TMI Blog2011 (2) TMI 1406X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing of depreciation on intangible assets . 3. As the issues raised in these appeals being identical and common, both the appeals were heard, considered and disposed off, for the sake of convenience, in this common order. A.Y. 2000-01: 4. Briefly stated, the assessee company [the assessee in short] acquired Compaq Computers (India) Ltd., as a going concern [which had earlier acquired Digital Equipment (India) Limited] by paying a lump sum consideration of ₹ 83 crores initially and ₹ 83.99 crores subsequently, out of which, a sum of ₹ 42.02 crores represented the value of fixed assets and the remaining ₹ 41.96 crores represented the value of intangible assets. This issue had come up for consideration during the original assessment proceedings for the AY under dispute. The assessee had valued the goodwill out of intangible assets at ₹ 5.68 crores and, thus, a sum of ₹ 36.29 crores was fixed as the value of intangible assets. For having failed to clinch its claim of depreciation in its favour either with the assessing authority or with the first appellate authority, the assessee had changed its track and put up a valiant claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perusal of the agreement dated 27.4.1999 entered into between the appellant company and M/s.Digital Equipment (India) Ltd. shows that the appellant had paid ₹ 83 crores which was subsequently revised to ₹ 83.99 crores for acquiring the business as a going concern on lock, stock and barrel basis together with goodwill. Further, the sabve consideration was in respect of both tangible and intangible assets of ₹ 42,02,25,072/- and ₹ 41,97,00,000/- respectively. The appellant also furnished copy of valuation certificate by a certified valuer to that effect. The intangible assets acquired by HPISPL considering the nature of patents, know-how, distribution rights etc., the value was arrived at by the valuer at ₹ 41.97 crores. Accordingly, the appellant contended that such intangible assets were eligible for depreciation u/s 32(1)(iii) of the Act. The facts of the case relied upon cited supra are applicable to the facts of the instant case. 3.8 .it is held that the appellant is entitled to depreciation on the payment of ₹ 36.29 crores 6. Agitated, the Revenue in its present appeal before us argued that - the Ld. CIT (A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l) which has been rightly claimed by the assessee . 7.2. For appreciation of facts and for clarity, we are obliged to extract the finding of the Hon ble Mumbai Bench in the case of Skyline Caterers (P) Ltd. v. ITO as under: The assessee-company was engaged in the business of providing catering, housekeeping and allied services to a company HLL. Such catering business was earlier carried on by one R under a catering contract with HLL for the last 30 years. The assessee entered into an agreement with R for taking over the catering contract of R with HLL against a consideration of ₹ 27 lakhs. Out of the said sum, the assessee paid a sum of ₹ 25 lakhs to R as a consideration for acquiring all the rights under the catering contract between R and HLL and balance sum of ₹ 2 lakhs was paid to R for not competing with the assessee. The assessee reflected the said amount in its balance sheet as goodwill and claimed depreciation thereon treating the same as intangible assets as well commercial rights acquired by it. The AO held that the goodwill did not find place in s.32 as part of intangible assets which included only know-how, patents, copyright ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the expression any other business or commercial rights of similar nature would include such rights which can be used as a tool to carry on the business. If this test was to be applied, then the rights acquired by the assessee under the catering contract between R and HLL would fall within the expression mentioned above. Further, since catering business at HLL canteen could be carried on only with the help of such rights under the contract, the assessee would be entitled to depreciation. 7.3. Further, in the case of Hindustan Cocoa Cola Beverages Pvt. Ltd. v. DCIT reported in 2009-TIOL-650-ITAT-DEL, the Hon ble ITAT, Delhi C Bench has held that goodwill is not specifically excluded from the intangible assets eligible for depreciation. Even if an asset is described as goodwill but it fits in the description of section 32(1)(ii), depreciation is to be granted on the same. The true basis of depreciation allowance is the character of the asset and not its description. 7.4. We have also perused with respects the ruling of the Hon ble jurisdictional High Court in the case of CIT v. Mangalore Ganesh Beedi Works reported in 264 ITR 142 on which the Revenue has plac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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