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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 ..... ances of the case, Altimetrik India Private Limited ("the Appellant"), respectfully submits the following grounds of appeal before your Honours: 1. The directions of the Hon'ble Dispute Resolution Panel ("DRP") and the order of the learned Assessing Officer ("AO"), to the extent prejudicial to the Appellant, are bad in law and on facts. 2. Disallowance of depreciation on Goodwill 2.1. That on the fact and circumstances of the case, the Hon'ble DRP and the learned AO erred in law in disallowing the depreciation on goodwill by placing reliance on the sixth proviso to section 32(1)(ii) of the Income-tax Act, 1961 ("the Act"). 2.2. The Hon'ble DRP has erred in law in holding that the Appellant's claim of depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o INR 2,89,74,184. 3.2 The learned AO has erred in not granting credit of taxes deducted at source under the PAN of erstwhile Synova Innovative Technology Private Limited now merged with the Appellant. Each of the above grounds are independent and without prejudice to the other grounds of appeal preferred by the Appellant. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing, of the appeal, so as to enable the Honourable Income Tax Appellate Tribunal to decide this appeal according to law." 2. Brief facts of the case are as under: The assessee was incorporated as a private company and is engaged in rendition of Software Development S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the prescribed rates as if amalgamation had not taken place and such deduction ought to have been apportioned between the assessee and Synova India (amalgamating company) in ratio of period of usage of assets. Aggrieved by the addition proposed in the DOA, the assessee filed its objections before the Dispute Resolution Panel. 4. The DRP held that the assessee's claim is not in accordance with the provisions contained in Explanation 7 to section 43(1) read with Explanation 2 to section 43(6)(c) of the Act read with sixth proviso to section 32(1) of the Act. The DRP however considered the submission of the assessee that the disallowance ought to be restricted to Rs 6,08,69,744/- as claimed in the Return of income and directed the Ld.AO t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by them does not arise. He placed reliance on the following decisions in support. 1. Smifs Securities Ltd. (2012) 348 ITR 302 (SC). 2. Aricent Technologies (Holdings) Ltd. [2019] 109 taxmann.com 47 (Delhi -Trib.) 3. Mylan Laboratories Ltd. (2020) 113 taxmann.com 6 (Hyderabad-Trib.) The Ld.DR placed reliance on the orders passed by authorities below. The Ld.DR relied on the decision of Coordinate Bench of this Tribunal in case of M/s. United Breweries Ltd. by order dated 30.09.2016. We have perused the submissions advanced by both sides in the light of records placed before us. 9. The decision relied by the Ld.DR does not support the case of revenue for the reason that in the case of M/s. United Breweries (supra), the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coordinate bench is misplaced in as much as in that case the value of the goodwill in the books of amalgamating company was only Rs.7.45 crores which has been shown by the assessee at Rs.62.30 croes and on this it was held by the appellate authority that the assessee has failed to justify the valuation of goodwill at Rs.62.30 crores. The facts of the case in hand clearly show the valuation of goodwill as per the valuation report and there is no quarrel in so far as the net asset value of the amalgamating companies is concerned. The same has the sanction of the Hon'ble High Court. 61. Another argument of the DR is that the assessee has not paid anything for the goodwill acquired in business reconstruction. No consideration can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat payments made towards business acquired on slum price and a part of the price so paid was allocated to the intangible asset covered under the head goodwill." 10. Hon'ble Supreme Court in the case of Smifs Securities Ltd. (supra) while considering an identical issue, held that goodwill arising on amalgamation to be a capital asset eligible for depreciation. The facts in the case of Smifs Securities Limited (supra) were similar to that of the present assessee. The consideration paid by the amalgamated company over and above the net assets of the amalgamating company should be considered as goodwill arising on amalgamation. 11. Based on the above, we are of the opinion that the depreciation claimed by the assessee on goodwill acquired d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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