2014 (7) TMI 413 - AT - Income Tax

Rectification of order Mistake apparent from record Valuation and depreciation on goodwill Held that - The valuation of goodwill has not been decided by the Tribunal - it amounts to mistake apparent from the record thus, the matter is remitted back to the Tribunal for fresh adjudication the claim of depreciation on goodwill has been dismissed by Tribunal Relying upon Commissioner of Income Tax, Kolkata Versus Smifs Securities Ltd. 2012 (8) TMI 713 - SUPREME COURT - goodwill is an intangible asset within the meaning of Section 32 of the Act and eligible for depreciation thus, the order is recalled as the contrary decision taken by the Tribunal amounts to mistake apparent from record matter recalled for fresh decision.

Summary

Issues:
1. Adjudication of grounds related to valuation of goodwill and depreciation on goodwill.
2. Allowability of depreciation on goodwill as per the Hon'ble Supreme Court decisions.

Analysis:

Issue 1: Adjudication of grounds related to valuation of goodwill and depreciation on goodwill:
The miscellaneous application was filed by the assessee under Section 254(2) of the I.T. Act, seeking reconsideration of certain grounds not adjudicated by the Tribunal in its previous order. The Tribunal had disposed of the Revenue's appeal and the cross objection filed by the assessee, but had not addressed grounds No.6 & 7 raised by the assessee regarding the valuation of goodwill and depreciation on goodwill. The learned AR argued that the Tribunal's failure to adjudicate these grounds amounted to a mistake apparent from the record. Specifically, the issue of depreciation on goodwill was highlighted, with reference to the Tribunal's previous decision and subsequent Supreme Court judgments in favor of allowing depreciation on goodwill as an intangible asset. The Tribunal acknowledged the oversight and decided to recall and reconsider these grounds for fresh adjudication, directing the Registry to issue notices and fix a hearing date.

Issue 2: Allowability of depreciation on goodwill as per the Hon'ble Supreme Court decisions:
The Tribunal revisited the issue of the claim of depreciation on goodwill in light of the Hon'ble Supreme Court decisions, particularly the case of Smifs Securities Pvt. Ltd., which established that goodwill qualifies as an intangible asset eligible for depreciation under Section 32 of the Act. The Tribunal recognized the inconsistency between its previous decision and the Supreme Court rulings, leading to the conclusion that the denial of depreciation on goodwill by the Tribunal constituted a mistake apparent from the record. Consequently, the Tribunal allowed the miscellaneous application filed by the assessee, indicating a favorable stance towards reconsidering the claim of depreciation on goodwill based on the recent judicial interpretations. The decision was pronounced in an open court on June 6, 2014, setting the stage for a fresh examination of the relevant grounds in the upcoming hearing scheduled for July 7, 2014.

This detailed analysis of the judgment highlights the procedural and substantive aspects of the issues raised by the assessee and the subsequent reconsideration by the Tribunal in light of relevant legal principles and judicial precedents.