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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 ..... ce of depreciation on Goodwill amounting to Rs. 3,03,70,514/-made by the Deputy Commissioner of Income Tax- 9( 1)(2),Mumbai (hereinafter known as Assessing Officer (AO)) 1.2 The CIT (A) should have allowed depreciation on Goodwill amounting to Rs. 3.03,70,514/- as the same is allowable U/s 32(1) when the intangible assets were acquired and paid in past years and Honorable ITAT Mumbai has allowed depreciation on Goodwill in the assessment year 2009-10 . 1.3 The AO has erred in disallowing depreciation on Goodwill only on the pretext that the asset is impaired in the books of accounts as per Accounting Standards issued by Institute of Chartered Accountants of India and the Petitioner Company has not sold the asset but continues to enjoy t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessment Year in question. The depredation at 25% on WDV basis was not claimed in the nature filed. Thus a plea is filed to allow such amount of depreciation to the Petitioner Company." In para 9 of the order, the Hon'ble ITAT has held as under: " As regard the issue raised in additional ground, we find that the same is purely a legal ground, arising out of the facts available on record and accordingly, the same is admitted. The issue, whether the depreciation on goodwill is allowable or not, the same stands concluded by the decision of Hon'ble Apex Court in the case of Smiff Securities Ltd. (supra), wherein the Hon'ble Supreme Court held that goodwill is an asset under the expression used in Explanation 3(b) to section 32(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. AR for the assessee submitted that the Ld.CIT(A) was erred in upholding the disallowances of deprecation on goodwill amounting to Rs. 3,03,70,514/- without appreciating the fact that depreciation on goodwill is allowable u/s 32(1) as an intangible asset of any other business or commercial rights of similar nature. The Ld. AR, further submitted that although, the assessee has written of goodwill in books of accounts by impairment of asset, as per the accounting standard issued by the ICAI, but the written down value of such goodwill is continued to be remain in the books of accounts and also, as long as, the block of asset is continued in the books of accounts, the assessee is entitled to claim depreciation on WDV of such block of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of goodwill recorded in the books of accounts 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 allowabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The Ld.AO as well the Ld.CIT(A), after considering relevant facts has rightly disallowed depreciation claimed on non-existing asset being goodwill. We do not find any error in the order of the Ld.CIT(A). Hence we are inclined to uphold order of the Ld.CIT(A) and dismissed appeal filed by the assessee. 7. In the result, appeal filed by the assesee is dismissed. Order pronounced in the open court on this 28 /08/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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