TaxTMI 
TaxTMI 
2022 (8) TMI 901
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....cial rights' as envisaged under section 32(1)(ii) of the Act and all the grounds of appeal relate thereto. 3. The assessee is a company which operates as a wholly owned subsidiary of Geodis International S.A., France. It is engaged in the business of freight forwarding operation. 4. The Ld. AO noticed that the assessee company claimed depreciation on goodwill of Rs. 1,16,51,168/- and Rs. 87,38,376/- in AY 2014-15 and 2015-16 respectively. On query, the assessee submitted that the Geodis group entered into 'Master Asset Purchase Agreement' dated December 1, 2008 with 'International Business Machine' (IBM) to acquire its logistics division world-wide. Pursuant to such agreement, the company had entered into an acquisition agreement dated March 31, 2009 with IBM India Private Limited, Network Solutions Private Limited and IBM Daksh Business Process Services India Private Limited (collectively referred to as 'IBM India') to acquire its logistics division in India. As a part of the Acquisition Agreement, the company acquired from IBM India for consideration of USD 27,83,540 convertible into Rs. 14,78,00,975/- (i) tangible assets in the form of laptops/desktops; and (ii) intangible....
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....ides, perused the orders of the A.O. and the Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the A.O. following the orders of his predecessor disallowed the claim of depreciation on goodwill. We find the Ld. CIT(A) upheld the action of the A.O, the reasons of which, have already been reproduced in the preceding paragraph. We find the issue stands decided in favour of the assessee by the consistent decisions of the Tribunal for the A.Ys. 2010-11, 2011-12 and 2012-13. We find the Tribunal in ITA.No.483/Del./2017 order dated 17.03.2021 for the A.Y. 2012-13 has allowed the claim of depreciation on goodwill by observing as under: "8. As regards Ground No. 42 in Assessment Year 2011-12, the Tribunal held in Para 17 to 25 are as under:- "17. The second grievance relates to disallowance of depreciation on goodwill. 18. Facts on record show that the appellant entered into a world-wide multi-year outsourcing agreement with IBM India Private Limited, Network Solutions Private Limited and IBM Daksh Business Process Services Private Limited to acquire the freight forwarding business/ internal....
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....l or business rights as defined under Explanation 3 to section 32(1). Further, the purchase price is not verifiable from any calculation or valuation report. According to the AO, there is decline in the business receipts even after paying so much on account of goodwill and, therefore, there is no justification for the payment of such amount. Further, it is also the case of the AO that as per the provisions of law, no depreciation is allowable on goodwill and the legislature provides that depreciation should be allowed on all other intangible assets other than goodwill. 41. We find, the Hon'ble Delhi High Court in the case of Areva T & D India Ltd. vs. DCIT, 345 ITR 421 has decided an identical issue in favour of the assessee. In that case, the following substantial question of law was admitted: - "Whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that know-how, business contacts, business information, etc. acquired as part of the slump sale described as " goodwill' were not entitled for depreciation under Section 32(1 )(ii) of the Income Tax Act?" 42. We find, the Hon'ble Delhi High Court in the said decis....
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....ible, valuable and capable of being transferred and that such assets were eligible for depreciation. On behalf of the respondent it was argued that applying the doctrine of noscitur sociis the expression "any other business or commercial rights of similar nature" used in Explanation 3(b) to Section 32(1) has to take colour from the preceding words "knowhow, patents, copyrights, trademarks, licenses, franchises". It was urged that the Supreme Court had clearly held in Techno Shares and Stocks Ltd. (supra) that "Our judgment should not be understood to mean that every business or commercial right would constitute a "licence" or a "franchise" in terms of section 32(l)(ii) of 1961 Act". 13. In the present case, applying the principle of ejusdem generis, which provides that where there are general words following particular and specific words, the meaning of the latter words shall be .confined to things of the same kind, as specified for interpreting the expression "business or commercial rights of similar nature" specified in Section 32(1 )(ii) of the Act, it is seen that such rights need not answer the description of "knowhow, patents, trademarks, licenses or franchises" but ....
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....items falling in Section 32(l)(ii) of the Act. 14. In view of the above discussion, we are of the view that the specified intangible assets acquired under slump sale agreement were in the nature of "business or commercial rights of similar nature" specified in Section 32(1 )(ii) of the Act and were accordingly eligible for depreciation under that Section. 15. In view of the above, it is not necessary to decide the alternative submission made on behalf of the assessee that goodwill per se is eligible for depreciation under Section 32(l)(ii) of the Act. In the circumstances, the substantial question of law is decided in the affirmative and this appeal is allowed in favour of the assessee and against the Revenue and the impugned order is set aside. " 44. We further find the SLP filed by the Revenue against the aforesaid decision was dismissed by the Hon'ble Supreme Court, vide order dated 23rd September, 2013 vide SLP 21227/2012. 45. We further find, the Delhi Special Bench in the case of CLC & Sons Private Ltd. (supra), while allowing depreciation on goodwill has held as under:- "7. It is overt from the command of clause (ii) of section 32....
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....ia is showing a declining trend is also incorrect. A perusal of the chart at para 32 of this order shows that there is, in fact, increase of revenue from IBM. 48. In view of the above discussion and relying on the decisions cited (supra), we hold that the assessee is entitled to depreciation on goodwill. The ground raised by the assessee is accordingly allowed. " 25. Respectfully following the findings of the co-ordinate bench, we direct the Assessing Officer to allow claim of depreciation of good will. This ground is, accordingly, allowed." In the present appeal, the issue is identical to that of earlier years and no distinguishing facts pointed out by the Revenue. The DRP has not at all considered the aspect of depreciation on goodwill in correct context as there is a finding identical to that of earlier years, assessee entered into a worldwide multi-year outsourcing agreement with IBM India Pvt. Ltd., Network Solutions Pvt. Ltd. and IBM Daksh Business Process Services Pvt. Ltd. as well as Acquisition Agreement and this is not an initial year of claim of depreciation on goodwill. Hence, in light of the decision of the earlier years by the Tribu....