TMI Blog2023 (8) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... s or gains arising from the transfer of a capital asset. However, it is well settled that a transfer in terms of a scheme of amalgamation which is sanctioned is accomplished by operation of law as opposed to an act of parties. It is in that backdrop that the decision in Smifs assumes significance. The judgment rendered in Smifs [2012 (8) TMI 713 - SUPREME COURT] clearly recognises goodwill to be an intangible asset and on which depreciation can clearly be claimed in terms of Section 32(1) of the Act. Decided in favour of assessee. - HON'BLE MR. JUSTICE YASHWANT VARMA AND HON'BLE MR. JUSTICE DHARMESH SHARMA For the Appellant Through: Mr. Sanjay Kumar, Ms. Easha, Ms. Hemlata Rawat, Advs. For the Respondent Through: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 3. The Assessment Officer had added a sum of Rs. 6,17,30,352/- on account of disallowance of depreciation on goodwill that was created as a result of amalgamation. Aggrieved by the aforesaid, the respondent had preferred an appeal before the CIT (Appeals). The CIT (Appeals) found that since goodwill had come to be created by virtue of the merger in terms of the Scheme approved by the Court, depreciation on goodwill to the extent of Rs. 6,17,30,352/- was correctly claimed by the assessee. It was this decision of the CIT (Appeals) which was assailed by the appellants. 4. The ITAT while dealing with the aforesaid challenge has held as follows: - 5. As per the scheme of amalgamation, where value of liabilities and amount of equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises or any other business or commercial rights of similar nature. Explanation 3 states that the expression asset shall mean an intangible asset, being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature. A reading of the words any other business or commercial rights of similar nature in clause (b) of Explanation 3 indicates that goodwill would fall under the expression any other business or commercial right of a similar nature . The principle of ejusdem generis would strictly apply while interpreting the said expression which finds place in Explanation 3(b). 9. In the circumstances, we are of the view that goodwill is an asset under Explanation 3(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that both the CIT (Appeals) as well as the ITAT have clearly erred in holding otherwise. Learned counsel referred to the definition of cost of acquisition as spelt out in Section 55(2) of the Act and which had defined that expression to also include goodwill of a business or profession or a trademark or brand name associated with the business or profession or any other intangible asset. It is in the aforesaid context that learned counsel for the appellant had sought to rely upon Section 49 and more particularly Section 49(1)(e) thereof. 8. The aforesaid submission, however, clearly loses sight of the fact that Section 47 in express terms excludes the transfer of a capital asset in terms of a scheme of amalgamation. We further find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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