned Departmental representative could also not throw light as to whether the assessee had preferred any appeal against the order for the assessment year 2002-03 whereby its claim of depreciation was denied by the learne .....

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s and commercial rights and was comparable with trade mark, franchise, copyright, etc., rendered in the first part of clause 2 of section 32(1) and so much so, goodwill was covered by the above provision of the Act entitling the assessee for depreciation. We also find that the hon'ble apex court in the case of CIT v. Smifs Securities Ltd. [2012] 348 ITR 302 (SC) has held that goodwill is an asset under Explanation 3(b) to section 32(1). Before us, the Revenue has not pointed out any contrary .....

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y the assessee for the assessment year 2006-07 reads as under : 2. The learned Commissioner of Income-tax (Appeals) grossly erred in confirming addition of ₹ 1,58,606 on account of lump sum disallowance out of milgine and factory expenses as per para 5 of the appellate order. The ground is with respect to addition of ₹ 1,58,606 out of milgin and factory expenses. 11. The Assessing Officer noticed that the assessee had debited milgine expenses of ₹ 7,79,014 and factory expenses .....

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xclusively for the purpose of business. He accordingly disallowed one-fifth of the expenses amounting to ₹ 1,58,606. Aggrieved by the order of the Assessing Officer, the assessee carried the matter before the learned Commissioner of Income-tax (Appeals) who upheld the order of the Assessing Officer and confirmed the disallowance by holding as under : 5. Ground No. 3 in the assessment year 2006-07 and ground No. 3 in the assessment year 2008-09 are against the Assessing Officer making addit .....

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58,606 and ₹ 1,01,507 in the assessment year 2006-07 and in the assessment year 2008-09, respectively. During the course of the appellate proceedings, no submissions have been made in respect of this ground. The SOF accompanying the appeal does not give any reason why the action of the Assessing Officer should not be upheld. I am therefore constrained to uphold the action of the Assessing Officer. Ground No. 3 in the assessment year 2006- 07 and ground No. 3 in the assessment year 2008-09 .....

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