TMI Blog2020 (7) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be allowed on goodwill. As regards the doubt raised by learned DRP that the assessee cannot claim depreciation on the entire amount of goodwill, it must be observed that the assessee has claimed goodwill on the opening WDV only and not on the entire amount. It is now fairly well settled that goodwill being an intangible asset, depreciation has to be allowed. In view of the aforesaid, we direct the Assessing Officer to allow assessee s claim of depreciation on goodwill. Claim of additional depreciation on goodwill subsequent to amalgamation - In the light of decision of the Co-ordinate Bench in assessee s own case on same set of facts, we restore this issue back to the file of Assessing Officer with similar directions Non-granting of set off of brought forward business losses - HELD THAT:- As assessee has prayed for restoration of this issue with a direction to Assessing Officer to allow assessee s claim. The issue is restored back to Assessing Officer for reconsideration in accordance with law. Assessing Officer shall grant reasonable opportunity of hearing to the assessee in accordance with law. - ITA NO.2074/MUM/2017 - - - Dated:- 12-6-2020 - Shri Vikas Awast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el Infoways Limited (Segmental) 49.38% Average 32.09% The assessee objected to inclusion of Genesys International Corporation Ltd. (in short Genesys ) and Excel Infoways Limited (Segmental) (in short Excel ) in the final set of comparables. The objection of the assessee against inclusion of Genesys is that it is not functionally comparable as the company is predominantly engaged in providing advance mapping, survey, geospatial services and offers solutions revolving state of the art remote sensing LIDAR, ariel survey. The assessee further objected to inclusion of Genesys on the ground that there is no segment for ITES and the said company is having high turnover. In respect of Excel the assessee objected that the said company does not maintain separate segment for ITES in the financial year. The company is primarily engaged in providing BPO services. There is considerable change in the business of the assessee and there is extra-ordinary event in the financial year 2011-12 i.e. disinvestment. The company had sold 25,000 shares of Excel Infra N reality Pvt. Ltd. The objections raised by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee further pointed that in assessment year 2009-10 and 2010-11 there was no disputed with regard to the comparables as the case of the assessee was not referred to the TPO. In assessment year 2011-12, the TPO did not include Genesys in the list of comparables. The ld. Counsel for the assessee submitted that there has been no change either in the nature of business of the assessee or that of Genesys. Since the facts in assessment year 2008-09, 2011-12 and assessment year under appeal i.e. assessment year 2012-13 are same, Genesys should be excluded from the list of comparables on account of functional disparity. In respect of Excel, the ld. Counsel for the assessee submitted that the company is liable to be excluded from the list of comparables on the ground that the said company is having highly fluctuating margins in the financial year 2011-12 (relevant to assessment year 2012-13). To support his contention, the ld. Counsel for the assessee placed reliance on the following decisions:- (i) Emersion Climate Technologies vs. DCIT, ITA No.359/PUN/2016 decided on 25/04/2018. (ii) Baxter India Pvt. Ltd vs. ACIT, ITA No.6158/Del/2016 decided on 24/08/2017. The ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Departmental Representative pointed that the assessee had never claimed additional deprecation in the return of income. The claim of depreciation on goodwill was raised for first time during the course of assessment proceedings. The Hon ble Supreme Court of India in the case of Goetze (India) Limited vs. CIT, 284 ITR 323(SC) has held that the Assessing Officer has no power to accept the claim not made in the return of income. 7. We have heard the submissions made by rival sides and have perused the orders of authorities below. The grounds No.1 to 8 of the appeal are in respect of TP adjustment. The ld. Counsel for the assessee while making submissions on these grounds confined his submissions to assailing the final list of comparables. The ld. Counsel for the assessee submitted that the authorities below have erred in including Genesys and Excel in the final list of comparables. The ld. Counsel pointed that if both these companies are excluded from the final list of comparables, the margins of the comparables would be within +/- 5% range of the asssessee s margin. Genesys International Corporation Ltd. The assessee sought exclusion of Genesys on the ground of functional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad closed down its ITES and BPO segment in financial year 2011-12 on account of global recession. We hold that the said concern which is in the process of closing down its ITES segment and also because of the factum of fluctuating margins, could not be selected as functionally comparable to the assessee. In this regard, we find support from the ratio laid down by the Hon ble High Court of Gujarat in Pr. CIT Vs. Allscripts India Pvt. Ltd. in Income Tax Appeal No.258 of 2016 and Pune Bench of Tribunal in TIBCO Software India Pvt. Ltd. Vs. DCIT in ITA Nos.276/PUN/2015 cross appeal in ITA No.334/PUN/2015, relating to assessment year 2010-11, order dated 31.01.2017 and Qlogic India Pvt. Ltd. Vs. DCIT in ITA No.227/PUN/2014, relating to assessment year 2009-10, order dated 21.10.2014. [Emphasised by us] In the case of Baxter India Pvt. Ltd vs. ACIT (supra), the Tribunal directed to exclude Excel from the list of comparables inter-alia on account of, abnormal volatility in revenue and margins. It is settled legal position that a company having super normal profits or highly unstable margins should not be idly considered as good comparable. Thus, in view of the decisions refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of such transaction. Thus, when the assessee by virtue of such amalgamation has received back the goodwill in its book, depreciation has to be allowed on goodwill. As regards the doubt raised by learned DRP that the assessee cannot claim depreciation on the entire amount of goodwill, it must be observed that the assessee has claimed goodwill on the opening WDV only and not on the entire amount. It is now fairly well settled that goodwill being an intangible asset, depreciation has to be allowed. In view of the aforesaid, we direct the Assessing Officer to allow assessee s claim of depreciation of ₹ 2,25,66,258, on goodwill. Grounds are allowed. The facts in assessment year under appeal are identical. For parity of reasons mentioned above, the ground No.9 of the appeal is allowed. 10. The ground No.10 of the appeal is with respect to assessee s claim of additional depreciation on goodwill subsequent to amalgamation. Undisputedly, the assessee had not made the claim of additional depreciation in the return of income. The claim was made for the first time in the assessment proceedings. We find that similar was the position with regard to the claim of additiona ..... X X X X Extracts X X X X X X X X Extracts X X X X
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