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Tax Publishers Metal One Corporation India (P) Ltd. v. DCIT [ITA No. 1761/Del/2015, dt. 31-7-2020] : 2020 TaxPub(DT) 3024 (Del.-Trib) Depreciation on goodwill arising out of a Business transfer agreement dated 20-6-2008 (Assessment Year 2009-10) without claiming it in return but raising the claim before assessing officer for the first time--Allowability. *Facts:* Assessee had paid Rs. 34 crores to Mitsubishi for acquiring their business on slump sale basis in assessment year 2009-10. The excess of purchase price over the net assets was treated Goodwill. There was no mention of goodwill in the business transfer agreement. Depreciation on this goodwill was not claimed in the return for the assessment year 2010-11 but was claimed for the first time before assessing officer applying Smifs Securities Ltd. decision (2012) 348 ITR 302 (SC) : 2012 TaxPub(DT) 2430 (SC) (which held that goodwill was an intangible asset and depreciation was allowable on the same). This claim of depreciation on goodwill was rejected by assessing officer and DRP did not adjudicate the same. On higher appeal to ITAT - Held in favour of the assessee that the depreciation claim of goodwill be verified as per the business transfer agreement and duly allowed. *Editorial Note:* The assessee in their earlier assessment year 2009-10 and 2011-12 did not claim any depreciation on goodwill and in assessment year 2011-12 the Commissioner (Appeals) has allowed the claim of depreciation on goodwill. The year of appeal is assessment year 2010-11 is in between year is to be noted. Reference be made to section 32(1) Explanation 5 whereby depreciation is a mandatory claim deemed to have been given whether claimed or not. Would the department permit an allowance of depreciation only on the net WDV of the particular block especially reading section 32(1) Explanation 5 needs to be seen though it would be incorrect if done thus. The claim being made for first time before assessing officer without claiming in the return needs to be considered on merits as per decisions of Pruthvi Brokers & Shareholders Pvt. Ltd. (2012) 349 ITR 336 (Bom.) : 2012 TaxPub(DT) 2671 (Bom-HC), Jai Parabolic Springs Ltd. (2008) 306 ITR 42 (Del.) : 2008 TaxPub(DT) 1881 (Del-HC) this topic is no longer res integra.

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Metal One Corporation India (P) Ltd. v. DCIT [ITA No. 1761/Del/2015, dt. 31-7-2020] : 2020 TaxPub(DT) 3024 (Del.-Trib)

Depreciation on goodwill arising out of a Business transfer agreement dated 20-6-2008 (Assessment Year 2009-10) without claiming it in return but raising the claim before assessing officer for the first time--Allowability.

Facts:

Assessee had paid Rs. 34 crores to Mitsubishi for acquiring their business on slump sale basis in assessment year 2009-10. The excess of purchase price over the net assets was treated Goodwill. There was no mention of goodwill in the business transfer agreement. Depreciation on this goodwill was not claimed in the return for the assessment year 2010-11 but was claimed for the first time before assessing officer applying Smifs Securities Ltd. decision (2012) 348 ITR 302 (SC) : 2012 TaxPub(DT) 2430 (SC) (which held that goodwill was an intangible asset and depreciation was allowable on the same). This claim of depreciation on goodwill was rejected by assessing officer and DRP did not adjudicate the same. On higher appeal to ITAT -

Held in favour of the assessee that the depreciation claim of goodwill be verified as per the business transfer agreement and duly allowed.

Editorial Note: The assessee in their earlier assessment year 2009-10 and 2011-12 did not claim any depreciation on goodwill and in assessment year 2011-12 the Commissioner (Appeals) has allowed the claim of depreciation on goodwill. The year of appeal is assessment year 2010-11 is in between year is to be noted. Reference be made to section 32(1) Explanation 5 whereby depreciation is a mandatory claim deemed to have been given whether claimed or not. Would the department permit an allowance of depreciation only on the net WDV of the particular block especially reading section 32(1) Explanation 5 needs to be seen though it would be incorrect if done thus.

The claim being made for first time before assessing officer without claiming in the return needs to be considered on merits as per decisions of Pruthvi Brokers & Shareholders Pvt. Ltd. (2012) 349 ITR 336 (Bom.) : 2012 TaxPub(DT) 2671 (Bom-HC), Jai Parabolic Springs Ltd. (2008) 306 ITR 42 (Del.) : 2008 TaxPub(DT) 1881 (Del-HC) this topic is no longer res integra.