AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (5) TMI 85
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....„ITAT‟) dated 07.03.2014 whereby it affirmed the Appellate Commissioner‟s order on the depreciation claim for AY 2006-07 by the assessee for the sum of Rs. 53,39,256/-. 3. The facts necessary to decide the present appeal are that on 29.09.2000, the assessee acquired the shares of M/s Siemens Telecom Ltd. („STL‟). The consideration paid by the assessee, inter alia, included the sum of Rs. 9 Crores for the "marketing, customer support, distribution and associate setups" of STL. It is a conceded fact that for the previous assessment years, i.e., 2002-03, 2003-04 and 2004-05, the depreciation claim of the assessee was allowed and had acquired finality. In these circumstances when the returns for AY 2006-07 were ....
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....rs‟ reasoning which had accepted the depreciation claims. The CIT (A) also considered the relevant statutory provisions and the decision of this Court in CIT v. Hindustan Coca Cola Beverages Pvt. Ltd., (2011) 331 ITR 192. The ITAT by the impugned order affirmed the findings of the CIT (A). 5. It is urged by Mr. Kamal Sawhney, Sr. Standing Counsel that given the nature of the definition of asset under Section 32 (1), Explanation 3 (b), only intangible assets which are akin to those enumerated, i.e., know-how, patents, copyrights, trademarks, licences, franchises etc. can claim depreciation. It was urged that this is apparent from the reading of an expression "any other business or commercial rights of similar nature". 6. Learned ....
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....s, being know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature." 9. In Hindustan Coca Cola Beverages (supra), this Court had an occasion to consider Explanation 3 (b) in the specific context of claim for depreciation of goodwill. The Division Bench noticed the various decisions of the Supreme Court including Nat Steel Equipment Pvt. Ltd. v. Commissioner of Central Excise, AIR 1988 SC 631 in the context of what is meant by the term „similar‟. The Court also recollected the Supreme Court‟s ruling in CIT v. B.C. Srinivasa Setty, (1981) 128 ITR 294 (SC) in the specific context of what is meant by goodwill and thereafter preceded to held as follows: - ....
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.... and, hence, eligible to depreciation. It has also been noted by the tribunal that the said facts were stated by the Assessee in the audit report and the assessing officer had examined the audit report and also made queries and accepted the explanation proffered by the Assessee. The acceptance of the claim of the Assessee by the assessing officer would come in the compartment of taking a plausible view inasmuch as basically intangible assets are identifiable non-monetary assets that cannot be seen or touched or physical measures which are created through time and / or effort and that are identifiable as a separate asset. They can be in the form of copyrights, patents, trademarks, goodwill, trade secrets, customer lists, marketing rights, fr....
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....ion that the tribunal is justified in holding that if two views were possible and when the assessing officer had accepted one view which is a plausible one, it was not appropriate on the part of the Commissioner to exercise his power under Section 263 solely on the ground that in the books of accounts it was mentioned as "goodwill" and nothing else. As has been held by the Apex Court in Malabar Industrial Co. Ltd. (supra), Max India Ltd. (supra) and Commissioner of Income Tax v. Vimgi Investment P.Ltd. [2007] 290 ITR 505 (Delhi) once a plausible view is taken, it is not open to the Commissioner to exercise the power under Section 263 of the Act." 10. In Smifs (supra), the Court was pointedly answering the questions as to whether goodwill....
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....red to hereinabove. 12. For the afore-stated reasons, we answer Question No. [b] also in favour of the Assessee." From the above discussion, it is apparent that the question as to whether the claim for depreciation confirms to one or the other description under Section 32, especially Explanation 3 has to be examined with reference to what is put forward by the assessee in the given facts of each case. The structure of the definition, or rather expanded definition, which by Explanation 3 spells out what are intangible assets (know-how, patents, copyrights, trademarks, licences, franchises etc.), being of a peculiar nature, the claim which the Court would necessarily have to consider is whether the item claimed to be eligible for deprec....