TMI Blog2018 (8) TMI 1544X X X X Extracts X X X X X X X X Extracts X X X X ..... is granted on that block, the issue cannot be agitated in the AYs 2006-07 and 2007-08. - Decided against revenue - ITA No. 3170/MUM/2016, ITA No. 3171/MUM/2016 - - - Dated:- 31-7-2018 - SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) Revenue by : Mr. Anoop Hiwase, DR Assessee by : Mr. Anuj Kisnadwala, AR ORDER PER N. K. PRADHAN, AM The captioned appeals filed by the Revenue are directed against the order of the Commissioner of Income Tax (Appeals)-12, Mumbai [in short CIT(A) ] and arise out of the assessment completed u/s 143(3) r.w.s.147 of the Income Tax Act 1961 (the Act ). As common issues are involved, we are proceeding to dispose them off through a consolidated order for the sak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how ₹ 2,75,00,000/- 2. Trademarks Trade Name ₹ 67,50,000/- 3. Goodwill ₹ 25,00,000/- Total ₹ 3,67,50,000/- It was also submitted before the AO that in the course of corporatization, the assessee acquired all the assets (including intangible assets) and liabilities from Mr. Nayan Mepani, proprietor of Krystal Colloids vide Agreement for Assignment of Business dated 24.03.2005 and had discharged the consideration for the transfer by issue of equity shares. The assessee thus submitted before the AO that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee that it had tried to project the technique and expertise in its manufacturing process as an intangible assets owned by it, which is not acceptable as per AS-26 as well as within the meaning of intangible asset in the Act. The AO also found that the assessee is not eligible for depreciation on intangible assets as per the 5th proviso to section 32(1) which provides that the aggregate deduction in respect of depreciation allowable to the predecessor and successor in the case of succession referred to in clause (xiii) of section 47 shall not exceed in any previous year the deduction calculated at the prescribed rate as if succession had not taken place. The proprietary concern has added the intangible assets in its fixed assets on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O disallowed the claim of depreciation of ₹ 36,75,000/- made by the assessee. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). We find that the Ld. CIT(A) has followed the appellate order passed by her predecessor in respect of AYs 2008-09 and 2009-10 and allowed the appeal, thus holding that (i) the action of the AO in disallowing the benefit of depreciation on intangible assets to the assessee cannot be upheld, if such disallowance was to be made, it should have been done in AY 2005-06, itself, (ii) the 5th proviso to section 32 is only applicable in the year of succession and it cannot be applied to the succeeding year, in this case the succession was carried out on 31.03.2005 and the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bilities. For the purpose of transfer and conversion, the proprietary concern had revalued certain assets to bring them to their fair values, on the basis of a detailed valuation report from the government approved valuer. Thereafter, the proprietary concern had transferred these assets to the assessee and the assessee acquired the business, including the assets at the revalued amounts. The assessee had claimed depreciation u/s 32 on the cost paid by it in accordance with the provisions of law and as per judicial decisions. The intangible assets acquired included trademarks, technical knowhow and goodwill. The Ld. counsel submits that the AO failed to acknowledge that the actual cost of assets cannot be challenged once the asset forms pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of assets has to apply upon block as a whole instead of an individual asset. In this context, we place reliance on the decision in Unitex Products Ltd. v. ITO [2008] 22 SOT 430 (Mum.), CIT v. Bharat Aluminum Co. Ltd. (2010) 187 Taxman 111 (Delhi), CIT v. Oswal Agro Mills Ltd. (2011) 197 Taxman 25 (Delhi), Swati Synthetics Ltd. v. ITO (2010) 38 SOT 208 (Mum). 7.1 The Hon ble Bombay High Court in the case of CIT v. Western Outdoor Interactive Pvt. Ltd. (2012) 349 ITR 309 (Bom) has held that whether a benefit of deduction is available for a particular number of years on satisfaction of certain conditions and under the provisions of the Act, then without withdrawing or setting aside the relief granted for the first AY in which claim was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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