KRIBHCO FERTILIZERS LIMITED,KAILASH COLONY vs. DEPUTY COMMISSIONER OF INCOME TAX, C. R. BUILDING

The assessee in appeal has assailed the order of CIT(A) in confirming disallowance of depreciation Rs.40,05,875/- claimed on intangible assets.

Shri Birn Shah, appearing on behalf of the assessee submits that in the Financial Year 2005-06, the assessee company had purchased a Urea Fertilizer Complex at Saharanpur, U.P., as a going concern on as is where is basis from M/s Oswal Chemical and Fertilizers Ltd. The possession, management, and control of the said Urea Fertilizer Complex in running condition was handed over to the assessee on 18.01.2006. The total purchase cost of the Urea Fertilizer Complex was (A.Y.2022-23) Rs.1908 crores /-, comprising the value of various tangible assets, intangible assets, and net current assets. The assets includes, all Intellectual Property Rights and technical information, all permits licences, leases, etc., assets listed in Schedule A of the Agreement as on 18.01.2006. The assessee, in the impugned assessment year, claimed depreciation on intangible assets as it was claiming in the preceding assessment years. The same was denied by the AO. In the preceding assessment years, a similar claim of depreciation on intangible assets made by the assessee was denied by the AO. In appeal before the CIT(A), the assessee’s claim of depreciation was allowed year after year. The Revenue carried the issue in appeal before the Tribunal in & 3490/Del/2017 for A.Ys. 2012-13 & 2013-14 and for A.Y. 2014-15. The Tribunal, vide common order dated 30.09.2021 following earlier orders of Tribunal, dismissed the Revenue’s grounds of appeal against deletion of addition on account of depreciation on intangible assets. He further pointed that in the impugned order, the CIT(A) has recorded that the Tribunal had allowed depreciation on intangible assets in the preceding assessment years in the assessee’s case, but to take a different view placed reliance on the decision of Hon’ble Supreme Court of India in the case of Sundaram Finance Ltd. vs. DCIT (99 taxmann.com 152). The ld. AR further contended that the CIT(A) has erred in holding that the assessee failed to produce any evidence to show that the licenses/permits are still enforceable and that the assessee is deriving benefits therefrom. The ld. AR submitted that the amount paid for acquiring intangible assets has already been capitalized, and the assessee is now eligible for depreciation.