2013 (6) TMI 675

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....he assessment years 2008-09 and 2009-10, respectively. I. T. A. No. 37/Hyd/12-Appeal by the assessee 2. Briefly the facts of the case are that the assessee is a company engaged in the business of retail trading in electronic goods and home appliances. For the assessment year 2008-09, it filed return of income on December 30, 2008, showing income of Rs. 3,75,45,760. During the course of assessment proceedings, the Assessing Officer found that the assessee had debited a sum of Rs. 15 lakhs to the profit and loss account, showing as goodwill amortised. On the query raised by the Assessing Officer for justifying such claim of deduction, the assessee had submitted that the said amount was paid to one M/s. Krishna Electronics, Vijayawada....

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.... (Appeals) held that in the absence of any documentary evidence including a copy of agreement from the assessee, it is difficult to believe that the said amount had been paid for transfer of leasehold rights of such premises. The Commissioner of Income-tax (Appeals) concurred with the view taken by the Assessing Officer. The Commissioner of Income-tax (Appeals) observed that the assessee has, however, separately shown such payment under miscellaneous expenditure in the balance-sheet and, therefore, cannot be allowed as deduction under section 32(1)(ii) of the Act, the same cannot be treated as an intangible asset. Accordingly, the Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer in making the addition of Rs.....

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....e specified assets and accordingly the assessee was allowed depreciation. The hon'ble Supreme Court in the case of CIT v. Smifs Securities Ltd. [2012] 348 ITR 302 (SC) held that goodwill is an intangible asset eligible for depreciation under section 32 of the Act. In these circumstances, we remit the issue to the file of the Assessing Officer to decide the issue in the light of the said decisions to consider the allowability of depreciation on intangible assets after getting bifurcation of payment of Rs. 75 lakhs and to allow depreciation on the goodwill at 25 per cent. 8. In the result, appeal being I. T. A. No. 37/Hyd/12 is partly allowed for statistical purposes. I. T. A. No. 1482/Hyd/12-Appeal by the Revenue 9. In this case....