2024 (10) TMI 355

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....w." 03. Brief facts of the case are that the assessee is a limited company engaged in business. Income of Rs. 2,95,12,610/- declared in the e-return for A.Y. 2016-17, furnished on 22nd September, 2017. The case selected for scrutiny under Computer Assisted Scrutiny Selection (CASS) followed by serving of valid notices under Section 143(2) and 142(1) of the Act. The learned Assessing Officer during the course of assessment proceedings observed that the assessee has claimed depreciation on goodwill at the rate of 25% at Rs. 59,32,617/- on the Written Down Value (WDV) as on 1st April, 2015 of Rs. 2,37,30,469/-. The ld. Assessing Officer observed in the order that the goodwill was created in books during the F.Y. 2006-07 on account of difference between the cost of net assets and the amount paid by the transferee company pursuant to amalgamation of the erstwhile Shristi Infrastructure Development Corporation Ltd. having its registered office at Delhi with Peerless Abasan Finance Ltd. (PAFL) as per the scheme approved by Hon'ble High Court of Calcutta. After disallowing the alleged depreciation on goodwill claimed during the year income assessed at Rs. 3,54,45,230/-. 04. Aggri....

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....A No.881/KOL/2019, the finding of this Tribunal reads as under: - "2. The Revenue' sole substantive grievance raised in the instant appeal seeks to reverse the CIT(A)'s action deleting disallowance of depreciation on goodwill amounting to Rs. 187,50,000/- made by the Assessing Officer in his regular assessment framed on 31.03.15. The CIT(A)'s detailed discussion to this effect reads as under: "4. GROUND NO. 3: This ground is directed against the action of the A.O. in disallowing depreciation on goodwill for an amount of INR 187;50,000/-. The goodwill in subject was acquired during merger of two companies i.e. the erstwhile Shristi Infrastructure Development Corporation Limited with Peerless Abasan Finance Limited in accordance with the orders of the Delhi High Court & Calcutta High Court. Subsequently, the name of Peerless Abasan Finance Limited was changed to Shristi Infrastructure Development Corporation Limited. The difference between the cost of net assets and the amount paid by the transferee company, in terms of scheme of Amalgamation, was recorded as goodwill, i.e. for Rs. 10,00,00,000/-. 4.1. AO'S CASE: The AO has....

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.... be considered as any other business or commercial rights of similar nature attention of your goodself is invited to the decision of the Hon'ble Supreme in the ease of the Commissioner of Income Tax vs. Smifs Securities Ltd [2012] 24 taxmann.com 222 (SC). The Hon'ble Apex Court held that depreciation is allowable on 'goodwill' arising pursuant to a merger. 1.4 The decision of the Apex Court has also been followed in the judicial pronouncements mentioned below wherein it was held that depreciation is allowable on goodwill arising on merger: - DCIT vs Worldwide Media (2014) (43 Taxmann.com 18 - Mum ITAT -Triune Energy Services (P) Ltd. us DCIT (2016) (65 taxmann.com 288 - Del HC) -Cyber India Online Ltd. vs ACIT (2014)(42 Taxmann.com 108) 1.5 In light of the above, it is apparent that the depreciation is allowable on goodwill. 1.6 The Ld. AO in its order has also not contested that the depreciation on goodwill is not allowable u/ s 32(1)(ii) of the Act. The Ld. AO has disallowed the depreciation on goodwill merely on the contention that the goodwill is not reflected in the post-merger audited financial statement and the tax....

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....shed fact that decisions of the Supreme Court, is law of the land and binding on all Courts/ Tribunals and other authorities. 1.13 Reference in this regard is drawn to the decision in the case of CIT us Vallabhdas Vitaldas (1985) 253 ITR 543, wherein it has been held that where there is a judicial pronouncement by the highest court of the land, the same is binding on all courts. 1.14 Also, as aforesaid, the claim of depreciation on Goodwill was allowed for the previous year i.e. A.Y. 2011-12 by your predecessor in this office, it is humbly submitted before your goodself that the claim of depreciation on goodwill should be allowed as deduction on the principle of res judicata. 4.3. DECISION : On careful examination of assessment order and documentary evidences filed by the Ld. A/R, it has been observed that the AO made a remark that value of goodwill is not available from the financial statements of F.Y. 2006-07, without giving due cognizance to the relevant financial statements and without considering the submission of the appellant. Furthermore, it is not the case of AO that the depreciation on goodwill is not allowable u/s 32(1)(ii) of....

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....reciation on goodwill of Rs. 2,50,00,000/-. During the course of assessment proceedings, the assessee furnished written submission on 14.03.2014 regarding claim of depreciation on goodwill, which is reproduced below: As informed in our earlier hearings, the erstwhile Shristi Infrastructure Development Corporation (having its registered office at Delhi) had merged into Peerless Abasan Finance Limited (PAFL) as per order of both Hon'ble High Court at Delhi & Hon'ble High Court at Kolkata and then the name PAFL was changed to Shristi Infrastructure Development Corporation Ltd. As per the amalgamation scheme, the difference between the cost of the net assets and the amount paid by the transferee company, pursuant to amalgamation, has been recorded as goodwill. Hence, based on the aforesaid, a sum of INR 100,000,000 has been recorded as goodwill in the books of SIDCL during F. Y. 2006-07.The Hon'ble SC has, in the case of SMIFS Securities (2012)24 taxmann.com 222(SC) held that goodwill in the form of difference between the amount paid and the cost of the net asset acquired from the amalgamating company is an asset eligible for depreciation under the Act. The ruling ....

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....to scheme of amalgamation approved by the Hon'ble High court of Delhi on 22nd May, 2007 and Hon'ble Calcutta High Court on 20th June, 2007, the erstwhile Shristi Infrastructure Development Corporation Ltd. merged with Peerless Abasan Finance Ltd. (PAFL). Post-merger, the name of Peerless Abasan Finance Ltd. was changed to Shristi Infrastructure Development Corporation Ltd. In terms of the Scheme of amalgamation, the purchase consideration paid by PAFL to erstwhile Shristi Infrastructure Development Corporation Ltd. exceeded the cost of net assets taken over. Consequently, a sum of INR 100,000,000 was recorded as goodwill in the books of the assessee during the FY 2006-07. For the assessment year under consideration, the assessee filed a revised return of income and claimed depreciation on goodwill recorded in books at the rate of 25% being an eligible asset in terms of section 32(1) of the Act. We note that by going through the provisions of section 32(1) of the Act there remains no ambiguity that depreciation is allowable on Goodwill which can be classified under the category of 'any other business or commercial rights of similar nature'. This view is supp....