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TMI Blog2015 (10) TMI 2307X X X X Extracts X X X X X X X X Extracts X X X X ..... s or other business or commercial rights of similar nature being intangible assets. The gratuity liability taken over by the respondent does not fall under any of those categories specified in section 32. The matter needs re-consideration by Their Lordships. - Decided in favour of revenue as directed. - ITA No. 120 of 2000 - - - Dated:- 9-2-2015 - GIRISH CHANDRA GUPTA AND ARINDAM SINHA, JJ. For The appellant : Mr. M.P. Agarwal, Advocate with Mr. S.N. Dutta, Advocate For The respondent : Mr. J.P. Khaitan, Senior Advocate The Court :- The subject matter of challenge in the present appeal is a judgment and order dated lst September, 1999 passed by the learned Income Tax Appellate Tribunal allowing an appeal of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the consideration of ₹ 4.10 crores shown in the agreement is not the real consideration unless liability towards payment of gratuity and leave salary is spread over the consideration shown.? Mr. Agarwal submitted that the question is no longer res integra since the point has already been decided in favour of the Revenue by the Supreme Court in the case of the assessee itself in the case of Commissioner of Income Tax vs. Hooghly Mills Co. Ltd. reported in (2006) 287 ITR 333 (SC) wherein the following views were expressed :- However, even if we reject the aforesaid submission of learned counsel for the Revenue (as we are inclined to do) and hold that the expenditure on taking over the gratuity liability is a capital expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f mentioned the value of the building, plant and machinery. Hence it is not necessary to remit the matter to the Tribunal in this case. No doubt, the word plant had been given the deeming meaning vide section 43(3) but even this deeming meaning does not include the gratuity liability. Hence, in our opinion, no depreciation can be granted on the gratuity liability taken over by the respondent assessee. Mr. Khaitan, learned senior Advocate submitted that the Apex Court was considering the matter in the light of the agreement dated 24th March, 1988 entered into between the assessee and M/s. Fort Gloster Industries Ltd. whereas the case before us arose out of an agreement dated 30th August, 1994 entered into between the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned value of the assets and not in respect of the money paid only. He submitted that the Hon ble Apex Court s attention was not drawn to the fact that liability on account of gratuity taken over by the purchaser lost the character of outstanding gratuity and partook the character of consideration in the hands of the assessee. Once it partook the character of consideration, there is no reason why the depreciation should not be allowed. Mr. Khaitan contended, the liability on account of gratuity was in the hands of the seller. The buyer did not enjoy any service of the employee nor could have been in law liable for payment of any gratuity to the employees of the seller. The buyer became liable because the buyer undertook to pay the debt due b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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