2014 (1) TMI 540

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....ppeal wise and ground wise adjudication is given in the following paragraphs. ITA No.6806/M/2011 (AY: 2007-2008) 2. Firstly we shall take up ITA No.6806/M/2011 which is filed by the Revenue on 7.10.2011 against the order of CIT (A)-18, Mumbai dated 12.7.2011 for the AY 2007-08 and the grounds raised in this appeal read as under:    "1. On the facts and in the circumstances of the case and in law, the CIT (A) erred in directing the AO to grant depreciation of Rs. 38,71,87,235/- on Goodwill.    2. On the facts and in the circumstances of the case and in law, the CIT (A) erred in not appreciating the ratio of the judgment of the Mumbai ITAT's decision in the case of R.G. Keshwani vs. ACIT (2009) 120 TTJ 1081, wherein it....

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....04-05); Hon'ble Kerala High Court judgment in the case of B. Raveendran Pillai vs. CIT [2011] 332 ITR 531 and the Hon'ble Delhi High Court judgment in the case of Areva T & D India Ltd. & Ors vs. DCIT & Ors [2012] 70 DTR (Del) 233. In this regard, we have perused the decision of this Tribunal in the case of M/s. Jyoti (India) Metal Industries Pvt. Ltd., vs. ACIT (supra) and find that the distribution rights, which is in the nature of marketing network are eligible for depreciation being a intangible asset eligible for depreciation u/s 32(1) of the Act. Para 7 & 8 of the said Tribunal's order is relevant in this regard and the same read as under:    "7. We have heard both the parties and perused the orders of the Revenue as well a....

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....bsp;   14.1. Hon'ble High Court has observed that the meaning of business or commercial rights of similar nature has to be understood in the context of purpose of such rights obtained as for effectively carrying on the business and commerce.        15. If the facts of the case in hand are analysis, in the light of the decisions discussed above, it is clear that the assessee paid the consideration for the purpose of enhancing its network in the field of money transfer business by acquiring the rights over infrastructure and other advantage attached to the marketing network and hence, the same falls under the category of intangible asset as contemplated u/s 32(1)(ii) of the IT Act.    &....

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.... the depreciation u/s 32 of the Act. Thus, the facts of the instant case of the assessee are comparable to the case of Weizmann Forex Ltd (supra). In the present case also assessee acquired the marketing network of Jyothi Industries by which the assessee got access to the marketing network of Jyothi Industries consisting of representative, infrastructure, customer lists, marketing strategies etc. Considering the commonality of the facts of the issue, assessee's acquisition of distribution network is eligible for depreciation u/s 32 of the Act and therefore, the issue under consideration stands covered in favour of the assessee. Accordingly, ground no.1 is allowed." 5. Considering the above, assessee is entitled for depreciation on the dist....

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...., stand covered in favour of the assessee. 8. In the result, appeal I.T.A. NO.6806/M/2011 filed by the Revenue is dismissed and the Cross Objection No. 238/M/2012 filed by the assessee is allowed. I.T.A. NO.6807/M/2011 (AY: 2008-2009) 9. This appeal filed by the Revenue on 7.10.2011 against the order of CIT (A)- 18, Mumbai dated 13.7.2011 for the AY 2008-09 and the grounds raised in this appeal read as under:    "1. On the facts and in the circumstances of the case and in law, the CIT (A) erred in directing the AO to grant depreciation of Rs. 29,03,90,427/- on goodwill.    2. On the facts and in the circumstances of the case and in law, the CIT (A) erred in not appreciating the ratio of the judgment of the Mumbai IT....