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TMI Blog2023 (9) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... 12,592 on goodwill made by the Assessing Officer holding that goodwill does not fall within "any other business or commercial rights of similar nature" used in section 32 of the Act contrary to the decision of Supreme Court in the case of Smifs Securities Ltd (2012) (348 ITR 302). 1.3. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the contention of the Assessing Officer that the Appellant has not incurred any cost for acquiring goodwill in the scheme of merger. 2. Disallowance of depreciation of INR 74,27,651 on distribution network 2.1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the disallowance of depreciation of INR 74,27,651 on distribution network. 2.2. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the contention of the Assessing Officer that the Appellant has not incurred any cost for acquiring distribution network in the scheme of merger. 3. Disallowance of depreciation of INR 7,42,04,775 on customer relations 3.1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged at the rate of 15% prescribed under Article 11 of the DTAA between India and Denmark as against the rate as per the provisions of section 115-0 of the Act and thereby rejecting the claim of refund of excess tax paid on dividend distribution. The Appellant craves to add, alter, amend, delete or withdraw any or all of the grounds of appeal at or before hearing of the appeal so as to enable the Income-tax Appellate Tribunal to decide the appeal according to law." 3. The issue arising in grounds no.1-3, raised in assessee's appeal, is pertaining to the disallowance of depreciation claimed on goodwill, distribution network, and customer relations. 4. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is a private company incorporated in India and is engaged in the business of manufacturing and trading in diversified chemicals offering a broad range of products and services in various segments such as water, food, and pharmaceuticals to paints, packaging, and personal care products. For the year under consideration, the assessee filed its return of income on 29/11/2017 declaring a total income of Rs. 286,62,42,450, and a revise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and merely by accounting entries the assessee cannot claim depreciation on goodwill contrary to the provisions of the law. The AO held the intangible assets created in the books of the assessee as fictitious and disallowed the depreciation of Rs. 20,82,45,018 claim by the assessee under section 32(1)(ii) of the Act. 6. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee and held that there was no determination of any goodwill that could have been held by the amalgamating company prior to the amalgamation and the consideration for the amalgamation did not relate to payment of any kind for acquiring any license, business or commercial rights. The learned CIT(A) upheld the findings of the AO that the assessee is not entitled to claim depreciation on goodwill under section 32(1) of the Act. Similarly, the learned CIT(A) also upheld the disallowance of depreciation on customer relations and distribution network. Being aggrieved, the assessee is in appeal before us. 7. We have considered the submissions of both sides and perused the material available on record. In the present case, Rohm and Hass Company, USA along with all its subsidiaries were acqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as the learned CIT(A) rejected the claim of the assessee as these intangible assets were not shown in the books of accounts of the transferor company and mere accounting treatment by the assessee does not entitle the assessee to claim depreciation in its books. Since no credible evidence or material was produced by the assessee to show that it had incurred any cost for acquiring the goodwill in the scheme of amalgamation, the depreciation as claimed by the assessee was disallowed. 9. It is pertinent to note that the scheme of amalgamation was approved by the Hon"ble High Court with the appointed date being 01/04/2015, therefore it is necessary to see how this aspect was examined in the first year itself, which is the assessment year 2016-17. During the hearing, it was submitted that the assessee claimed depreciation on the aforesaid intangible assets in the first year after the amalgamation. However, its appeal against the assessment order for the assessment year 2016-17 is currently pending before the learned CIT(A). Therefore, in view of the above, we are of the considered opinion that it becomes relevant to examine whether any intangible asset arises in the hands of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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