Depreciation on goodwill claim required fresh factual verification after the appellate deletion was set aside and remanded.

Depreciation on goodwill arising from acquisition of business units was claimed on the footing that the transaction was a slump sale and the goodwill formed part of the block of intangible assets. The appellate authority accepted the claim and deleted the disallowance without obtaining a remand report or factual response from the Assessing Officer, despite the Revenue's objection that the transaction had been mischaracterised and required verification. The matter was therefore found to need fresh factual scrutiny at the appellate stage, including the additional ground that the assessment order had been passed in the name of a non-existent entity. The deletion was set aside and the issue was remanded for de novo adjudication after hearing both sides.

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Issues: Whether the deletion of the disallowance of depreciation on goodwill arising from acquisition of business units was sustainable when the Revenue alleged that the transaction was mischaracterised and the factual basis had not been independently verified by the appellate authority.

Analysis: The assessee's claim of depreciation on goodwill was founded on acquisition of business units on slump sale basis and on the treatment of goodwill as part of the block of intangible assets. The appellate authority accepted the assessee's version and deleted the addition without calling for a remand report or obtaining a factual response from the Assessing Officer, despite the Revenue's objection that the assessment order had proceeded on allegedly incorrect factual assumptions and that the nature of the transaction required verification. In these circumstances, the matter required fresh factual examination at the appellate stage, including consideration of the additional ground concerning the assessment order having been passed in the name of a non-existent entity.

Conclusion: The deletion was set aside and the matter was remanded to the appellate authority for de novo adjudication after calling for comments from the Assessing Officer and affording the assessee an opportunity of hearing.

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