Tribunal allows depreciation on Goodwill and plant assets, following Supreme Court decision.

The appeal was allowed by the Tribunal regarding the disallowance of depreciation claimed on payments made towards intangible assets (Goodwill) and in respect of the Tudou plant. The Tribunal directed the Assessing Officer to allow depreciation on Goodwill as per a Supreme Court decision, emphasizing that if any part of the plant and machinery is used during the assessment year, depreciation is eligible for that block. Consequently, the Assessee was entitled to depreciation for the operational dry plant within the block of assets, leading to the allowance of the appeal on both issues.

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Issues:
- Disallowance of depreciation claimed on payments made towards intangible assets (Goodwill)
- Disallowance of depreciation in respect of Tudou plant

Issue 1: Disallowance of depreciation claimed on payments made towards intangible assets (Goodwill)

The appeal was against the order confirming the disallowance of depreciation claimed on payments made towards intangible assets, specifically Goodwill, for the assessment year 2006-07. The Assessee argued that the issue was covered by a Supreme Court decision where it was held that Goodwill is an asset under Explanation-3(b) to Sec. 32(1) of the Income Tax Act and entitled to depreciation. The Departmental Representative supported the order disallowing depreciation. The Tribunal considered the submissions and directed the Assessing Officer to allow the claim of depreciation on Goodwill as per the Supreme Court decision. Consequently, the appeal on this issue was allowed.

Issue 2: Disallowance of depreciation in respect of Tudou plant

The appeal also contested the disallowance of depreciation in relation to the Tudou plant. The Assessee, engaged in iron ore mining, explained that the plant had two processes, wet and dry, with the wet process being halted due to forest department orders. The Assessee contended that the dry plant was operational and produced evidence of its usage. Both the AO and CIT(A) acknowledged the usage of the dry plant. The Departmental Representative supported the disallowance. The Tribunal noted that if any part of the plant and machinery falling within a block of assets is used during the assessment year, depreciation is eligible for that block. As the dry plant was operational during the relevant period and fell within the block of assets, the Assessee was entitled to depreciation. Therefore, the Tribunal directed the AO to grant depreciation for the Tudou plant, leading to the allowance of the appeal on this issue.

In conclusion, the Tribunal allowed the Assessee's appeal concerning the disallowance of depreciation claimed on Goodwill and in relation to the Tudou plant. The judgments were based on legal interpretations and precedents, ensuring the correct application of tax laws in the given circumstances.

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