2020 (9) TMI 429 - AT - Income Tax

Depreciation on good will value - HELD THAT - Issue settled in favour of the assessee and against the revenue by the Tribunal in assessee s own case 2020 (8) TMI 50 - ITAT DELHI - Claim can be considered in the hands of the assessee subject to verification of the factual aspects in the hands of the assessee. AO was of the view that the claim was not allowable because of the decision of Goetz India Ltd. 2006 (3) TMI 75 - SUPREME COURT though he has made some reference to the factual aspects of the case. DRP has not adjudicated this issue; though the CIT(A) has allowed the claim of the assessee in Assessment Year 2011-12. The present Assessment Year being the year in which agreement was entered into i.e. dated 20.06.2008, it is considered fit to remit this issue of determining resultant amount of goodwill on which depreciation is allowable in the hands of the assessee. Disallowance of marked to market foreign exchange loss - HELD THAT - As decided in own case 2020 (8) TMI 50 - ITAT DELHI reverse the orders of Assessing Officer in this regard and direct the Assessing Officer to delete the disallowance made on account of mark to market foreign exchange loss.

Summary

Issues Involved:
1. Allowance of depreciation on goodwill value
2. Deletion of disallowance of marked to market foreign exchange loss

Analysis:

Issue 1: Allowance of Depreciation on Goodwill Value
The appeal by the Revenue challenged the order of the ld. CIT(A) allowing depreciation on goodwill value of &8377; 6.09 crores and deletion of disallowance of marked to market foreign exchange loss of &8377; 4,10,404/-. The Tribunal noted that both issues had been decided in favor of the assessee in a previous case for A.Y 2010-11. The Tribunal considered the claim of depreciation on goodwill, emphasizing that even if a claim was not originally made in the return of income, it could be allowed during assessment proceedings. Referring to relevant case law, the Tribunal held that depreciation on goodwill should be considered in the hands of the assessee. The matter was remitted back to the Assessing Officer for verification and decision in accordance with law.

Issue 2: Deletion of Disallowance of Marked to Market Foreign Exchange Loss
The Tribunal addressed the deletion of disallowance of marked to market foreign exchange loss, citing precedents and case law. It noted that the issue was covered by decisions of the Hon'ble Delhi High Court and the Hon'ble Bombay High Court, which allowed mark to market loss on revaluation of forward exchange contracts. The Tribunal reversed the Assessing Officer's decision and directed the deletion of the disallowance on account of marked to market foreign exchange loss.

In conclusion, the Tribunal dismissed the appeal of the revenue, following the decisions in favor of the assessee on both issues. The assessing officer was directed to allow the claim of loss and make necessary adjustments accordingly.