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Facts
The Revenue appealed against the CIT(A)'s order allowing the assessee's claim for depreciation on goodwill and launch expenses. The assessee, an asset management company, had claimed these expenses as revenue expenditure. The Assessing Officer (AO) had disallowed the depreciation on goodwill and treated the launch expenses as capital expenditure.
Held
The Tribunal noted that the issue of depreciation on goodwill had been consistently decided in favor of the assessee by coordinate benches in previous assessment years, and there was no change in facts. Similarly, the issue of launch expenses being revenue expenditure had also been decided in favor of the assessee, with the High Court not admitting the revenue's appeal.
Key Issues
Whether depreciation on goodwill is allowable? Whether launch expenses are revenue or capital expenditure?
Sections Cited
143(3), 144C, 37(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
O R D E R PER PRASHANT MAHARISHI, AM: is filed by the Assistant Commissioner of Income Tax-6 (1) (2), Mumbai (the learned Assessing Officer against the appellate order passed by the Commissioner of Income Tax (A) – 56, Mumbai (the learned CIT – A) for Assessment Year 2015 – 16 dated 21/3/2024 wherein the appeal filed by the assessee against the assessment order passed under section 143 (3) read with section 144C of the income tax Act, 1961 (the act) dated 18/12/2018 passed by the Deputy Commissioner of Income Tax Circle – 6 (3) (1), Mumbai (the learned Assessing Officer) was partly allowed.
The learned AO aggrieved with that order has preferred this appeal raising 2 is of appeal. The first ground of appeal
is with respect to the depreciation of goodwill of Rs. 19,607,917/– allowed by the learned CIT – A which was disallowed by the learned AO stop second issue is with respect to the claim of the expenditure under the head launch expenses of Rs.76,317,661/– claimed by the assessee as allowable under section 37. (1) of the act whereas the learned Assessing Officer held that same is a one- time expense generating advantage for future years and therefore it is a capital expenditure which was allowed by the learned CIT – A.
3. The brief fact of the case shows that assessee is an asset management company of Franklin Templeton mutual fund and is engaged in the business of managing scheme of the above mutual fund including providing transfer agency services and portfolio management services. Assessee filed its return of income on 27/11/2015 declaring total income of Rs. 185,03,68,510/–. The assessment was passed under section 143 (3 by the learned assessing officer are capital in nature as it gives a benefit to the assessee for future years. This issue has already been decided in case of the assessee by the coordinate bench for Assessment Year 1997 – 98 and 98 – 99 in and 413 dated 8th February, 2005 and 8th December, 2006 respectively. Furthermore, the orders were challenged by the learned assessing officer before the honourable High Court and Department and appeal has not been admitted by the honourable High Court. This evidence are placed in the paper book at page Nos. 105 – 115 which are not controverted. Therefore, at present this issue is also squarely covered in favour of the assessee. Accordingly Ground No. 2 of the appeal of the learned Assessing Officer is also dismissed.
In the result appeal filed by the learned AO is dismissed.