2020 (2) TMI 980 - AT - Income Tax

Trade marks' depreciation disallowed for 2013-14 & 2014-15 upheld by Tribunal. Valuation report rejected.

M/s. Sami Direct Marketing Pvt. Ltd. Versus The ACIT, Circle – 6 (1) (1), Bengaluru.

M/s. Sami Direct Marketing Pvt. Ltd. Versus The ACIT, Circle – 6 (1) (1), Bengaluru. - TMI Issues Involved:- Disallowance of depreciation on trade marks for Assessment Year 2013-14 and 2014-15.Analysis:1. The appeals were filed against two separate orders of the CIT(A) for the Assessment Years 2013-14 and 2014-15, focusing on the disallowance of depreciation on trade marks.2. The assessee claimed depreciation on trade marks amounting to Rs. 30.62.500/- for 2013-14 and Rs. 22,96,875/- for 2014-15. The valuation report submitted by the assessee was questioned for being post-dated and lacking separate cash flow analysis for activities with and without trademarks.3. The AO disallowed the depreciation claim as the valuation of the trade mark was not substantiated. The assessee argued that since no depreciation was disallowed in the year of purchase (2012-13), it should not be disallowed in subsequent years. However, no evidence was presented regarding any query by the AO in 2012-13.4. The CIT(A) noted that the valuation of trade marks seemed arbitrary and not based on correct assessments. The claim of revenue neutrality was refuted, and the valuation report was not admitted due to non-compliance with Tribunal Rules.5. The Tribunal order cited by the assessee was deemed inapplicable as it pertained to a different scenario regarding depreciation denial based on asset usage, unlike the current case involving valuation and substantiation issues.6. Consequently, the Tribunal upheld the CIT(A)'s decision, dismissing both appeals of the assessee due to the lack of substantial evidence and compliance with rules.This detailed analysis of the judgment highlights the key arguments, findings, and conclusions related to the disallowance of depreciation on trade marks for the mentioned assessment years.