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| The Tax Publishers2020 TaxPub(DT) 4139 (Mum-Trib) INCOME TAX ACT, 1961
Section 32
Where assessee had made the claim during the course of assessment proceedings itself before AO along with supporting documents but the same were not admitted by AO since assessee did not revise its return of income and no verification as to quantification / computations / valuation of goodwill was done at the level of AO. Therefore, matter was remanded back to AO and he was directed to allow the depreciation after due verification of quantification of amount of goodwill.
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Depreciation - Depreciation on goodwill - CIT(A) directed AO to allow depreciation @12.5% -
Assessee was engaged in development, manufacturing and marketing of engineering products and fuel dispensers, submersible tank pumps, outdoor payment terminals. During assessment proceedings, assessee filed a revised computation of income wherein it reduced claim of depreciation on fixed assets on account of capitalized interest, which was accepted by AO. At the same time, it claimed certain depreciation on goodwill. However, AO refused to admit the same since the claim was made after expiry of time allowed for filing of revised return of income under section 139(5) and assessee had not claimed the same by way of filing revised return of income. Assessee claimed depreciation on goodwill @ 12.5%, being half of 25% since the acquisition was in later half of the year. CIT(A) rejected the enhancement made by management and directed AO to allow depreciation on the same @12.5%. Held: Assessee had made the claim during the course of assessment proceedings itself before AO along with supporting documents but the same were not admitted by AO since assessee did not revise its return of income. AO had no occasion to consider assessee's claim since claim was not admitted and no verification as to quantification / computations / valuation of goodwill was done at the level of AO. Therefore, assessee was entitled to claim the depreciation on goodwill in terms of the decision of Supreme Court in the case of CIT v. Smifs Securities Ltd. (2012) 24 taxmann.com 222 (SC) : 2012 TaxPub(DT) 2430 (SC) as well as in terms of decision of Tribunal for assessment year 2011-12 in assessee's own case, the limited matter of verification of valuation of goodwill stand remitted back to AO and he was directed to allow the depreciation after due verification of quantification of amount of goodwill after appreciating the relevant documents.
Relied:CIT v. Smifs Securities Ltd. (2012) 24 taxmann.com 222 (SC) : 2012 TaxPub(DT) 2430 (SC) Goetze (India) Limited v. CIT (2006) 284 ITR 323 (SC) : 2006 TaxPub(DT) 1528 (SC) CIT v. Pruthvi Brokers & Shareholders Pvt. Ltd. (2012) 349 ITR 336 (Bom.) : 2012 TaxPub(DT) 2671 (Bom-HC) Gilbarco Veeder Root India Private Limited v. Dy. CIT 2018 TaxPub(DT) 5957 (Mum-Trib)
REFERRED :
FAVOUR : Partly in assessee's favour by way of remand
A.Y. : 2010-11
IN THE ITAT, MUMBAI BENCH
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