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TMI Blog2015 (1) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos.12 and 15 of 2014 are directed against the composite order, dated 29th April, 2013, passed by Income Tax Appellate Tribunal, Chandigarh, (for short, the Appellate Tribunal), in ITA Nos.189 190/Chd/2013, pertaining to assessment years 2006-07 and 2009-10, while ITA Nos.4 and 13 of 2014 have been preferred by the Revenue against the common order, dated 2nd April, 2013, passed by the Appellate Tribunal, in ITA Nos.293 and 294/Chd/2012, qua the assessment years 2007-08 2008- 09, whereby the appeals filed by the assessee (respondent herein) came to be allowed in terms of the impugned orders and the Assessing Officer was directed to allow the claim of the assessee vis.-a-vis. the depreciation on goodwill and also depreciation on intangible assets. 3. Feeling aggrieved, the Revenue has challenged the orders of the Appellate Tribunal by the medium of these appeals. 4. All these appeals have been admitted on the following analogous substantial questions of law, on 3rd September, 2014: 1. Whether the ITAT was justified in applying the ratio of the judgment in CIT vs. SMIFS Securities (SC) wherein there was a categorical finding by the CIT(A) that the difference between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal(s) filed by the nominated nondefaulting continuing member stands allowed with no order as to costs. 9. The Appellate Tribunal, after making discussions, in paragraphs 27 28 has rightly applied the ratio of the judgment of the Apex Court in Commissioner of Income Tax vs. SMIFS Securities Ltd., [2012] 348 ITR 302 (SC), and held that the authorities i.e. the Assessing Officer and the CIT(Appeals) have wrongly made the order and the Assessing Officer was directed to allow the claim of the assessee vis.-a-vis. the depreciation on goodwill. It is apt to reproduce paragraphs No.27 and 28 of the impugned order hereunder: 27. The second aspect of the issue is that the assessee had booked the said consideration of ₹ 12.62 crores as goodwill in its books of account. In this regard also the assessee is entitled to the claim of depreciation on the goodwill as the Hon ble Supreme Court in CIT Vs. SNIFS Securities Ltd. (supra) held that the goodwill by itself was an intangible asset under Explanation 3(b) to section 32(1) of the Act and is eligible for deduction. The relevant portion of the ratio laid down by the Hon ble Supreme Court is as under: The Assessing Officer h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal had made discussion in paragraphs 28, 29, 33, 35 and 38 of the order impugned in ITA Nos.4 and 13 of 2014. We are of the considered view that the discussion made is based on facts, law applicable, read with the judgment of the Apex Court. 12. It is apt to record herein that the Delhi High Court in Areva T and D India Ltd. vs. Deputy Commissioner of Income Tax, [2012] 345 ITR 421 (Delhi) discussed and laid down what is the meaning of intangible assets and how the assessee is entitled to depreciation. It is apt to reproduce paragraphs 13, 14, 15 and 16 of the said decision hereunder: 13. In the present case, applying the principle of ejusdem generis, which provides that where there are general words following particular and specific words, the meaning of the latter words shall be confined to things of the same kind, as specified for interpreting the expression business or commercial rights of similar nature specified in Section 32(1)(ii) of the Act. It is seen that such rights need not answer the description of knowhow, patents, trademarks, licenses or franchises but must be of similar nature as the specified assets. On a perusal of the meaning of the categories of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we are of the view that the specified intangible assets acquired under slump sale agreement were in the nature of business or commercial rights of similar nature specified in Section 32(1)(ii) of the Act and were accordingly eligible for depreciation under that Section. 15. In view of the above, it is not necessary to decide the alternative submission made on behalf of the assessee that goodwill per se is eligible for depreciation under Section 32(1)(ii) of the Act. In the circumstances, the substantial question of law is decided in the affirmative and this appeal is allowed in favour of the assessee and against the Revenue and the impugned order is set aside. ITA No.1151/2010 and ITA No.1152/2010 16. In these appeals, the Income-tax Appellate Tribunal, relying upon the decision in assesse s own case I.T.A. No.336/Del/08 dated July 6, 2009, pertaining to assessment year 2005-06, held:- 5.On careful consideration of rival submission, we are of view that learned Commissioner Income-tax (Appeals) has rightly allowed relief to the assessee after considering relevant facts and circumstances of the case. The assessee has not claimed depreciation on goodwill it acquired c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the amended provisions of section 32 of the Act w.e.f. 1.4.1999, ambit of depreciation has been enlarged to cover both the tangible and intangible assets. The depreciation on buildings, machinery plant of furniture being tangible assets was being allowed subject to satisfaction of the conditions laid down under section 32 of the Act i.e. the assets should be owned wholly or partly by the assessee and used for the purpose of business or profession of the assessee. The rate of depreciation for such assets was provided in Schedule attached to the Income Tax Act. However, after the amendment by the Finance (No.2) Act, 1998, w.e.f. 1.4.1999 the depreciation is also to be allowed on intangible assets i.e. know-how, patent and copyrights, trademarks, licences or franchises or any other business or commercial rights of similar nature. The Hon ble Delhi High Court in Areva T and D India Ltd. Vs. DCIT (supra) applied the principle of ejusdem generic to interpret the expression business or commercial rights of similar nature referred to in section 32(I)(ii) of the Act and held that the Legislature did not intend to provide for depreciation only in respect of specified intangible assets b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 36-37 26. The perusal of the Schedules to BPA comprising of the above said list of Stockist Agreements, Distribution Agreements, Lease Agreements and also Distribution and Marketing Agreements, alongwith List of Licenses and Permissions and List of various Products, the name license and also the manufacturing know-how etc., alongwith List of employees are assets, which are invaluable and instrumental in carrying on the business of Animal Health Care and Diagnostics Business divisions acquired by the assessee from M/s Ranbaxy Laboratories Ltd. as per BPA. The acquisition of the above said items is bundle of rights acquired by the assessee for which lump sum price was fixed and no break up in the value of price was determined either by the assessee or by the auditors but the same constituted bundle of rights akin to a licence or comparable to a license to carry on the business of Animal Health Care and Diagnostics Business divisions which was being carried on by the seller i.e. M/s Ranbaxy Laboratories Ltd. the above said assets acquired by the assessee were the business or commercial rights or licence acquired in order to carry on new business acquired by the assessee includi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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