AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (3) TMI 1303
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....essee has raised the following grounds of appeal:- 1. The learned CIT(A) erred in law and on facts and in the circumstances of the case in confirming the disallowance of depreciation on goodwill of Rs. 15,21,394/-. 2. The order of the Commissioner (Appeals) being contrary to law, evidence and facts of the case should be set aside, amended or modified. 3. Each ground of appeal hereinabove is independent and without prejudice to each other. 3. Briefly, in the facts of the case, the assessee for the year under consideration had filed the return of income declaring loss of Rs. 4,37,06,983/-. The assessee was engaged in the business of aviation training and hospitality industry. During the course of assessment proceedings on verificati....
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....TA No. 218 of 2007 held that no depreciation or amortization was allowable on goodwill. Accordingly, the sum of Rs. 15,21,394/- claimed as depreciation was disallowed and added back as income of the assessee. An alternate plea was made by the assessee that the excess payment be treated as non-compete fees to the parties from whom the assets were acquired. The said plea of the assessee was also rejected by the Assessing Officer holding that even non-compete frees would not qualify as intangible assets eligible for depreciation u/s. 32(1) of the Act. 4. The Commissioner of Income Tax (Appeals) upheld the order of Assessing Officer on both the counts and disallowed the depreciation on the so called goodwill and non-compete fees claimed by the....
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....s. Deputy Commissioner of Income Tax & Ors. reported in (2016) 237 Taxman 230 (Delhi) wherein on identical facts, the Hon'ble High Court held that the surplus arising out of slump sale consideration is the value of goodwill in the hands of the assessee on which the assessee is entitled to claim the depreciation. He pointed that there was an agreement to pay a slump sale consideration which was lump sum sale price, part on which was attributed to value of costs of goods and the balance was the value of goodwill. 7. The learned Departmental Representative for the Revenue placed reliance on the ratio laid down in Chowgule & Co. (P.) Ltd. Vs. Assistant Commissioner of Income Tax reported in (2011) 10 taxmann.com 224 (Panaji) and pointed out th....
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....sideration was fixed at Rs. 75,00,000/-. It was agreed between the parties that the sale of the 'acquired business undertaking' by the seller to the purchaser pursuant thereto was as and by way of a slump sale and the purchase consideration was a composite purchase consideration for the whole of the acquired business undertaking and no purchase consideration shall be assigned to specific items to the 'acquired business undertaking', as per article 2.2 of the agreement. While clarifying and interpreting the term 'acquired business undertaking', as per article 1.1.1, it was agreed upon that the seller's business run under the name and style of Avalon Aviation Academy which is, inter alia, engaged in Aviation and hospitality training; the good....
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....es (2,27,345) Net Assets 14,14,423 Consideration 75,00,000 Goodwill 60,85,577 10. On such goodwill, the assessee claimed depreciation which has been denied by the authorities below holding that the excess amount over assets and liabilities is not goodwill. This is the finding of the Commissioner of Income Tax (Appeals). The Assessing Officer had denied the depreciation as goodwill was not part of intangible assets u/s. 32(1) of the Act. The depreciation was allowable only on tangible assets and not intangible assets. The basis for disallowance was the decision of the Hon'ble Bombay High Court in the case of Commissioner of Income Tax Vs. M/s. Techno Shares Stocks Ltd. & Others (supra) which was against the assessee. However,....
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....red to be accounted for when a purchaser acquires a business as a going concern by paying more than the fair market value of the net tangible assets, that is, assets less liabilities". The Hon'ble High Court therefore held that goodwill included a host of intangible assets, which a person acquires, on acquiring a business as a going concern and valuing the same at the excess consideration paid over and above the value of net tangible assets is an acceptable accounting principle and thus, further exercise to value the goodwill is not warranted. In this regard reliance was placed on the ratio laid down by the Hon'ble Supreme Court in Commissioner of Income Tax Vs. Smifs Securities Ltd. (supra) and on Commissioner of Income Tax Vs. B.C. Sriniv....