TMI Blog2012 (9) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation on the goodwill - Held that:- It is a settled position that the ‘goodwill’ is an intangible asset entitled for the depreciation. Considering the above said nature of the issue, we are of the opinion that the assessee is entitled for depreciation u/s 32 in respect of the goodwill acquired by the assessee vide the agreement dated 1.3.2000 placed at page 39 of the paper book. Accordingly, ground no. 2 is allowed. - I.T.A. No. 181/M/2008 - - - Dated:- 28-9-2012 - H. L. Karwa (President) And D. Karunakara Rao (Accountant Member) For the Petitioner : Vijay Mehta, Champak K. Dedhia, Deepesh T. Chedda For the Respondent : Roopak Kumar ORDER D. Karunakara Rao (Accountant Member) This appeal filed by the assessee on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter, the assessee filed the present appeal raising the grounds relating to the said two issues. As such, in the opinion of the Ld Counsel, both issues are fully covered in favour of the assessee by various decisions. Issue wise adjudication is given in the following paragraphs. 4. Ground 1 relates to the allowability of depreciation u/s 32 of the Act on the commercial right of marketing network . Relevant facts of this issue are that the assessee acquired the market network rights for a sum of ₹ 1.5 crores from its sister concern named M/s Jyothi Industries. Relevant agreement was signed on dated 1.4.2000 by Jyothi Industries and the assessee. The said asset became part of the block of assets of the assessee. Assessee claimed de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also mentioned the fact that the assessee s claim for the earlier years was accepted, therefore, the AO should not disturb the claim of assessee for the current year too. 6. On the other hand, learned DR for the Revenue relied on the orders of the authorities below. 7. We have heard both the parties and perused the orders of the Revenue as well as the documents filed before us including the case laws. On perusal, we find that the decision in the case of Weizmann Forex Ltd. vs. DCIT (supra) was decided in the context of distribution network relating to the money transfer services . However, the ratio of the said decision is found to apply to the facts of the instant case. Relevant paragraphs of the said order are reproduced as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twork in the field of money transfer business by acquiring the rights over infrastructure and other advantage attached to the marketing network and hence, the same falls under the category of intangible asset as contemplated u/s 32(1)(ii) of the IT Act. 16. In view of the above discussion and in the facts and circumstances of the case, we hold that the assessee s claim of depreciation is allowable . Accordingly, we do not find any error or illegality in the impugned order of the Ld. CIT (A) and upheld the same. 8. Therefore, the marketing network, a commercial right, acquired by the Weizmann Forex Ltd (supra) was held as an intangible asset eligible for depreciation on the reason that the assessee acquired the rights to avail t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or depreciation u/s 32 of the Act and therefore, the issue under consideration stands covered in favour of the assessee. Accordingly, ground no.1 is allowed. 9. Ground no.2 relates to the allowability of depreciation on the goodwill of amount ₹ 8,43,750/-. In this regard, learned Counsel relied on the decision of the Hon ble Supreme Court in the case of CIT vs. Smifs Securities Ltd. vide Civil Appeal No.5961 of 2012 (Arising out of S.L.P.(C) No.35600 of 2009). Learned Counsel read out question no (b) adjudicated by Hon ble Supreme Court i.e. Whether goodwill is an asset within the meaning of section 32 of the Income Tax Act, 1961, and whether depreciation on goodwill is allowable under the said section? . He also read out the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, the AO as a matter of fact, came to the conclusion that no amount was actually paid on account of goodwill. This is a factual finding. The CIT (A) has come to the conclusion that the authorized representatives had filed copies of the order of the High Court ordering amalgamation of the above two companies; that the assets and liabilities of M/s. YSN Shares and Securities Private Ltd were transferred to the assessee for a consideration; that the difference between the cost of an asset and the amount paid constituted goodwill and that the assessee company in the process of amalgamation had acquired a capital right in the form of goodwill because of which the market worth of the assessee company stood increased. This finding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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