TMI Blog2018 (6) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi pertaining to the Assessment Years (A.Y.) 2007-08 and 2008-09 on the following common grounds. ITA No. 5098/Del/2014 A.Y. 2007-08 1. On the facts and in law, the Ld.CIT(A) erred in confirming the order of Ld.AO passed u/s 154/147/143(3) of the Act in the case. 2. On the facts and in law, appellant is entitled to depreciation at 25% on intangible asset of licence for running container trains on Indian Railways Net work as per Part-B of New Appendix-1 to Income Tax Rules, 1962. 3. On the facts and in law, the said licence is capital asset of the appellant and it is even transferable as per the agreement and as such depreciation of 25% is admissible. 2. Today before us assessee preferred appeal for AYs 2007-08 and 2008-09 on identical grounds of appeal. For the sake of convenience, grounds of appeal for A.Y. 2007-08 are reproduced hereinabove and facts relating to A.Y. 2007-08 are being dealt with as under. 3. Return declaring income of ₹ 4,92,63,05,249/- was filed on 30.10.2007. The original assessment was completed u/s 143 (3) of the Act on income of ₹ 8,38,00,90,942/-on 16.12.2009. The Assessee is a Government of India Undertaking work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication proceedings u/s 154 of the Act Ld.AO observed that it was deferred revenue expenditure, which was to be amortized over a period of 20 years. The AO observed that registration fee paid for running containers cannot be considered as an intangible asset. Hence the claim of depreciation amounting to ₹ 8,43,75,000/- was not allowed in entirety. However, the amortization amount of ₹ 2,50,00,000/-was allowed. Therefore, an addition of ₹ 5,93,75,000/- (Rs.8,43,75,000 - ₹ 2,50,00,000/-) was made to the income of the assessee in the reassessment. 4. Aggrieved by the order of Ld.CIT(A) assessee is in appeal before us. It was submitted that an identical issue arose for A.Y. 2008-09 in ITA No.1876/2012 wherein the issue was decided as under. 14. We have carefully considered the rival contentions. In the present case undisputedly the assessee has paid ₹ 50 crores to the Ministry of Railway as non refundable registration fee for 20 years towards license for running container trains on Indian Railways facilities in terms of policy statement dated 09.01.2006. According to that policy it was permitted to move various operators container trains on Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angible assets, was allocated by the transferee towards acquisition of bundle of business and commercial rights, clearly defined in the slump sale agreement, compendiously termed as goodwill in the books of account, which comprised, inter alia, the following : (i) business claims, (ii) business information, (iii) business records, (iv) contracts, (v) skilled employees, (vi) know-how. It is also observed that the Assessing Officer accepted the allocation of the slump consideration of ₹ 44.7 crores paid by the transferee, between tangible assets and intangible assets (described as goodwill) acquired as part of the running business. The Assessing Officer, however, held that depreciation in terms of section 32(1)(ii) of the Act was not, in law, available on goodwill. The Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal approved the reasoning of the Assessing Officer thereby holding disallowance of depreciation on the amount described as goodwill. It was thus argued on behalf of the assessee-company that section 32(1)(ii) would mean rights similar in nature as the specified assets, viz., intangible, valuable and capable of being transferred and that suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the circumstances, it is observed that in the case of the assessee, intangible assets, viz., business claims ; business information ; business records ; contracts ; employees ; and know-how, are all assets, which are invaluable and result in carrying on the transmission and distribution business by the assessee, which was hitherto being carried out by the transferor, without any interruption. The aforesaid intangible assets are, therefore, comparable to a licence to carry out the existing transmission and distribution business of the transferor. In the absence of the aforesaid intangible assets, the assessee would have had to commence business from scratch and go through the gestation period whereas by acquiring the aforesaid business rights along with the tangible assets, the assessee got an up and running business. This view is fortified by the ratio of the decision of the Supreme Court in Techno Shares and Stocks Ltd. [2010] 327 ITR 323 (SC) wherein it was held that intangible assets owned by the assessee and used for the business purpose which enables the assessee to access the market and has an economic and money value is a licence or akin to a licence which is one of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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