SNB INFRASTRUCTURE PRIVATE LIMITED,MUMBAI vs. DCIT CIRCLE 14(1)(2), MUMBAI

ITA 8603/MUM/2025Status: DisposedITAT Mumbai24 July 2026AY 2015-1614 pages
AI SummaryRemanded

What were the facts?

The assessee, SNB Infrastructure Private Limited, is in appeal against the order of the NFAC, Delhi, for Assessment Year 2015-16. The appeal arises from an order passed by the DCIT Circle 14(1)(2), Mumbai, under Section 143(3) of the Income Tax Act, 1961. The assessee company entered into a succession agreement with a partnership firm, M/s. Shyam Narayan & Bros. The partners and directors were identical. Intangible assets, goodwill, and commercial rights were created in the assessee's books. The Assessing Officer (AO) treated this as a 'fake bookish entry' and rejected the depreciation claim of Rs. 87,90,161/-. An identical issue for AY 2010-11 in the assessee's own case was decided against the assessee by a Coordinate Bench of the ITAT Mumbai.

What did the Tribunal hold?

The Tribunal noted that an identical issue for AY 2010-11 in the assessee's own case was decided against the assessee, holding that intangible assets were artificially created. However, the Tribunal also acknowledged a subsequent, contrary decision by a Coordinate Bench in Dharmanandan Diamonds Pvt. Ltd., which allowed depreciation on assets taken over if Section 47(xiii) conditions were met and the transaction was genuine. The Tribunal observed that the Ld. CIT(A) relied on United Breweries Ltd. and distinguished the assessee's cases. The Tribunal found that the controversy required examination in light of subsequent judicial developments, including the Hon'ble Bombay High Court judgment in Pr. CIT v. Dharmanandan Diamonds Pvt. Ltd. and the conflicting Coordinate Bench decisions. Since the impugned orders did not reflect an examination of these subsequent precedents, the Tribunal set aside the Ld. CIT(A)'s order and restored the matter to the Ld. AO for de novo adjudication. The Ld. AO is directed to examine the claim afresh in light of all judicial precedents, verify the factual matrix and Section 47(xiii) conditions, and pass a speaking order after affording the assessee an opportunity of being heard. All contentions are left open for the Ld. AO.

What were the issues?

1. Whether the assessee is entitled to claim depreciation on intangible assets (goodwill and commercial rights) created on succession, when such assets were not recorded in the predecessor firm's books, turning on Section 43(1) and Section 47(xiii) of the Income Tax Act, 1961. Assessee's Contention: The assessee argued that the Ld. CIT(A) had considered submissions and relied on the case of Dharmanandan Diamonds Pvt. Ltd. v. DCIT, which took a contrary view to an earlier decision in the assessee's own case. The assessee contended that on substantially identical facts, Coordinate Benches had adopted conflicting views. They further relied on the Bombay High Court judgment in Pr. CIT v. Dharmanandan Diamonds Pvt. Ltd. and other precedents like Neptune Industries Ltd., Suyash Lab. Ltd., and Nayan L. Mepani. Revenue's Contention: The revenue, through the Ld. AO and Ld. CIT(A), argued that the transaction was a 'fake bookish entry' as no consideration was paid for the intangible assets. The Ld. CIT(A) relied on the Bangalore Bench decision in United Breweries Ltd. and distinguished the cases relied upon by the assessee, holding that the goodwill and commercial rights represented artificial book entries created without real cost of acquisition. The Ld. CIT(A) also noted that the partners of the firm and directors of the company were identical, suggesting no genuine business justification other than tax benefits.

Which sections of the Income-tax Act were involved?

Section 43(1),Section 47(xiii),Section 143(3),Section 250,Section 254

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI ANIKESH BANERJEE & SHRI BINAYANANDA PRUSETH

For Respondent: Shri Surendra Mohan - SR. DR

PER: SHRI ANIKESH BANERJEE, JM:

The instant appeal of the assessee filed against the order of NFAC, Delhi [for brevity “Ld. CIT(A)”], order passed under Section 250 r.w.s. 254 of the Income Tax Act, 1961 (for brevity ‘the Act’) for Assessment Year 2015-16, date

of order 29.09.2025. The impugned order emanated from the order of the Ld.

ITA 8603/MUM/2025 SNB INFRASTRUCTURE PRIVATE LIMITED

Assistant Commissioner of Income Tax

The order continues below.

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