DCIT, CIR-7(1), KOLKATA, KOLKATA vs. M/R BRITANNIA DAIRY PVT. LTD., KOLKATA

ORDER Per N.V.Vasudevan, JM This is an appeal by the Revenueagainst the order dated 02.03.2016 of C.I.T.(A)-15, Kolkata relating to A.Y.2011-12.

raised by the revenue reads as follows :- “The following Grounds of appeal are suggested:- 1. "That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law as well as in facts for allowing depreciation on intangible assets viz, Knowhow, Marketing Infrastructure and Non-compete Rights in contravention of section 32 of the I T.Act, 1961.

2. "That the appellant craves leave to add, delete, alter, modify or take new grounds of appeal".

3. The Assessee is a company. During the relevant year the assessee carried on business of marketing, distribution and sale of value added dairy products .. Pursuant to Business Transfer Agreement dated 22.03.2002 the Assesseehad purchased dairy business of Britannia Industries Limited (BIL). Under the said Business Transfer Agreement (BTA) the appellant had purchased intangible rights relating to dairy products for consideration specified therein. The intangible rights purchased inter alia 2 M/s Britannia Dairy Pvt. Ltd. A.Yr.2011-12 included know how, marketing infrastructure and goodwill. The consideration for each of the intangible right was clearly defined in the Business Transfer Agreement and the same was paid to BIL. Besides, BIL also entered into a Non Compete Agreement on 22.03.2002 in terms of which BIL agreed not to carry on competing dairy business. For accepting the Non Compete Covenant separate and distinct consideration was paid. In respect of the intangible rights, privileges and assets acquired in terms of the BTA dated 22.03.2002 the appellant claimed depreciation u/s 32(1)(ii) of the Act. In the income tax assessments for A.Y. 2003-04 to 2010-11 the assessee’s claim for depreciation on the actual cost/WDV of the intangible assets was disallowed by the AO.

3. On appeal by the assssee the CIT(A) directed the AO to allow depreciation of intangible assets as claimed by the assessee and in doing so followed the order of CIT(A) in assessee’s own case for A.Y.2003-04 wherein depreciation claimed by the assessee was allowed by CIT(A).

4. Aggrieved by the order of CIT(A) the revenue has preferred the present appeal before the Tribunal.

5. At the time of hearing of the appeal it was brought to our notice that the issue of disallowance of depreciation on intangible acquired by the assessee was the subject matter of dispute from A.Y.2003-04 to 2009-10 between the assessee and the department. The Hon’ble ITAT in to 2682/Mum/2012 and 6592/Mum/2012 for A.Y.2003-04 to 2009-10 considered the issue by its order dated 19.02.2018 and ultimately came to the conclusion that there was a genuine business transfer agreement and that the residual value after allocation of values to the various assets was treated as good will and that the valuation done by the valuers was proper. The tribunal further placed reliance on the decision of the Hon’ble Supreme Court in the case of CIT vs Snifs Securities Ltd. 348 ITR 302 (SC) came to the conclusion that the transfer of intangible such a good will is allowable u/s 32(1)(ii) of the Income Tax 2

3 M/s Britannia Dairy Pvt. Ltd. A.Yr.2011-12 Act, 1961 (Act). The Tribunal also came to the conclusion that the acquisition of knowhow , payment for acquisition of marketing infrastructure, payment of consideration of non composite fee and payment of acquisition of good will would all be payment for acquiring intangible assets and the assessee would be eligible for depreciation on acquisition cost of such intangible assets. In view of the decision of the tribunal referred to above we find no merits in this appeal raised by the revenue.

Order pronounced in the Court on 01.03.2018.