TMI Blog2007 (3) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be dismissed, as contended in alternate Ground No.2, the claim of assessee in respect of depreciation is allowable. Since the amount was borrowed for acquisition of capital asset and such capital asset were not put to use prior to payment of the front end fees paid to ICICI bank, in view of the decision of Hon'ble Supreme Court in the case of Chellapalli Sugar Mills Ltd.[ 1974 (10) TMI 3 - SUPREME COURT] , such interest has to be added to the cost of capital asset. Since the Tribunal has held that the assessee is entitled to depreciation in respect of various intangible assets and since the front end fees is to be added to the cost of such capital assets, the alternate claim made by the assessee in Ground No.4 regarding deprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2000 as a joint venture company by the Sarabhai Group, Baroda and Zydus Group, Ahmedabad for doing the business of manufacture and selling of animal healthcare products. The share capital of ₹ 46 crores of the company was subscribed by Ambalal Sarabhai Enterprises (ASE) and Cadila Healthcare Ltd. (CHL) in equal proportions being ₹ 23 crores each. During the year under consideration, being the first year of its business, the appellant company stated to have incurred a total sum of ₹ 104.94 crores towards acquisition of trade marks, marketing rights and technical know-how from its two promoter companies ASE and CHL as detailed below: ASE CHL Patents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of marketing rights. Learned CIT(A) held that there are no convincing arguments to allow the amount of ₹ 2 crores paid by the assessee to Ambalal Sarabhai Enterprises. 2.1 Learned counsel for assessee submitted that the amount has been paid pursuant to the agreement. It amounts to acquisition of intangible rights. Thus, even if the same is not allowed as revenue expenditure, alternatively, the same can be treated as capital expenditure and claim of depreciation thereon may be allowed u/s 32(1) of the Act. Learned DR, on the other hand, relied upon appellate order. 3. In the appeal of revenue in ITA No.372/Del/2005 before this Tribunal to which one of us (AM) was a signatory, the Tribunal held that the marketing rights acquire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for assessee submitted that in the appeal filed by revenue in ITA No.372/Del/2005 cited supra, the Tribunal has held that assessee is entitled to depreciation in respect of various intangible assets by way of patent, technical know how and marketing rights acquired from ASE and CHL. Thus, even it the amount is not allowable as revenue expenditure though the decision of Hon'ble Supreme Court supports the same, in tune with the order of this Tribunal dated 25.1.2007 depreciation has to be allowed. Learned DR submitted that the amount cannot be allowed as revenue expenditure. As regards claim of depreciation, the same may be considered on merits. 5. We have considered rival submissions. Since the amount was borrowed for acquisition o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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