TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 315
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....mes and trademarks valued at Rs. 65,26,40,150/-. 2. The lower authorities have failed to appreciate that revaluation of the intangibles was effected by the erstwhile firm, before the succession, and not that of the Appellant as a result of on succession. 3. The lower authorities have failed to appreciate that the assets (including the intangible assets) of the erstwhile firm were transferred to the Appellant in the succession as contemplated under Section 47(xiii) of the IT Act. 4. The lower authorities have failed to appreciate that neither under Section 47(xiii) or elsewhere in the IT Act is there a stipulation that assets cannot be revalued prior to succession or the fact that transfer needs to necessarily take place at the book value. The very fact that Section 47(xiii) exempts such transaction from the purview of transfer for the purpose of capital gains is that there is a contemplation that in a scenario of succession there could arise profits due to the sale of assets at a value higher than the cost. 5. The lower authorities have failed to appreciate that Section 47(xiii) makes an explicit mention of transfer of intangible assets. 6. The lower authorities have fail....
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....sputed by the Learned Assessing Officer. 14. The Learned Commissioner (Appeals) is not justified in upholding the action of the Learned Assessing Officer in disallowing the depreciation, when the fact that the intangibles originally belonged to the firm has not been questioned and in the Appellant's own case for AY 2013-14 the Hon`ble ITAT has allowed the depreciation. 15. The Learned Commissioner (Appeals) is not justified in upholding the action of the Learned Assessing Officer in disallowing the depreciation even when the Hon'ble ITAT has allowed the appeal of the Appellant for A Y 2013-14. For the above reasons and for such other reasons which may be allowed by the Hon'ble members to be urged at the time of hearing, it is prayed that the aforesaid appeal be allowed." 3. It was submitted by ld. AR of assessee that although the assessee has raised as many as 15 grounds of appeal but the only grievance of the assessee is regarding non-granting of depreciation on intangible assets to the extent of Rs. 1,64,95,840/- being brand names and trademarks valued at Rs. 65,26,40,150/-. He submitted a copy of the Tribunal order in assessee's own case for Assessment Year 2013-1....
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....ing Officer no interference is needed. The grounds taken are thereby dismissed. Whereas, the AR of the appellant has pleaded that the losses are allowed to be carried forward as per the provisions of law. The Assessing Officer is directed accordingly." 6. Now we reproduce Para nos. 9 and 10 from the Tribunal order in assessee's own case for Assessment Year 2013-14 because in Para 9 of this Tribunal order, there is reproduction of the relevant para from the Tribunal order in assessee's own case for Assessment Year 2012-13. These paras are as under. "9. Having carefully examined the orders of lower authorities in the light of rival submissions, we find that this issue has been raised before the Tribunal in earlier AY 2012-13. The Tribunal following its order for earlier years had decided the issue in favour of assessee, after holding that depreciation is allowable on intangible assets. The relevant observations of the order of Tribunal are extracted hereunder for the sake of reference:- "8. With respect to ground No.2, it is pointed out by the learned DR that this issue is covered against the assessee in the assessee's own case for earlier assessment years from 2005-06 to 2008-....
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....elationship between the holding company and wholly owned subsidiary is that they are two legally distinct persons and holding company does not own the assets of a subsidiary and in law the management of the business of the subsidiary also lies with its directors. Thus, according to him, the partnership firm and the assessee company are two different and distinct legal entities and it cannot be said that the assessee company has not acquired any assets from the erstwhile partnership firm. To appreciate these contentions of the assessee, we have to examine the procedure and effect of conversion of a partnership firm into a company. The Hon'ble Bombay High Court in the case of CIT Vs. Texspin Engg and Manufacturing Works reported in (2003) 263 ITR 345 (Bom) has considered the effect of conversion of a partnership firm into a limited company by virtue of sec. 575 of the Companies Act and has held that under part IX of the Companies Act, when a partnership firm is converted to a limited company, the properties of the erstwhile firm vests in the limited company. It was observed that there is a difference in vesting of the property and distribution of the property. It was held that on ves....
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....stence. Therefore, the assets come to vest in the hands of the company and there is no cost of assets to the company on such vesting. When the transaction itself has been treated to be not a transfer, but is akin to succession, in our opinion the 5th proviso to subclause (ii) of sec. 36(1) applies and the depreciation has to be calculated as if there is no transfer. 19. Further, as there is no transfer, there is no cost to the assessee. Depreciation is allowable on the WDV of the asset and WDV has been defined u/s 43(6) to mean in the case of assets acquired in the previous year, the actual cost to the assessee. As actual cost to the assessee was 'Nil', the WD value of the assets in the hands of the predecessor firm shall be considered for the allowance of depreciation. 20. Therefore, we do not see any reason to interfere with the orders of the authorities below. 21. The learned counsel for the assessee had placed reliance upon the decision of ITAT at Ahmedabad in the case of Prakash Chemical Agencies Pvt. Ltd. reported in (2012) 136 ITD 222 (Ahd) but we find that it is the case of a takeover of the business of a partnership firm by the assessee company therein whereas in the....
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....we deem it appropriate to dismiss this ground of the assessee as well." 10. Since the Tribunal has taken a particular view in the earlier assessment year, we find no reason to take a contrary view in this appeal. Accordingly, following the order of Tribunal for the earlier year, we direct the AO to allow depreciation for intangible assets." 7. When we go through the relevant paras reproduced from the Tribunal order in assessee's own case for Assessment Year 2012-13, we find that in that year, the issue was decided by the Tribunal against the assessee. We find that in para 9 of this Tribunal order for Assessment Year 2013-14, an apparent mistake has been committed by saying that the Tribunal in its order for earlier years has decided the issue in favour of the assessee because we find that as per the relevant paras reproduced from the Tribunal order for Assessment Year 2012-13, it has been stated that the issue is covered against the assessee as per the Tribunal order in assessee's own case for Assessment Years 2005-06 & 2008-09 in ITA Nos. 429 to 430/Bang/2013 dated 10.01.2014 and para nos. 16 to 25 of that Tribunal order for earlier years were also reproduced and as per the sam....