TMI Blog2020 (9) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... also set aside the issue of depreciation on goodwill to the AO to workout the appropriate amount of depreciation on goodwill, therefore, we are of the considered view that no interference is called for in the well reasoned order passed by the Ld. First Appellate Authority, hence, we uphold the findings of the Ld. First Appellate Authority on the issue of depreciation of goodwill. Appeal of the Revenue is dismissed. - ITA No. 2245/DEL/2017 - - - Dated:- 10-9-2020 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER Revenue by : Ms. Rakhi Vimal, Sr. DR Assessee by : Sh. Shatavik Chakrborty , Adv ORDER PER H.S. SIDHU, JUDICIAL MEMBER, This appeal by the Revenue is preferred against the order of the ld. CIT(A) - 39, New Delhi dated 13.12.2016 pertaining to A.Y 2011-12 on the following grounds:- 1. Whether on facts and in circumstances of the case, Ld. CIT(A) is legally justified in deleting disallowance of market to market foreign exchange loss of ₹ 18,26,173/- by ignoring the findings of fact recorded by the Assessing Officer (the AO) that the transaction was speculative loss in nature? 2. Whether on facts and in circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of hearing of the appeal. 2. The facts narrated by the revenue authorities are not disputed by both the parties, therefore, no need to repeat the same for the sake of convenience. 3. Both the parties filed their adjournment applications requesting some time for arguments on the different grounds. But on pointing out by the Bench that the issues in dispute have already been decided by the ITAT in the Appeal filed by the Department for previous and subsequent year in favour of the Assessee. Both the parties agreed on the query raised by the Bench and requested to withdraw their adjournment applications. Therefore, the adjournment applications filed by both the parties are dismissed as withdrawn . 4. At the time of hearing, Ld. Counsel for the assessee stated that the issues in dispute have already been decided by the ITAT, Delhi I.2 Bench, New Delhi in ITA No. 6101/Del/2017 (AY 2012-13) in assessee s own case i.e. DCIT, Circle 16(2), New Delhi vs. Metal One Corporation India Pvt. Ltd. on 28.08.2020. He has also filed the copy of this order. He requested that the issues in dispute have already been decided in favour of the Assessee by the ITAT in its order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee after pointing out to the factual aspects referred to the order of the CIT(A) for Assessment Year 2011-12 and pointed out that after obtaining Remand Report from the Assessing Officer, the said claim was allowed in the hands of the assessee. The Ld.AR for the assessee further pointed out that pursuant to the agreement of slum sale, vide agreement dated 20.06.2008, sum of ₹ 34 crores was paid to Mitsubishi and the difference between sale value and book value of the assets was booked and depreciation was claimed, though during the course of assessment proceedings. The Ld. AR for the assessee points out that the Hon ble Supreme Court in Smifs Securities Ltd.: (2012) 348 ITR 302 has held that goodwill was intangible asset and depreciation is to be allowed on it. Our attention was drawn to the order of the CIT(A) in Assessment Year 2011-12 and the Remand Report of the Assessing Officer which are placed at pages 25 to 29 of the Paperbook. The assessee further pointed out that the Hon ble Delhi High Court in Triune Energy Services (P.) Ltd. vs DCIT [2016] 237 Taxman 230 (Delhi) observed that in view of Accounting Standard 10, ITA No. 1761/Del/2015 Assessment Year: 2010-11 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r being the year in which agreement was entered into i.e. dated 20.06.2008, it is considered fit to remit this issue of determining resultant amount of goodwill on which depreciation is allowable in the hands of the assessee, consequent to the terms and conditions of the Business Transfer Agreement, back to the file of Assessing Officer. The Assessing Officer is directed to verify the claim of the assessee after allowing reasonable opportunity of hearing. The assessee is also directed to produce all the facts before the Assessing Officer, who shall decide the same in accordance with law . 7. On finding parity in the facts, respectfully following the decision of the co-ordinate bench Ground no. 1 with its sub grounds is dismissed. 8. In so far as the issue relating to deletion of disallowance of marked to market foreign exchange loss is concerned, the co-ordinate bench has considered the same in A.Y 2010-11 and has held as under : We have heard the rival contentions and perused the record. The issue is raised against the disallowance of Mark to Market foreign exchange loss of ₹ 28,14,307/-. The assessee has booked the said loss on account of reinstatement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n dated 28.08.2020 passed in assessee s own case for the assessment year 2012-13 as reproduced above and stated that the issue of depreciation on the goodwill has been adjudicated and decided in favour of the Assessee by the ITAT in assessee s own case, as aforesaid, and requested that the issue of depreciation of goodwill may be decided in favour of the assessee by dismissing the ground nos. 4 to 6 raised by the Revenue. Ld. DR relied upon the order passed by the Assessing Officer and did not brought to our notice any no contrary decision to the order of the ITAT dated 28.08.2020. She further stated that Ld. First Appellate Authority has given the directions to work-out the appropriate amount on goodwill while giving effect to his order. She further stated that Ld. First Appellate Authority in the impugned order as well as the Tribunal in its order dated 28.08.2020, as aforesaid , has not allowed the depreciation of goodwill, but only set aside the same to AO to work-out the appropriate amount of depreciation of goodwill. 7.1.1 We have heard both the parties and perused the orders passed by the revenue authorities alongwith the orders passed by the ITAT, Delhi I.2 Bench dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cter of an Income Tax Officer especially with regard to adherence to the CBDT Circular NO. 14 (XL-35) of 1955 dated 11th April, 1955. Coming to the reasons mentioned by the AO in the impugned order, it is observed that the second and fifth reasons mentioned above for rejecting the appellant's claim are not factually correct based on the copies of the evidences submitted at the appellate stage. Secondly, the third and last reasons mentioned above appear to be mere speculation but definitely cannot be taken as conclusions without further investigation. Finally, taking the book value of assets for valuation of goodwill will hardly impact the valuation adversely and be prejudicial to Revenue. Depreciation is an inherent claim under the Act. Accordingly, I agree with the appellant s contention regarding depreciation on goodwill representing the difference in the purchase price and the fair value of the assets based on the relevant provision of law (Section 32 r w Rule 5 and Appendix I) and in due deference to the decision of the Hon'ble Apex Court in this regard, the appeal on this point is allowed. The AO is directed to work out the appropriate amount of depreciation on goodwil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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