TaxTMI 
TaxTMI 
2019 (3) TMI 261
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....2,838/-. The case was selected for scrutiny and necessary notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee. The assessee appeared through its representative and furnished the details called for. 3. The AO observed that the assessee has entered into an agreement dated 18.11.2008 for purchase of Cable TV business of M/s. Apna Cable Network for a total consideration of Rs. 2,30,00,000/-. He observed that the said amount included the consideration for equipment & material of Rs. 24,91,620/- cables of Rs. 37,56,800/-and deposits to the tune of Rs. 5,01,580/- totaling to Rs. 67,50,000/-. The AO observed that as per schedule C, fixed assets, the company has claimed depreciation on network rights of Rs. 1,62,66,250/-....
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....ance of head end, accounting, compliance, billing and other day to day operations" 5. Observing that the assessee has not furnished any evidence in support of the above contention and also observing that the assessee also has claimed to have incurred expenses towards salaries, wages and staff welfare totaling to Rs. 18,29,569, the AO held that further incurrance of expenditure of Rs. 18.75 lacs is not genuine and disallowed the same and brought it to tax. 6. Aggrieved, the assessee preferred an appeal before the CIT (A), who confirmed the order of the AO that the "Network Rights" are not intangible assets and therefore, no depreciation can be allowed. Further, he also disallowed the expenditure towards technical and management services o....
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....d by the CIT (A). Therefore, he submitted that the assessee accepts the said network rights to be "goodwill" and as per the judgment of the Hon'ble Supreme Court in the case of CIT Kolkata vs. Smifs Securities Ltd reported in 348 ITR 302 (S.C), "goodwill" is an intangible asset and depreciation is allowable thereon. Thus, he prayed for allowance of depreciation. The learned DR, on the other hand, supported the orders of the authorities below. 8. Having regard to the rival contentions, we find that the findings of the AO that "Network Rights" is "goodwill" has not been disturbed by the CIT (A) and as held by the Hon'ble Supreme Court in the case of CIT vs. Smifs Securities Ltd (Supra), depreciation is allowable on "goodwill". Respec....