9911796707
TMI Blog2021 (6) TMI 1103X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrary to law and based on erroneous understanding of the facts. 03. On appreciation of the facts and circumstances of the case and law the Learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Learned Assessing Officer in disallowing depreciation claimed by the appellant company to the tune of Rs. 1,06,00,847/- on intangible assets purchased by the appellant company. The action of the Learned Commissioner of Income Tax (Appeals) is contrary to the facts and law and deserves to be deleted. 04. The appellant craves to add, amend, modify or alter the above grounds of appeal at any stage of appellate proceedings. 05. The appellant humbly prays that the appeal be allowed in toto." 3. When this appeal was called out for hearing, learned counsel for the assessee invited our attention to the order dated 24.10.2019, passed by the Division Bench of this Tribunal in assessee's own case in ITA No.2912/Ahd/2015, for the Assessment Year 2010-11, whereby the issue relating to depreciation on intangible assets purchased by the assessee company was discussed and adjudicated in favour of assessee. Learned counsel for the assessee submitted that the present a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee company has repeated again and again that most of the payments are for intangible assets of manufacturing process of know-how and Registration and Commercial rights. We further find that Mitsu Ltd. is not related company under section 40A(2)(b). The assessee has acquired the Lmidachloropid business of Mitsu Limited as slump sale basis for a total consideration of Rs.27.50 crores as a going concern basis. M/s. Mitsu Industries Ltd. has been carrying on its business from last 15 years and Lmidachloropid was one of the pesticides for which necessary process, technical knowhow, knowledge and idea of business, commercial rights, marketing rights etc. Apart from above, the assessee company also purchased marketing rights of aforesaid products from Mitsu Ltd. at a cost of Rs. 18.34 crores which was capitalized as capital asset in the books of accounts. The seller company M/s Mitsu Ltd. has also obtained registration, permission for government and concerned authorities and same was transferred to Bilag Industries Pvt. Ltd. pursuant to Business Transfer Agreement (PB-75 to 89). The assessee has acquired the license like CIB registration dtd. 13.08.1999 from Central Insecticid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Business Transfer Agreement and intangible assets was allocated on the basis of valuation report from independent Valuer M/s. Bansi S. Mehta & Co. who had assigned the value of individual assets in accordance with AS-10. This valuation of items are placed at Paper Book Page No. 105 to 111. We are of the view that depreciation on intangible assets is allowable as per Section 32 of the Act. We also note that that Ahmedabad Tribunal in the case of M/s. Mitsu Ltd. , the seller company, in I.T.A. No. 1672/Ahd/2007 A.Y. 2004- 05(PB-31-70) vide order dated 01.08.2008 has considered the sale of business to the assessee as slump sales and observed that the assessee has transferred machinery and infrastructure including licenses and right to manufacture products for the year 1999 onwards and even on date of sale. This fact is not disputed by the Revenue authorities. The assessee has sold a business which includes the necessary rights and technology. The value of technology and rights are determined the parties to the transaction on commercial consideration and after mutual negotiations. Accordingly, we feel that this transaction is nothing but slump sales exigible to long-term capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s assets under a Business Transfer Agreement for which valuable consideration has been paid by the appellant company. The AO has not given any factual finding as regards her observation that the assessee company could not justify in any logical and convincing way the basis on which such huge payment was made to acquire what the appellant company terms 'intangible assets' based on which inference the assessment order has been framed. The assessee company has purchased intangible assets in the form of marketing rights, right to carry on business, right to manufacture and technical of know-how for carrying on Imidacloprid Business. The Seller company is also engaged in manufacturing pesticides for the last 15 years and the assessee company is also manufacturing pesticides for the last 3 years. This very facts means that the seller company was having better experience in terms of marketing of know-how as it was more experienced as compare to assessee who was in the market of pesticides for last 3 years only. Further reliance is placed on the judgement of Hon`ble Delhi High Court in the case of Areva T & D India Ltd. v. DCIT [2012] 20 taxmann.com 29 (Delhi) held that specified intangibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale marketing and distribution of products apart from tangible assets such as Land, Building and other assets. We further note that M/s. Mitsu Limited was not a related concerns as per the provision of Section 40(A)(2)(b) of the Income-tax Act, 1961 as the point of sales. The Learned counsel submitted that assets acquired under slump sale were capitalized in books of account as per generally accepted accounting principles in a slump sale several assets are purchased for a consolidated price and price is paid for the entire business as a whole. Hence, value to individual assets cannot be assigned directly. The valuation of Intangible assets and marketing rights have been done in accordance with the Accounting Standard-10 (AS-10) issued by the Institute of Chartered Accountants of India (ICAI) the company has assigned the values to the various assets on a fair basis. The payments made for acquisition of Imidachloropid products business pursuant to transfer of Business Transfer Agreement and intangible assets was allocated on the basis of valuation report from independent valuer M/s. Bansi S. Mehta Et Co. who had assigned the value of individual assets in accordance with AS-10. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the case of M/s. Trio Elevators Company (India ) Ltd. v. ACIT Circle 8 Ahmedabad [2016] 67 taxmann.com 348 (Ahmedabad Trib) wherein it was held that admissibility of depreciation of trademark is not contingent upon its registration in the name of the assessee inasmuch as description of intangible assets is Part-B of depreciation schedule describe the same merely of 'knowhow' patents' copyright, trademark licenses franchises or any other business or commercial rights of similar nature. Further the Hon'ble Jurisdictional High Court of Gujarat in the case of Pr. CIT v. Swastik Industries [2016] 68 taxmann.com 329 (Gujarat) held that payment of compensation made by the assessee firm to retiring partner was to be treated as goodwill and since, goodwill is an asset under Explanation(1), assessee's claim for depreciation on said payment was to be allowed. 118. We further observed that the Seller company has sold and transferred various assets under a Business Transfer Agreement for which valuable consideration has been paid by the appellant company. The AO has not given any factual finding as regards her observation that the assessee company could not justify in any logical a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal holding that the assessee having purchased various assets under the business transfer agreement by way of slump sale and further that Mitsu Industries Ltd. was not a related concern as per the provisions of section 40A(2)(b) of the Act at the point of sale, depreciation under section 32 of the Act is allowable to the assessee company both on the intangible assets as well as marketing rights. The Tribunal has therefore, not erred in allowing depreciation both on intangible assets as well as marketing rights under section 32 of the Act. 6. In the light of the aforesaid discussion, it is not possible to state the Tribunal has committed any legal error so as to warrant interference. No question of law, as proposed or otherwise, much less, substantial question of law, can be stated to arise out of the impugned order of the Tribunal, The appeal is, accordingly dismissed." 5. As the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench, in assessee`s own case(supra). The said issue is also covered by the judgement of the Hon'ble Gujarat High Court in assessee's own case(supra), and there is no change in facts and law and the Revenue is unab ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
