TaxTMI 
TaxTMI 
2010 (12) TMI 520
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....al finance Ltd. (BGFL) for acquisition from BGFL of the business of retail finance, hire purchase and consumer durable finance including existing contracts, assets, liability and employees related to the retail finance division of every description, as going concern on slump sale basis. The assessee acquired certain intangible assets as part and parcel of the foregoing agreement which it had reflected in its accounts as "business and commercial brand equity". According to the assessee as part of the acquisition of retain finance business from BGFL it had acquired certain intangible assets and on such intangible assets the assessee is entitled to depreciation at 25% which was quantified at a sum of Rs.5,75,00,000/-. As already stated this return of income was accepted u/s. 143(1) of the Act on 3/12/2002. 3. For assessment year 2002-03 the assessee filed return of income on 31/10/2002 declaring a loss of Rs.11,71,89,590/- and this loss return was processed under section 143(1) of the Act on 22/2/2003. The claim of depreciation on intangibles was made in assessment year 2002-03 also. 4. In A.Y 2003-04 assessee filed a return of income on 31/1/2003 declaring a loss ....
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....t to our notice that the issue with regard to allowing depreciation on intangibles namely business and commercial brand equity had come up for consideration before the Tribunal in ITA No.902/M/08 for A.Y. 2004-05 and this Tribunal held as follows: "5 The remaining issue relate to allowing deprecation of Rs.5,66,01,583/- on intangible assets, namely business and commercial brand equity. 5.1 During the assessment proceedings, the AO noted that the assessee company has claimed depreciation of R. 5,66,01,583/- on intangible assets namely business and commercial brand equity. The assessee company was required to file the details of intangible assets along with value of intangible assets. In response, the assessee furnished copy of agreement dated 29.3.2001 for transfer of Retails Finance Division of Birla Global Finance Ltd (BGFL) to the assessee company. The assessee company also furnished copy of valuation report prepared by Haribhakti Financial Services P Ltd for valuation of retail business of BGFL. As per this valuation report, the total value of hire purchase business as well as marketing network was Rs.46.20 crores as on 30.3.2001. The assessee company has pur....
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.... was drawn on the copy of the agreement and copy of valuation report placed on record. It was explained that in the agreement, there is a clear mention about intangible assets and the valuation obtained from Haribhakti Financial Services P Ltd was in respect to intangible assets only. The details of intangible assets and the value of the intangible assets has been clearly mentioned which is Rs.46.20 crores. It was further submitted that it was a going concern purchased by the assessee from parent company M/s BGFL. In the agreement names of the assets were also mentioned. Attention of the Bench was drawn on various clauses of the agreement placed on record. In the clause (b) of para 3.1.3 the details of all the intangible assets mentioned in the agreement. The valuation of the intangible assets was arrived at on the basis of valuation report obtained and therefore, there is no question of doubting that there was no detail of intangible assets and there was no valuation of intangible assts. The lump-sum consideration of the going concern at Rs.248 crores or so have been accepted by the AO which includes valuation of intangible assets also. Thereafter, the ld counsel of the assessee i....
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....to do this exercise, the opinion of the AO as expressed in the Assessment Order is arbitrary and subjective. It is submitted that there being no valid reason n just brushing aside the valuation report of a reputed valuation firm, the disallowance ought to be deleted." 7.1 Thereafter, the CIT(A) taken into consideration all the aspects and then has given his findings in paras 15 and 16 as under: "15. I have carefully considered the order of the AO and the arguments and written submissions of the appellant. First of all, the agreement relating to the sale of business elaborately defines all assets, tangible as well as intangibles. Secondly, the breakup of the total consideration paid under the agreement was provided by the assessee in its audited accounts for the year ended 31.3.2001, being the first year in which the business was acquired. This is stated in the notes to accounts. Thirdly, the value of the intangibles has been taken having regard to the valuation report obtained from M/s Haribhakti Financial Services Pvt ltd, an independent valuer. In addition to the valuation determined by the valuer, the consideration comprise of the book value of all tangible a....
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.... of license user of the premises along with necessary infrastructure like telephone lines, fax lines, e-mail connections etc., that were made available to the appellant from day one of its takeover of the business. Indeed, these business rights are off balance sheet items and there can be no two views that these are valuable rights enabling the appellant to carry on the business as a going concern. 16. Having regard to the foregoing facts on record, I am of the considered opinion that the claim of the appellant is in accordance with the law and in the absence of any factual and contrary finding made by the AO with respect to the disallowance made by him who has based the disallowance and addition solely on ten basis of non submission of the breakup of the valuation which has properly been contested by the AO this ground deserves to succeed and is accordingly allowed." 8. The above findings of the ld CIT(A), in our view are finding of fact. The ld CIT(A) has ascertained the factual aspect that the assessee has actually substantial revenues from the business contracts from those parties that were transferred to the assessee company as part of the business and that....