2020 (2) TMI 980 - AT - Income Tax

Disallowance of depreciation on trade marks - transaction regarding purchase of trade mark was between sister concerns of the assessee - valuation of the same could not be substantiated with any evidence - HELD THAT - Before us, the assessee has furnished a copy of valuation report regarding trade mark which is dated 05.09.2017 whereas the order of CIT(A) is dated 22.12.2017 for Assessment Year 2013-14 and dated 18.12.2017 for Assessment Year 2014-15. In the Paper Book this is not made clear as to whether the valuation report was made available before CIT(A) or not and obviously it could not be made available before the AO since the Assessment Orders are much prior to the date of the valuation report but there is no finding of the learned CIT(A) on this aspect as to whether any valuation report was made available before him or not. In the facts of the present case, this valuation report appears to be a new evidence which appears in the Paper Book without complying with the Tribunal Rules in respect of filing of Paper Book and hence, we do not admit the valuation report - Decided against assessee.

Summary

Issues Involved:
- Disallowance of depreciation on trade marks for Assessment Year 2013-14 and 2014-15.

Analysis:
1. The appeals were filed against two separate orders of the CIT(A) for the Assessment Years 2013-14 and 2014-15, focusing on the disallowance of depreciation on trade marks.

2. The assessee claimed depreciation on trade marks amounting to ?30.62.500/- for 2013-14 and ?22,96,875/- for 2014-15. The valuation report submitted by the assessee was questioned for being post-dated and lacking separate cash flow analysis for activities with and without trademarks.

3. The AO disallowed the depreciation claim as the valuation of the trade mark was not substantiated. The assessee argued that since no depreciation was disallowed in the year of purchase (2012-13), it should not be disallowed in subsequent years. However, no evidence was presented regarding any query by the AO in 2012-13.

4. The CIT(A) noted that the valuation of trade marks seemed arbitrary and not based on correct assessments. The claim of revenue neutrality was refuted, and the valuation report was not admitted due to non-compliance with Tribunal Rules.

5. The Tribunal order cited by the assessee was deemed inapplicable as it pertained to a different scenario regarding depreciation denial based on asset usage, unlike the current case involving valuation and substantiation issues.

6. Consequently, the Tribunal upheld the CIT(A)'s decision, dismissing both appeals of the assessee due to the lack of substantial evidence and compliance with rules.

This detailed analysis of the judgment highlights the key arguments, findings, and conclusions related to the disallowance of depreciation on trade marks for the mentioned assessment years.