ACIT, CIRCLE-8(1), NEW DELHI vs. ELTEK SGS PVT. LTD, NEW DELHI

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ITA 7281/DEL/2018Status: DisposedITAT Delhi08 September 2021AY 2013-143 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that depreciation on goodwill is allowable, following the Supreme Court's decision in Smifs Securities Ltd. The CIT(A)'s decision to allow depreciation was upheld.

What were the facts?

The assessee company claimed depreciation on goodwill arising from an amalgamation. The Assessing Officer disallowed this claim, stating that goodwill is not eligible for depreciation.

What were the issues?

Whether depreciation is allowable on goodwill arising from an amalgamation.

Which sections of the Income-tax Act were involved?

Section 32

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI

Before: SH. N. K. BILLAIYA & MS. SUCHITRA KAMBLE

For Appellant: Dr. Maninder Kaur, Sr DR
Hearing: 08/09/2021Pronounced: 08/09/2021

PER N. K. BILLAIYA, AM: 7282/Del/2018 are two appeals by the Revenue preferred against two separate orders of the CIT(A)-3, Delhi dated 03.08.2018. 2. Both these appeals were heard together and are disposed of by this common order for the sake of convenience. 3. The common grievance in both these appeals relate to the deletion of addition made by the AO on account of disallowance of depreciation on goodwill.

4.

Briefly stated the facts of the case are that the appellant company underwent amalgamation with M/s. Valere Power India Limited pursuant to the order of High Court dated 05.02.2014 by which the amalgamation was effected from 01.04.2011.

5.

As per the scheme of amalgamation, where value of liabilities and amount of equity capital allotted /payment to the equity shareholders exceeds the value of assets of the transferor company taken over, such excess shall debited to the goodwill account. Accordingly, the assessee claimed on depreciation on goodwill which claim was denied by the AO. 6. Assessee assailed the addition before the CIT(A) and reiterated its claim of depreciation strongly contended that the goodwill has enumerated from the decision of the Hon’ble High Court and not out of accounting principles. It was brought to the notice of the CIT(A) that goodwill being a non tangible assets is eligible for depreciation u/s. 32 of the Act. 7. The CIT(A) was convinced with the claim and allowed the depreciation. 8. Before us the DR strongly supported the Assessment Order. 9. We find that this claim is no more res-integra as the issue has been settled in favour of the assessee and against the revenue by the decision of the Hon’ble Supreme Court in the case of Smifs Securities Ltd. 348 ITR 302. We do not find any error or infirmity in the findings of the CIT(A). 10. In the result, both the appeals filed by the revenue are dismissed.

11.

Decision announced in the open court in the presence of both the representatives on 08.09.2021.

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