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TMI Blog2019 (8) TMI 1410X X X X Extracts X X X X X X X X Extracts X X X X ..... s or commercial rights of similar nature. There is no dispute with regard to allowability of deprecation on goodwill, but when you compare the facts of the current year, the question of allowability of deprecation has to be examined, in the light of provision of section 32(1), where it mandates the block of assets should exists to claim depreciation. Since, goodwill is not treated as an asset in its books of accounts and also, the assessee is not getting any enduring benefit out of such goodwill, the question of allowing depreciation on such non existing asset does not arise. AO as well the CIT(A), after considering relevant facts has rightly disallowed depreciation claimed on non-existing asset being goodwill. - Decided against assessee. - ITA No.2546/Mum/2018 - - - Dated:- 28-8-2019 - Shri Saktijit Dey, Judicial Member And Shri G. Manjunatha, Accountant Member For the Assessee : Aarati Visanji For the Revenue : V.K.Chaturvedi ORDER PER G.MANJUNATHA (A.M): This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals) 16, Mumbai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order, allowed relief, in respect of additions made by the AO towards disallowances of delayed payment of employees contribution to provident fund, additions towards TDS written off, and cessation of liability u/s 41(1),however confirmed additions made by the AO towards disallowances of depreciation on goodwill, on the ground that when, the asset ceased to continue in books of accounts and also, the assessee is not getting any enduring benefit out of goodwill, the question of deprecation on such non existing asset is incorrect and accordingly, there is no error in the findings of the AO, while disallowing depreciation on goodwill . The relevant findings of the Ld.CIT(A) are as under: 6.4.1 Vide these grounds appellant has agitated against disallowance of depreciation amounting to ₹ 3,03,70,514/- on goodwill. In para 8 of the assessment order, the Id. A.O. had mentioned that we appellant company had claimed an amount of ₹ 3,03,70,514/- as depreciation u/s.32 of the Act on goodwill. The appellant had Further pointed out-that the appellant company had revalued its goodwill and recorded an impairment loss in respect of goodwill as on 31.03.2011 in its bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back to the file of the AO to examine the contention of the assessee and allow the claim of depreciation in accordance with the Supreme Court decision. Accordingly, additional ground raised by the assessee is partly allowed for statistical purposes. 6.4.3 I have considered the submissions made by t upon the judgment of Hon'ble ITAT in appellant s own case for A.Y .2009-10.The Hon'ble ITAT has decided the allowability of depreciation on goodwill when goodwill was reflected as an asset in its Balance Sheet During the year under consideration, facts of the appellant are different from A.Y 2009-10. For the year under consideration, the appellant had revalued its goodwill and recorded an impairment loss in respect of goodwill as on 31.03.2012. Since goodwill is not Heated as an asset in its books of account and appellant is not enduring, any benefit out of goodwill, therefore depreciation cannot be allowed on a non existing asset from which appellant is not deriving any benefit or utilizing for the business1 j of the appellant. Therefore, disallowance of ₹ 3,03,70,514/- made by the A.O is confirmed and ground raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts and the excess value as determined, in accordance with accounting standard issue by the ICAI has been written off in AY 2011-12. Further, it was noticed from the assessment order that the assessee has shown Nil value for goodwill as on 31/03/2012 in its books of accounts. Thus, as per books of accounts, the goodwill ceased to exist. Accordingly, the assessee has not claimed any deprecation in the books of account on value of goodwill. Further, deprecation is calculated on written down value of the block of assets. If, the written down value of asset is reduced to zero or, the block of asset is empty or ceased to exist on the last date of the previous year, then no depreciation is allowable, even though the written down value of the asset is not reduced to zero. In this case, there is no doubts of whatever with regard to exists of assets in the books of accounts for the relevant financial year. As claimed by the assessee itself, it has fully written off goodwill in the books of accounts on the asset ceased to exist in the books of accounts and the last date of the previous year. Therefore we are of the considered view that once, a particular asset is cease ..... X X X X Extracts X X X X X X X X Extracts X X X X
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