TMI Blog2020 (10) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... on to acquire the running business, it is comparable to a licence to carry out the existing transmission and distribution business of the transferor and in the absence of aforesaid intangible assets business, assessee would have to commence business from scratch. Effect of acquiring running business with tangible and intangible assets including goodwill and customer contracts are quite visible as turnover of the assessee has been increased during the year under assessment. Despite the fact that the assessee has given the complete details of agreement vide which tangible and intangible assets of running business of M/s. KPIT Cummins Infosystems Ltd. were purchased as per valuation report, AO has disallowed the depreciation on goodwill and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case, the Ld. CIT(A) has erred in holding that the Assessing Officer is wrong in disallowing depreciation u/s 32 claimed on self valued, unsubstantial intangibles declared as customers contract goodwill , whereas no such breakup was part of agreement with KPIT. 2. Whether the CIT (A) has erred in allowing depreciation on claimed intangible customer contract which is not covered in the definition of Intangible Assets as defined in Explanation 3 to Section 32 (1) of the IT Act. 3. For the sake of brevity, we are taking up the facts of ITA No.3475/Del/2018 for AY 2012-13 to dispose off all the four appeals bearing common question of law and facts which are : 4. Assessee company is into the business of sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon and orders passed by the Revenue authorities below in the light of the facts and circumstances of the case. 7. Undisputedly, during the year under assessment, the assessee has acquired certain business interest from M/s. KPIT Cummins Infosystems Ltd. for a consideration of ₹ 19,02,00,000/- out of which an amount of ₹ 6,52,80,577/- and ₹ 10,89,60,000/- has been shown as goodwill and customer contract respectively. It is also not in dispute that assessee has furnished detail of amount of ₹ 17.52 crores paid during the year under assessment based on the valuation report dated 21.08.2012 which is as under :- Sr. No. Asset Amount (Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration of ₹ 19,02,00,000/- as per valuation report, available at pages 87 to 89 of the paper book. Valuation Report contains value of tangible and intangible assets separately as in the business of banking and financial software business, contracts and the people along with a marginal amount of assets is considered as the major component of the transfer. Furthermore, in the business transfer agreement, complete detail of specified BSFI business, target assets, target customers and name of the target customers are available at pages 46 47 of the paper book. 11. Hon ble Supreme Court in CIT vs. Smiffs Securities Ltd. (2012) 348 ITR 302 held that, goodwill is an asset under Explanation 3B to section 32 of the Act and is el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly recorded in the audited financials are eligible for depreciation being intangible assets under section 32 (1)(ii) of the Act. 15. We are of the considered view that ld. CIT (A) has rightly deleted the disallowance made by the AO by following settled proposition of law discussed in the preceding paras. Finding no illegality or perversity in impugned order passed by the ld. CIT (A), appeal bearing ITA No.3475/Del/2018 filed by the Revenue is hereby dismissed. 16. Since question of fact and law raised in appeals bearing ITA Nos.3850/Del/2018, 4330/Del/2018 1637/Del/2019 is identical vis- -vis appeal bearing ITA No.3475/Del/2018, the same are also dismissed. Order pronounced in open court on this 20th day of October, 2020. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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