9911796707
TMI Blog2016 (7) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... y is engaged in the business of manufacturing of cement bricks, blocks and slabs and other building materials The appellant company acquired the business of Autoclave Aerated Concrete Products (AAC) with the manufacturing unit situated at Palwal, Haryana on a going concern basis for a gross consideration of Rs. 13.75 crores from M/s Premium Energy Transmission Limited (PET) vide Memorandum of Understanding (MOU) dated 20.05.2004. The above business was acquired by the appellant company w.e.f. 01.04.2004. The purchase cost was capitalized by the appellant company in A.Y. 2005-06 over various assets as mentioned below: Particulars Amount (Rs.) Land 1,20,00,000 Building 3,80,00,000 Plant & Machinery 4,75,00,000 Intangible Assets (Technical Know How) 2,75,00,000 Net Current Assets 1,25,00,000 Gross Consideration 13,75,00,000 The appellant also obtained a valuation report dated 06.12.2004 from M/s Vastuki Consultants Pvt. Ltd., Architects and Government Approved Valuers, as per which the value of the various assets was determined as under: Particulars Amount (Rs.) Land 1,20,57,000 Building 3,89,45,713 Plant & Machinery 4,37,39,700 Intangi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e following grounds. "1. Whether the Ld.CIT(A) has erred on facts and in law in deleting the addition of Rs. 21,75,293/- on account of depreciation on technical know-how. 2. Whether the Ld.CIT(A) has erred on facts and in law in deleting the addition of Rs. 1,08,565/- made on account of depreciation on computer peripherals ignoring the fact that the computer and computer software are eligible for depreciation of 60% and the same cannot be extended to computer accessories and peripherals. 3. Whether the Ld.CIT(A) has erred on facts and in law in deleting the addition of Rs. 1,71,31,908/- made on account of difference in trading account u/s 145A ignoring the fact that as per the provisions of S.145A the assessee is required to prepare memorandum trading account for the year under consideration by exclusive and inclusive method. 4. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 5. We have heard Shri K.K.Jaiswal, Ld.D.R. on behalf of the Revenue and Shri P.C.Yadav, the Ld.Counsel for the assessee. 6. On a careful consideration of the facts and circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt received on sale of technical know-how for taxation in its return of income and a copy of the same has been filed before the A.O. d. After acquiring the unit, the assessee company's turnover grew from Rs. 13 crores to Rs. 15 crores and tax payments from Rs. 8 lakhs to Rs. 4.3 crores. e. The A.O. has overlooked the definition of 'block of assets' and 'provision of depreciation' on such block. f. The value as determined by the Valuer is not relevant as it is only an opinion and the opening written down value during the year cannot be tinkered with, by the Ld.CIT(A), based on the value fixed by the Valuing Officer. 8. After hearing rival submissions we hold as follows. 9. The assessee company entered into Memorandum of Understanding (MOU) for transfer of business as going concern with M/s Premium Energy Transmission Ltd. (PET Ltd.). The assessee claimed to have acquired technical know-how. It was disclosed in the accounts and financial statements as an asset and depreciation was claimed on the same for the A.Y. 2005-06. The return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). Thus the depreciation claimed on the block of assets, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fees is to be upheld. 9.4. Even otherwise, on merits, we find that the First Appellate Authority has rightly come to a conclusion that the assessee has purchased technical know-how. The seller company had also offered this amount to tax. Under these circumstances the conclusions of the A.O. have rightly been vacated by the First Appellate Authority. In the result the appeals of the Revenue for the A.Y. 2007-08 and 2008-09 have to be dismissed. 10. Coming to the Cross Objections, we have to uphold the contentions of the assessee. The value of an asset cannot be determined by a valuer. The Ld.CIT(A) cannot tinker with the figure of opening written down value. It is well settled that valuation by a Valuer is an opinion and the transaction between the parties is a fact. An opinion cannot replace a fact. Thus, we allow the Cross Objections of the assessee and direct the A.O. to grant depreciation on the opening written down value of the asset of technical know-how. In the result the Cross Objections are allowed. 11. We now take up the appeal of the Revenue for the A.Y. 2009-10 in ITA 1261/Del/2013. 12. Ground no.1 of the Revenue is on the issue of allowability of depreciation on tec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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