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TMI Blog2022 (5) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the opinion that the depreciation claimed by the assessee on goodwill acquired deserves to be allowed in accordance with law. Ld.AO is directed to compute depreciation in accordance with the principles laid down in case of Smifs Securities Ltd. Assessee appeal allowed. Short credit of tax deducted at source - AO is directed to verify and grant credit in accordance with the law. - IT(TP)A No. 2511/Bang/2019 - - - Dated:- 3-2-2022 - SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER Assessee by : Shri Sharath Rao, Advocate Revenue by : Shri Pradeep Kumar, CIT (DR) ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by assessee against the final assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated company. 2.4. The Hon'ble DRP and learned AO has erred in not appreciating that a proviso is normally in the nature of a qualification or exception to the main provision to which it is a proviso and therefore it does not wholly nullify the main provision. 2.5. The Hon'ble DRP has erred in stating that the Appellant has not furnished any information to prove that the assets said to be acquired are in the nature of business or commercial rights and has not submitted valuation report for valuing the intangible assets ie goodwill, without appreciating the facts of the case. 2.6. The Hon'ble DRP erred in not appreciating the fact that the goodwill on amalgamation is nothing but the actual share purchase price p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goodwill by assessee is as under: Particulars Amount in Rs Remarks Investment in equity shares 33,13,55,566 Less: Net Assets taken over Assets 65,28,50,761 Less: Liabilities 52,18,16,176 13,10,34,585 Less: Capital issued (equity shares - Rs 1,83,33,340 + preference shares - Rs 5,27,50,780) 7,10,84,120 5,99,50,465 Goodwill on me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... give effect to the directions of the DRP. The Ld.AO after verification disallowed the depreciation on goodwill amounting to Rs 6,08,69,744/-. Aggrieved by the final assessment order, the assessee preferred appeal before this Tribunal. 6. Before us the Ld.AR contended that the said proviso to section 32 do not apply, as in the present facts it was not a case where the amalgamating company (Synova Innovative Technologies Pvt Ltd) had goodwill as an asset. Goodwill arose in the hands of the assessee company for the first time on account of the merger. 7. The Ld.AR submits that the entire proviso stipulates that the depreciation claimed after amalgamation should not exceed the deduction calculated at the prescribed rate in respect of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany or the transferor company who had goodwill in its books of account prior to the merger and the assessee in the present case is the transferee company who did not have any goodwill in the books of account prior to amalgamation and post amalgamation assessee acquired the goodwill. This aspect has been very well explained in the decision of Hon ble Delhi Tribunal in the case of Aricent Technologies (Holdings) Ltd. (supra) as under: 60. The DR further emphasized that if the 6th proviso to section 32 (i) is considered the depreciation under this provision is to be restricted to the amount considering that amalgamation has not taken place and since in the hands of the amalgamating companies the depreciation on goodwill would have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oodwill before amalgamation. Hence, it is not a case that goodwill has been bought or purchased and therefore, the cost of acquisition of such goodwill in the hands of the assessee should be taken as nil. Once again the DR has erred in not understanding the scheme of amalgamation. In the order of the Hon'ble High Court itself it is clearly mentioned that anything paid over and above the net asset value of the amalgamating companies shall be towards goodwill. 62. The DR further referred to the decision relied upon by the counsel in the case of Smifs Securities 348 ITR 302 and stated that the Hon'ble Supreme Court has only laid down the ratio that goodwill is an intangible asset and eligible for deprecation but has nowhere the H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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