AMERICA EXPRESS SERVICES INDIA LTD.,NEW DELHI vs. DCIT, NEW DELHI

That on facts and circumstances of the case and in law, the learned CIT(A) has erred in restricting the cost of goodwill to Rs. Nil instead of Rs. 80,000,000/- on the basis that no goodwill exists in the business acquired. Allowability of depreciation on goodwill 19. That on facts and circumstances of the case and in law, the learned CIT(A) has erred in not appreciating the fact that goodwill purchased for the purpose of business should be considered as “intangible assets” and accordingly depreciation should be allowed as per section 32 of the Act. 2. This appeal of the assessee was allowed for statistical purposes by order dated 30-11-2023. After that the assessee has moved miscellaneous application No.223/Del/2024 for rectification the order. The rectification application was allowed by the Tribunal by order dated 09-01-2015 holding as under: The application in hand has been filed under section 254(2) of the Income Tax Act, 1961 seeking rectification order dated 30-11-2023 and on hearing both sides we find that there is non-adjudication of ground of appeal No.18 &19 for which Ld. Counsel has submitted that the same are covered in favour of the assessee in assessee’s own decisions for earlier years. 2. In the light of the aforesaid order dated 30-11-2023 the order dated 30-11- 2023 is recalled to the extent of adjudicating ground No. 18 & 19. 3. The application is accordingly allowed registry is directed to list the appeal in the course of hearing. 3. We have heard the rival contention of the parties and gone through the material available on record.

The Ld. AR of the assessee submitted that the both the issues are covered in favour of the assessee’s own case for earlier years for A.Y.2002-03 and 2010-2011. He also submitted that the assessee own appeal No.4106/Mum/2007 for A.Y.2002-04 was decided on 03-02-2014, after that the assessee has moved miscellaneous application and the ground no.6 & 7 was recalled for adjudication by order dated 06-06- 2016. The grounds raised by the assessee was allowed by the Hon’ble Tribunal by order dated 29-10-2014 and the co- ordinate bench held as under” 3. At the time of hearing before us, the AR pointed out that the issue was impugned in the assessment year and the issue of valuation of goodwill travelled up to the ITAT, Mumbai and the co-ordinate Bench in the original order held that the valuation of Goodwill was correct and held that entire payment of Rs.12 crores was towards acquired business thereby allowing a claim. 4. Respectfully following the order of the ITAT in assessee’s own case, we hold that the assessee acquired the business along with goodwill and also that the valuation thereof was correct. 5. We now come to the issue of allowance of depreciation of goodwill acquired the assessee. The AO disallowed the claim of deprecation on goodwill, because goodwill did not feature as a depreciable intangible asset in section 32.

The AR pointed out that the issue is now covered by the decision of the CIT vs Securities Ltd. reported in 348 ITR 302 rendered by Hon’ble Supreme Court. 7. We, therefore, allow grounds no.6 & 7. 5. He also submitted that in the ITAT no. 1982/Del/2015 for the A.Y.2010-2011 in the assessee’s own the Co-ordinate Bench relying the above sited decision allow the appeal of the assessee. The relevant findings oof the Tribunal read as under: 32. The issue of depreciation on goodwill stands covered in favour of the assessee in line with the order of the tribunal in assessee’s own case in Assessment Year 2002-03 (supra). Following the same parity of reasoning we allow the claim of depreciation on goodwill. 6.In the case of Viacom 18 Media (P.) Ltd. v. Principal Commissioner of Income Tax [2025]181 taxmann.com 167 (Mumbai-Trib.) the coordinate bench in para no.9.4 and 9.5 held as under; 9.4 In view of the above discussion and applying the binding ratio of the Hon’ble supreme Court in Smifs Securities Ltd. (supra0 as well as the consistent line of authority supporting the allowability of depreciation on good will arising upon amalgamation where no such goodwill existed in the books of the amalgamating company, we hold that the sixth proviso to section 32(1) has no application to the present case. The good will in question is new intangible asset that came into existence only upon amalgamation and qualifies for depreciation under section 32(1)(ii). The Assessing Officer has, in our view correctly appreciated the legal position and allowed depreciation accordingly.