Court affirms depreciation on depreciable assets beyond sale deed, rules in favor of assessee

The court upheld the Income-tax Appellate Tribunal's decision to grant depreciation on the amount allocated for depreciable assets in a sale deed, emphasizing the need to determine the true value of assets beyond the sale deed. Additionally, the court agreed with the Tribunal's calculation of profit/loss based on the revised written down value for the assessment years, ruling in favor of the assessee and highlighting consistency with assessment proceedings. The court expedited the judgment's certified copy issuance and made no order as to costs.

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Issues:
1. Allocation of consideration towards depreciable assets and grant of depreciation.
2. Calculation of profit/loss under relevant sections for the assessment years.

Analysis:
1. The first issue pertains to the allocation of consideration towards depreciable assets and the grant of depreciation. The case involved a sale deed where Rs. 12.50 lakhs was allocated for goodwill, book debts, and other benefits. The Income-tax Appellate Tribunal directed the Income-tax Officer to grant depreciation on this amount towards the cost of depreciable assets of Central Studios purchased by the assessee. The Tribunal considered the value of goodwill based on findings from assessment proceedings concerning the vendor, which concluded that the value of goodwill was either "Nil" or inequitable. The court upheld the Tribunal's decision, stating that the value allocated in the sale deed cannot be conclusive, and assessing authorities were entitled to determine the appropriate allocation. The court agreed with the Tribunal's view, emphasizing the need to go behind the sale deed to ascertain the true value of assets.

2. The second issue involved the calculation of profit/loss under relevant sections for the assessment years. The Tribunal determined that the profit/loss should be calculated based on the revised written down value as determined for the previous assessment year. The court concurred with the Tribunal's decision, finding no merit in the Revenue's submission against it. Consequently, the court answered both questions in favor of the assessee, highlighting the consistency of the Tribunal's view with the assessment proceedings concerning the vendor. The court also expedited the issuance of a certified copy of the judgment and made no order as to costs in consideration of the facts and circumstances of the case.

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