RFCL Limited, New Delhi V. DCIT, Parwanoo

ITA 190/CHANDI/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2330 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 18-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Assessee Lawyers: MAHENDER KUMAR
• Keywords: Reopening of assessment; Depreciation; Tangible material
• Section: 143(3); 32; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS.189 & 190 /CHD/2013 (ASSESSMENT YEARS : 2006-07 &2009-10) RFCL LIMITED, VS. THE D.C.I.T., A-3, OKHLA INDUSTRIAL AREA, CIRCLE NEW DELHI. PARWANOO. PAN: AABCR7314N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MAHENDER KUMAR RESPONDENT BY : SMT.JYOTI KUMARI, CIT DR DATE OF HEARING : 10.04.2013 DATE OF PRONOUNCEMENT : 29.04.2013 O R D E R PER SUSHMA CHOWLA, J.M. : THESE TWO APPEALS FILED BY THE ASSESSEE ARE AGAINST THE CONSOLIDATED ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS), SHIMLA DATED 13.12.2012 RELATING TO ASSESSMENT YEAR S 2006-07 AND 2009- 10 AGAINST THE ORDER PASSED U/S 143(3) R.W.S.147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED FOLLOWING GROUND OF APPE AL IN ITA NO.189/CHD/2013 RELATING TO ASSESSMENT YEAR 2006-07 : 1) THAT THE ORDER PASSED BY THE HON'BLE COMMISSIONER OF INCOME-TAX (APPEALS) ['CIT(A)'] UNDER SECTION 250 OF THE ACT IS CONTRARY TO THE PROVISIONS OF THE LAW. 2) THAT THE HON'BLE CIT(A) ERRED IN UPHOLDING THE ORDE R OF LEARNED ASSESSING OFFICER ('AO') PASSED UNDER SECTION 147 READ WITH S ECTION 143(3) OF THE ACT ON THE FACTS AND CIRCUMSTANCE OF THE CASE, THEREBY THE ASSESSMENT IS VOID-AB-INITIO. 3) THAT THE HON'BLE CIT(A) ERRED IN UPHOLDING THE ORDE R OF THE LEARNED AO IN 2 MAKING AN ADDITION OF RS.15,926,686 ON ACCOUNT OF D ISALLOWANCE OF DEPRECIATION CLAIMED ON INTANGIBLE ASSETS RECORDED AS GOODWILL IN THE BOOKS OF ACCOUNTS; 4) THAT THE HON'BLE CIT(A) HAS ERRED IN LAW BY NOT PRO VIDING AN OPPORTUNITY TO THE APPELLANT FOR REPRESENTATION AND PASSING AN EX-PART E ORDER DESPITE THE WRITTEN REQUEST MADE BY THE APPELLANT TO KEEP THE MATTER IN ABEYANCE TILL THE DISPOSAL OF APPEAL BY THE HON'BLE BENCH FOR THE AYS 2007-08 AND 2008-09 INVOLVING IDENTICAL GROUNDS; 5) EVEN IF THE ORDER IS PASSED EX-PARTE, THE HON'BLE C IT(A) HAS ERRED BY NOT CONSIDERING THE HON'BLE SUPREME COURT DECISION IN T HE CASE OF COMMISSIONER OF INCOME-TAX VS SMIFS SECURITIES LIMITED (348 ITR 302 ); 6) THAT THE HON'BLE CIT(A) ERRED IN LAW BY HOLDING THA T THE REASSESSMENT WAS VALID IN THE ABSENCE OF ASSESSMENT THOUGH EXPLICITLY ACCE PTING THAT THE TANGIBLE MATERIAL WAS AVAILABLE WITH THE LEARNED AO AT THE T IME OF PROCESSING OF RETURN OF INCOME UNDERSECTION143(1) OF THE ACT; 7) THAT THE HON'BLE CIT(A) ERRED IN LAW AND ON FACTS B Y DISREGARDING THE CONTENTION OF THE APPELLANT THAT THE GOODWILL RECOR DED IN THE BOOKS REPRESENTS INTANGIBLE ASSETS ELIGIBLE FOR DEPRECIATION UNDER S ECTION 32(1 )(II), ALTHOUGH THE SAME WAS RECORDED AS GOODWILL IN THE BOOKS OF ACCOU NTS; 8) THAT THE HON'BLE CIT(A) ERRED IN LAW AND ON FACTS B Y HOLDING THAT DEPRECIATION ON 'GOODWILL' IS NOT ALLOWABLE SINCE THE SAME DOES NOT FIND A MENTION IN THE WORDS USED IN SECTION 32(1 )(II) OF THE ACT, ALTHOU GH THE APPELLANT HAS SUBMITTED THAT THE AMOUNT RECORDED AS 'GOODWILL' IN FACT REPR ESENTS AMOUNT PAID TOWARDS INTANGIBLE ASSETS ELIGIBLE FOR DEPRECIATION; 9) THAT THE HON'BLE CIT(A) ERRED IN LAW AND ON FACTS B Y GRANTING RESTRICTIVE MEANING TO SECTION 32(1 )(II) OF THE ACT; 3. THE ASSESSEE HAS RAISED FOLLOWING GROUND OF APPE AL IN ITA NO.190/CHD/2013 RELATING TO ASSESSMENT YEAR 2009-10 : 1) THAT THE ORDER PASSED BY THE HON'BLE COMMISSION ER OF INCOME-TAX (APPEALS) ['CIT(A)'] UNDER SECTION 250 OF THE ACT IS CONTRARY TO THE PROVISIONS OF THE LAW. 2) THAT THE HON'BLE CIT(A) ERRED IN UPHOLDING THE ORDER OF THE LEARNED ASSESSING OFFICER (AO') IN MAKING AN ADDITION OF RS.28,219,950 ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION CLAIMED ON INTANGIBLE ASSETS RECORDED AS GOODWILL IN THE BOOKS OF ACCOUNTS; 3) THAT THE HON'BLE CIT(A) HAS ERRED IN LAW BY NOT PROVIDING AN OPPORTUNITY TO THE APPELLANT FOR REPRESENTATION AND PASSING AN EX-PART E ORDER DESPITE THE WRITTEN REQUEST MADE BY THE APPELLANT TO KEEP THE MATTER IN ABEYANCE TILL THE DISPOSAL OF APPEAL BY THE HON'BLE BENCH FOR THE AYS 2007-08 AND 2008-09 INVOLVING IDENTICAL GROUNDS; 4) EVEN IF THE ORDER IS PASSED EX-PARTE, THE HON'B LE CIT(A) HAS ERRED BY NOT 3 CONSIDERING THE HON'BLE SUPREME COURT DECISION IN T HE CASE OF COMMISSIONER OF INCOME-TAX VS SMIFS SECURITIES LIMITED (348 ITR 302 ); 5) THAT THE HON'BLE CIT(A) ERRED IN LAW AND ON FAC TS BY DISREGARDING THE CONTENTION OF THE APPELLANT THAT THE GOODWILL RECOR DED IN THE BOOKS REPRESENTS INTANGIBLE ASSETS ELIGIBLE FOR DEPRECIATION UNDER S ECTION 32(1 )(II), ALTHOUGH THE SAME WAS RECORDED AS GOODWILL IN THE BOOKS OF ACCOU NTS; 6) THAT THE HON'BLE CIT(A) ERRED IN LAW AND ON FAC TS BY HOLDING THAT DEPRECIATION ON 'GOODWILL' IS NOT ALLOWABLE SINCE THE SAME DOES NOT FIND A MENTION IN THE WORDS USED IN SECTION 32(1 )(II) OF THE ACT, ALTHOU GH THE APPELLANT HAS SUBMITTED THAT THE AMOUNT RECORDED AS 'GOODWILL' IN FACT REPR ESENTS AMOUNT PAID TOWARDS INTANGIBLE ASSETS ELIGIBLE FOR DEPRECIATION; AND 7) THAT THE HON'BLE CIT(A) ERRED IN LAW AND ON FAC TS BY GRANTING RESTRICTIVE MEANING TO SECTION 32(1 )(II) OF THE ACT; 4. BOTH THESE APPEALS RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUE OF DISALLOWANCE OF DEPRECIATION ON GOODWILL/INTANGIBLE ASSETS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE. 5. THE LEARNED A.R. FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT IDENTICAL ISSUE RAISED IN BOTH THE APPEALS IN RELAT ION TO THE ALLOWABILITY OF DEPRECIATION ON GOODWILL/INTANGIBLE ASSETS IS SQ UARELY COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.293 & 294/CHD/2012, ORDER DATED 2.4.2013. THE LEARNED A. R. FOR THE ASSESSEE FURTHER POINTED OUT THAT IN ASSESSMENT YEAR 2006-07 AN ADDITIONAL ISSUE HAD BEEN RAISED VIDE GROUND NO.2 AGAINST REOPENING OF ASSESSMENT UNDER SECTION 147/148 OF THE ACT. THE LEARNED A.R. FOR T HE ASSESSEE FAIRLY POINTED OUT THAT THE RETURN OF INCOME RELATING TO A SSESSMENT YEAR 2006-07 FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 1 43(1) OF THE ACT. HOWEVER, THE INFORMATION IN RESPECT OF WHICH THE RE ASONS FOR REOPENING OF ASSESSMENT HAD BEEN RECORDED HAD BEEN FURNISHED IN THE RETURN OF INCOME AND THERE WAS NO MERIT IN THE SAID NOTICE IS SUED UNDER SECTION 147/148 OF THE ACT. 4 6. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN ACIT VS. RAJE SH JHAVERI STOCK BROKERS (P) LTD. [291 ITR 500 (SC)]. 7. WE FIND THAT THE ASSESSING OFFICER HAD RECORDED REASONS FOR REOPENING THE ASSESSMENT AND THERE WAS REASON TO BE LIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT. IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN ACIT VS. RAJESH JHAVERI STOCK BROK ERS (P) LTD. (SUPRA), WE UPHOLD THE REOPENING OF ASSESSMENT IN T HE PRESENT CASE AND THE GROUND NO.2 RAISED BY THE ASSESSEE IN THIS REGA RD IS DISMISSED. 8. THE GROUND NO.1 RAISED BY THE ASSESSEE IN BOTH T HE APPEALS BEING GENERAL IS DISMISSED. 9. THE GROUND NO.4 IN ASSESSMENT YEAR 2006-07 AND G ROUND NO.3 IN ASSESSMENT YEAR 2009-10 ARE NOT PRESSED AND HENCE T HE SAME ARE DISMISSED AS NOT PRESSED. 10. THE ISSUE RAISED ON MERITS IS AGAINST THE DISAL LOWANCE OF DEPRECIATION CLAIMED ON INTANGIBLE ASSET RECORDED A S GOODWILL IN THE BOOKS OF ACCOUNT. THE LEARNED A.R. FOR THE ASSESSE E POINTED OUT THAT THE ISSUE STANDS COVERED BY THE DECISION OF THE TRIBUNA L IN ASSESSEES OWN CASE. THE LEARNED D.R. FOR THE REVENUE PLACED RELI ANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE FINANCI AL YEAR 2005-06 THE ASSESSEE HAD ENTERED INTO A BUSINESS PURCHASE AGREE MENT WITH RANBAXY LABORATORIES LIMITED FOR PURCHASE OF THE ENTIRE ANI MAL HEALTH CARE AND DIAGNOSTICS BUSINESS DIVISION OF RANBAXY. AS PER T HE CLAIM OF THE ASSESSEE AS A PART OF THE BPA, ALL THE ASSETS, PERSONNEL, MA RKETING CAPABILITIES, LICENSES, 5 PERMITS, LEASES, TENANCY RIGHTS, CONTRACTS AND ALL OTHER RIGHTS AND POWERS ETC RELATED TO THE ALLIED BUSINESS DIVISIONS WERE TRANSFERRED BY RANBAXY TO R FCL FOR A CONSIDERATION OF RS.62 CRORES. FURTHER, THE ABOVE CONSIDERATION COMPRISED THE VALU E FOR BOTH TANGIBLE AS WELL AS INTANGIBLE ASSETS. THE INTANGIBLE ASSETS ACQUIRED B Y RFCL WERE IN THE NATURE OF TRADEMARKS AND BRAND NAMES, CLIENT PORTFOLIO CONSISTING OF THE DETAILED LIST OF WHOLESALE STOCKISTS AND ALL MARKETING AND PROMOTIONAL INFORMATION AND DOCUMENTS IN RELATION TO THE PRODUCTS, ALL LICENSES, COVENANTS, PERMISSIONS, HEALTH REGISTRATIONS, APPRO VALS AND CONCESSIONS FROM ANY GOVERNMENT AUTHORITY FOR CARRYING ON THE ALLIED BUSINESS, ALL OTHER INFORMATION AND TECHNOLOGY IN RELATION TO THE ALLIED BUSINESS INCLUDING WITHOUT LIMITATION TH E MANUFACTURING KNOW-HOW, IN PARTICULAR THE SPECIFICATIONS AND TEST METHODS, MANUFACTURING AND PACKAGING INSTRUCTIONS, MASTER FORMULAE, VALIDATION REPORTS, STABILITY DATA, ANALYTICAL METH ODS AND ANY OTHER DOCUMENTS NECESSARY TO MANUFACTURE, CONTROL AND RELEASE THE PRODUCTS, DRUG SAFETY REPORTS IN RELATION TO THE PRODUCTS ETC. OUT OF THE TOTAL CONSIDERATION OF RS.62 CRORES, AN AMOUNT OF RS.49.26 CRORES WAS APPORTIONED TOWARDS BRANDS, BUILDING, PLANT AND MAC HINERY, FURNITURE AND FIXTURES, VEHICLES AND CURRENT ASSETS. THE BALANCE AMOUNT OF RS.12.74 CRORES MAINLY REPRESENTING THE VALUE ATTRIBUTABLE TO THE INTANGIBLE ASSETS COMPRISING OF LICENSES, PERMISSIONS, HEALTH REGISTRATIONS, APPROVALS, CONCESSIONS, MANUFACTURING KNOW-HOW, SPE CIFICATIONS, MARKETING CAPABILITIES SUCH AS THE DISTRIBUTION NETWORK COMPRISING OF WHOLESALE STOCKISTS, INFORMATION AND DOCUMENTS IN RELATION TO PRODUCTS ETC WAS RECORDED AS GOODWILL I N THE BOOKS OF ACCOUNTS OF THE COMPANY. CONSEQUENTLY, IN RESPECT OF SUCH INTANGIBLE ASSETS, WHICH WERE ELIGIBLE TO CLAIM DEPRECIATION UNDER SECTION 32(1 )(II) OF THE ACT, RFCL CLAIMED D EPRECIATION IN ITS RETURN OF INCOME. 12. THE ASSESSEE HAD CLAIMED DEPRECIATION ON GOODWI LL OF RS.1273.78 LACS. THE SAID CLAIM OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER AS THE VALUER WHILE BIFURCATING THE FIGURE OF TOTAL CONSIDERATION HAD SEPARATELY ASSIGNED A VALUE TO THE INTANGIBLE A SSETS REPRESENTING SPECIFIC INTELLECTUAL PROPERTY RIGHTS IN THE FORM O F BRANDS, AND ALSO ASSIGNED VALUES TO THE TANGIBLE ASSETS, AND THE BAL ANCE SLUMP PRICE, WHICH COULD NOT BE ALLOCATED TO ANY OTHER SPECIFIC TANGIBLE OR INTANGIBLE 6 ASSET, WAS GIVEN A CONSOLIDATED VALUE AS GOODWILL A CQUIRED BY THE COMPANY. THE CLAIM OF DEPRECIATION ON THE SAID GOO DWILL WAS REJECTED BY THE ASSESSING OFFICER IN ASSESSMENT YEARS 2007-0 8 AND 2008-09. ORIGINALLY THE RETURN OF INCOME FILED BY THE ASSESS EE RELATING TO ASSESSMENT YEAR 2006-07 WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND THEREAFTER REASONS WERE RECORDED FOR REOPENING OF ASSESSMENT IN RELATION TO THE CLAIM OF DEPRECIATION ON GOODWILL. 13. WE FIND THAT THE TRIBUNAL IN ITA NOS.293 & 294/ CHD/2012 IN THE CASE OF THE ASSESSEE RELATING TO ASSESSMENT YEARS 2 006-07 AND 2008-09, ORDER DATED 2.4.2013, HAD DELIBERATED UPON ELABORAT ELY THE ISSUE OF ACQUISITION OF ENTIRE ANIMAL HEALTH CARE AND DIAGNO STICS BUSINESS DIVISION OF RANBAXY BY THE ASSESSEE, THOUGH DURING THE FINANCIAL YEAR 2005-06 AND REFERRED TO VARIOUS CLAUSES OF THE BUSI NESS PURCHASE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND TRA NSFEROR AND HAD ALSO CONSIDERED VARIOUS ASPECTS OF THE ISSUE, BIFURCATIO N OF TOTAL VALUE BETWEEN DIFFERENT ASSETS AND ALSO THE NATURE OF INT ANGIBLES ACQUIRED BY THE ASSESSEE IN LINE WITH BUSINESS PURCHASE AGREEME NT ENTERED INTO WITH M/S RANBAXY LABORATORIES. THE TRIBUNAL VIDE PARAS 19 TO 30 HAD OBSERVED AS UNDER: 19. THE ISSUE ARISING BEFORE US IS WHETHER THE ASS ESSEE IS ENTITLED TO THE CLAIM OF DEPRECIATION ON THE SAID A CQUISITION OF INTANGIBLE ASSETS IN LINE WITH THE ACQUISITION OF B USINESS OF ANIMAL HEALTH CARE AND DIAGNOSTICS BUSINESS DIVISIO NS OF RANBAXY AND/OR ALSO WHETHER THE ASSESSEE IS ENTITLE D TO THE CLAIM OF DEPRECIATION ON THE AMOUNT BOOKED UNDER THE HEAD GOODWILL SIMPLICITER. 20. UNDER THE AMENDED PROVISIONS OF SECTION 32 OF T HE ACT W.E.F. 1.4.1999, AMBIT OF DEPRECIATION HAS BEEN ENL ARGED TO COVER BOTH THE TANGIBLE AND INTANGIBLE ASSETS. THE DEPRECIATION ON BUILDINGS, MACHINERY PLANT OF FURNITURE BEING TA NGIBLE ASSETS WAS BEING ALLOWED SUBJECT TO SATISFACTION OF THE CO NDITIONS LAID DOWN UNDER SECTION 32 OF THE ACT I.E. THE ASSETS SH OULD BE OWNED WHOLLY OR PARTLY BY THE ASSESSEE AND USED FOR THE P URPOSE OF BUSINESS OR PROFESSION OF THE ASSESSEE. THE RATE O F DEPRECIATION FOR SUCH ASSETS WAS PROVIDED IN SCHEDULE ATTACHED T O THE INCOME TAX ACT. HOWEVER, AFTER THE AMENDMENT BY THE FINAN CE (NO.2) 7 ACT, 1998, W.E.F. 1.4.1999 THE DEPRECIATION IS ALSO TO BE ALLOWED ON INTANGIBLE ASSETS I.E. KNOW-HOW, PATENT AND COPY RIGHTS, TRADEMARKS, LICENCES OR FRANCHISES OR ANY OTHER BUS INESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE. THE HON'BLE D ELHI HIGH COURT IN AREVA T AND D INDIA LTD. VS. DCIT (SUPRA) APPLIED THE PRINCIPLE OF EJUSDEM GENERIC TO INTERPRET THE EXPRE SSION BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE R EFERRED TO IN SECTION 32(1)(II) OF THE ACT AND HELD THAT THE LEGISLATURE DID NOT INTEND TO PROVIDE FOR DEPRECIATION ONLY IN RESPECT OF SPECIFIED INTANGIBLE ASSETS BUT ALSO TO OTHER CATEGORIES OF I NTANGIBLE ASSETS, WHICH WERE NEITHER FEASIBLE NOR POSSIBLE TO EXHAUSTIVELY ENUMERATE. THE HON'BLE COURT FURTHER HELD THAT IN THE CIRCUMSTANCES, THE NATURE OF BUSINESS OR COMMERCIAL RIGHTS COULD BE OF THE SAME GENUS IN WHICH ALL THE AFORESAID SIX ASSETS FALL AND THUS INTANGIBLE ASSETS I.E. BUSINESS CLAIMS; B USINESS INFORMATION; BUSINESS RECORDS;, CONTRACTS; EMPLOYEE S; AND KNOW- HOW, WERE HELD TO BE ASSETS WHICH ARE INVALUABLE AN D RESULT IN CARRYING ON THE BUSINESS OF THE ASSESSEE, WITHOUT A NY INTERRUPTION AND ARE COMPARABLE TO A LICENCE OR AKI N TO A LICENCE WHICH IS ONE OF THE ITEMS FALLING IN SECTION 32(1)( II) OF THE ACT. 21. THE HON'BLE DELHI HIGH COURT IN AREVA T AND D I NDIA LTD. VS. DCIT (SUPRA) VIDE PARA 13 AND 14 HAD HELD AS UN DER: 13. IN THE PRESENT CASE, APPLYING THE PRINCIPLE OF EJUSDEM GENERIS, WHICH PROVIDES THAT WHERE THERE ARE GENERA L WORDS FOLLOWING PARTICULAR AND SPECIFIC WORDS, THE MEANING OF THE LATTER WORDS SHALL BE CONFINED TO THINGS OF THE SAME KIND, AS SPECIFIED FOR INTERPRETING THE EXPRES SION 'BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE' S PECIFIED IN SECTION 32(1)(II) OF THE ACT, IT IS SEEN THAT SU CH RIGHTS NEED NOT ANSWER THE DESCRIPTION OF 'KNOWHOW, PATENT S, TRADEMARKS, LICENSES OR FRANCHISES' BUT MUST BE OF SIMILAR NATURE AS THE SPECIFIED ASSETS. ON A PERUSAL OF THE MEANING OF THE CATEGORIES OF SPECIFIC INTANGIBLE AS SETS REFERRED IN SECTION 32(1)(II) OF THE ACT PRECEDING THE TERM 'BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE', IT IS SEEN THAT THE AFORESAID INTANGIBLE ASSETS ARE NOT OF THE SAME KIND AND ARE CLEARLY DISTINCT FROM ONE ANOTHER . THE FACT THAT AFTER THE SPECIFIED INTANGIBLE ASSETS THE WORD S 'BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE' H AVE BEEN ADDITIONALLY USED, CLEARLY DEMONSTRATES THAT THE LEGISLATURE DID NOT INTEND TO PROVIDE FOR DEPRECIAT ION ONLY IN RESPECT OF SPECIFIED INTANGIBLE ASSETS BUT ALSO TO OTHER CATEGORIES OF INTANGIBLE ASSETS, WHICH WERE NEITHER FEASIBLE NOR POSSIBLE TO EXHAUSTIVELY ENUMERATE. IN THE CIRCUMSTANCES, THE NATURE OF 'BUSINESS OR COMMERCIA L RIGHTS' CANNOT BE RESTRICTED TO ONLY THE AFORESAID SIX CATEGORIES OF ASSETS, VIZ., KNOWHOW, PATENTS, TRADE MARKS, COPYRIGHTS, LICENSES OR FRANCHISES. THE NATURE OF 'BUSINESS OR COMMERCIAL RIGHTS' CAN BE OF THE SAME GENUS IN WHICH ALL THE AFORESAID SIX ASSETS FALL. ALL THE AB OVE FALL IN THE GENUS OF INTANGIBLE ASSETS THAT FORM PA RT OF THE TOOL OF TRADE OF AN ASSESSEE FACILITATING SMOOTH CA RRYING ON OF THE BUSINESS. IN THE CIRCUMSTANCES, IT IS OBS ERVED THAT IN CASE OF THE ASSESSEE, INTANGIBLE ASSETS, VIZ., B USINESS CLAIMS; BUSINESS INFORMATION; BUSINESS RECORDS; CON TRACTS; 8 EMPLOYEES; AND KNOWHOW, ARE ALL ASSETS, WHICH ARE INVALUABLE AND RESULT IN CARRYING ON THE TRANSMISSI ON AND DISTRIBUTION BUSINESS BY THE ASSESSEE, WHICH WAS HI THERTO BEING CARRIED OUT BY THE TRANSFEROR, WITHOUT ANY IN TERRUPTION. THE AFORESAID INTANGIBLE, ASSETS ARE, THEREFORE, CO MPARABLE TO A LICENSE TO CARRY OUT THE EXISTING TRANSMISSION AND DISTRIBUTION BUSINESS OF THE TRANSFEROR. IN THE ABSENCE OF THE AFORESAID INTANGI BLE ASSETS, THE ASSESSEE WOULD HAVE HAD TO COMMENCE BUSINESS FROM SCRATCH AND GO THROUGH THE GESTATION PERIOD WHEREAS BY ACQUIRING THE AFORESAID BUSINESS RIGHTS ALONG WITH THE TANGIBLE ASSETS, THE ASSESSEE GOT AN UP AND RUNNING BUSINESS. THIS VIEW IS FORTIFIED BY THE RAT IO OF THE DECISION OF THE SUPREME COURT IN TECHNO SHARES AND STOCKS LTD.(SUPRA) WHEREIN IT WAS HELD THAT INTANGI BLE ASSETS OWNED BY THE ASSESSEE AND USED FOR THE BUSIN ESS PURPOSE WHICH ENABLES THE ASSESSEE TO ACCESS THE MARKET AND HAS AN ECONOMIC AND MONEY VALUE IS A 'LI CENSE' OR 'AKIN TO A LICENSE' WHICH IS ONE OF THE ITEMS FA LLING IN SECTION 32(1 )(II) OF THE ACT. 14. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT THE SPECIFIED INTANGIBLE ASSETS ACQUIRED UNDER SLUM P SALE AGREEMENT WERE IN THE NATURE OF 'BUSINESS OR C OMMERCIAL RIGHTS OF SIMILAR NATURE' SPECIFIED IN SECTION 32(1 )(II) OF THE ACT AND WERE ACCORDINGLY ELIGIBLE FOR DEPRECIATION UNDER THAT SECTION. 22. SIMILAR VIEW HAS BEEN LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN CIT-II VS. M/S BIRLA GLOBAL ASSET FIN ANCE CO. LTD., INCOME TAX APPEAL NO.6835 OF 2010 DATE OF D ECISION 16.10.2012 AND IT WAS HELD THAT INTANGIBLE ASSETS L IKE BUSINESS AND COMMERCIAL BRAND EQUITY WERE GOODWILL ON WHICH DEPRECIATION WAS ALLOWABLE. 23. THE MUMBAI BENCH OF THE TRIBUNAL IN M/S INDIA C APITAL MARKETS P. LTD. VS. DCIT, MUMBAI IN ITA NO.2948/MUM /2010 VIDE ORDER DATED 12.12.2012 HELD AS UNDER: 19. THE I.T.A.T. MUMBAI 'G' BENCH IN THE CASE OF DCIT VS. WEIZMAN FOREX LTD. IN ITA.NO.3571/MUM/2011 OBSERVED THAT THE DEFINITION OF THE ASSET WHICH IS A SUBJECT MATT ER OF THE TRANSFER CONSISTS OF ALL CONTRACT, LICENSES, FRANCH AISE, DISTRIBUTION NET WORK, CUSTOMER LISTS, MARKETING STRATEGIES AND SOFTWARE AND WHEN THE INTANGIBLE ASSET BEING COMMERCIAL/BUSINESS RIGHTS DIMINISHED IN VALUE OR P HYSICAL WEAR AND TEAR IS NOT AN ESSENTIAL CONDITION FOR ADM ISSIBILITY FOR DEPRECIATION, IF THE ASSET IS USED AS A BUSINESS TO OL FOR EARNING INCOME. 24. THE ABOVE SAID RATIO WAS REFERRED TO BY MUMBAI BENCH OF THE TRIBUNAL IN M/S INDIA CAPITAL MARKETS P. LTD. V S. DCIT (SUPRA) WHEREIN THE PURCHASE OF CLIENTELE BUSINESS BY THE ASSESSEE FROM M/S AFC WAS HELD TO BE RIGHT WHICH CO ULD BE USED AS A TOOL TO CARRY ON THE BUSINESS AND THE CONSIDER ATION PAID FOR WHICH WAS HELD ELIGIBLE FOR DEPRECIATION. 9 25. AS POINTED OUT IN PARAS HEREINABOVE THE ASSESSE E IN ADDITION TO BUILDING, PLANT & MACHINERY, FURNITURE, FIXTURES, VEHICLES AND NET CURRENT ASSETS ALONGWITH BRANDS VA LUED AT RS.49.26 CRORES HAD ALSO ACQUIRED THE UNDER-MENTION ED ASSETS: S.NO. DETAILS OF INTANGIBLE ASSETS ACQUIRED PAPER BOOK REFERENCE PAGE NUMBERS 1. STOCKIST AGREEMENTS 51-75 2. DISTRIBUTION AGREEMENTS 76-79 3. LEASE AGREEMENTS 81 4. DISTRIBUTION AND MARKETING AGREEMENTS 82 5. LIST OF EMPLOYEES 83-86 6. LIST OF LICENSES AND PERMISSIONS (EXPORT REGISTRATIONS) 126 7. VARIOUS PRODUCTS ENLARGED PRODUCT RANGE AND CUSTOMER BASE 108-120 8. NAME LICENSE 45 9. MANUFACTURING KNOW HOW, SPECIFICATIONS AND TEST METHODS, MANUFACTURING AND PACKAGING INSTRUCTIONS, MASTER FORMULAE, VALIDATIONS REPORTS, STABILITY DATA, ANALYTICAL METHODS AND ANY OTHER DOCUMENTS NECESSARY TO MANUFACTURE, CONTROL AND RELEASE THE PRODUCTS 36-37 26. THE PERUSAL OF THE SCHEDULES TO BPA COMPRISING OF THE ABOVE SAID LIST OF STOCKIST AGREEMENTS, DISTRIBUTIO N AGREEMENTS, LEASE AGREEMENTS AND ALSO DISTRIBUTION AND MARKETIN G AGREEMENTS, ALONGWITH LIST OF LICENSES AND PERMISSI ONS AND LIST OF VARIOUS PRODUCTS, THE NAME LICENSE AND ALSO THE MANUFACTURING KNOW-HOW ETC., ALONGWITH LIST OF EMPL OYEES ARE ASSETS, WHICH ARE INVALUABLE AND INSTRUMENTAL IN CA RRYING ON THE BUSINESS OF ANIMAL HEALTH CARE AND DIAGNOSTICS BUSI NESS DIVISIONS ACQUIRED BY THE ASSESSEE FROM M/S RANBAXY LABORATORIES LTD. AS PER BPA. THE ACQUISITION OF T HE ABOVE SAID ITEMS IS BUNDLE OF RIGHTS ACQUIRED BY THE ASSESSEE FOR WHICH LUMP SUM PRICE WAS FIXED AND NO BREAK UP IN THE VALUE OF PRICE WAS DETERMINED EITHER BY THE ASSESSEE OR BY THE AUDITOR S BUT THE SAME CONSTITUTED BUNDLE OF RIGHTS AKIN TO A LICENCE OR COMPARABLE TO A LICENSE TO CARRY ON THE BUSINESS OF ANIMAL HEALTH CARE AND DIAGNOSTICS BUSINESS DIVISIONS WHIC H WAS BEING 10 CARRIED ON BY THE SELLER I.E. M/S RANBAXY LABORATOR IES LTD. THE ABOVE SAID ASSETS ACQUIRED BY THE ASSESSEE WERE THE BUSINESS OR COMMERCIAL RIGHTS OR LICENCE ACQUIRED IN ORDER TO CARRY ON NEW BUSINESS ACQUIRED BY THE ASSESSEE INCLUDING LIST OF EMPLOYEES AND ALSO VARIOUS LICENCES OWNED BY RANBAXY LABORAT ORIES LTD. IN LINE WITH THE RATIO LAID DOWN BY THE HON'BLE DEL HI HIGH COURT IN AREVA T AND D INDIA LTD. VS. DCIT (SUPRA), WE AR E OF THE VIEW THAT THE CONSIDERATION OF RS.12.74 CRORES PAID BY T HE ASSESSEE WAS FOR ACQUISITION OF THE INTANGIBLE ASSETS ON WHI CH THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEPRECIATION U NDER SECTION 32(1)(II) OF THE ACT. 27. THE SECOND ASPECT OF THE ISSUE IS THAT THE ASSE SSEE HAD BOOKED THE SAID CONSIDERATION OF RS.12.62 CRORES AS GOODWILL IN ITS BOOKS OF ACCOUNT. IN THIS REGARD ALSO THE ASSE SSEE IS ENTITLED TO THE CLAIM OF DEPRECIATION ON THE GOODWILL AS THE HON'BLE SUPREME COURT IN CIT VS. SNIFS SECURITIES LTD. (SUP RA) HELD THAT THE GOODWILL BY ITSELF WAS AN INTANGIBLE ASSET UNDER EXPLANATION 3(B) TO SECTION 32(1) OF THE ACT AND IS ELIGIBLE FOR DEDUCTION. THE RELEVANT PORTION OF THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IS AS UNDER: 'THE ASSESSING OFFICER HELD THAT GOODWILL WAS NOT A N ASSET FALLING UNDER EXPLANATION 3 TO SECTION 32(1) OF THE INCOME TAX ACT, 1961 ['ACT', FOR SHORT] WE QUOTE HEREINBELOW EXPLANATION 3 TO SE CTION 32(1) OF THE ACT: 'EXPLANATION 3 - FOR THE PURPOSES OF THIS SUB-SECTI ON, THE EXPRESSIONS 'ASSETS' AND 'BLOCK OF ASSETS' SHALL MEAN-LA] TANGI BLE ASSETS, BEING BUILDINGS, MACHINERY, PLANT OR FURNITURE; [B] INTANGIBLE ASSETS, BEING KNOW-HOW, PATENTS, COP YRIGHTS, TRADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMME RCIAL RIGHTS OF SIMILAR NATURE.' EXPLANATION 3 STATES THAT THE EXPRESSION 'ASSET' SH ALL MEAN AN INTANGIBLE ASSET, BEING KNOW-HOW, PATENTS, COPYRIGHTS, TRADEMA RKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGH TS OF SIMILAR NATURE. A READING OF THE WORDS 'ANY OTHER BUSINESS OR COMME RCIAL RIGHTS OF SIMILAR NATURE' IN CLAUSE (B) OF EXPLANATION 3 INDI CATES THAT GOODWILL WOULD FALL UNDER THE EXPRESSION 'ANY OTHER BUSINESS OR COMMERCIAL RIGHT OF A SIMILAR NATURE'. THE PRINCIPLE OF EJUSDEM GENE RIS WOULD STRICTLY APPLY WHILE INTERPRETING THE SAID EXPRESSION WHICH FINDS PLACE IN EXPLANATION 3(B). IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT GOODW ILL' IS AN ASSET UNDER EXPLANATION 3(B) TO SECTION 32(1) OF THE ACT.' 28. IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE S UPREME COURT IN CIT VS. SNIFS SECURITIES LTD. (SUPRA), IT IS HELD THAT THE GOODWILL SIMPLICITER WAS ELIGIBLE FOR DEPRECIAT ION AND THE ASSESSEE HAVING PAID CONSIDERATION OF RS.12.74 CROR ES FOR ACQUISITION OF THE SAID GOODWILL AND HAVING ACCOUNT ED FOR THE SAME IN ITS BOOKS OF ACCOUNT AS GOODWILL, WAS ENTIT LED TO THE CLAIM OF DEPRECIATION. WE ACCORDINGLY DIRECT THE A SSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE VIS--VI S THE CLAIM OF DEPRECIATION ON GOODWILL OF RS.12.74 CRORES. 11 29. THE OBJECTION OF THE ASSESSING OFFICER IN NOT A LLOWING THE SAID CLAIM AS POINTED OUT BY THE LEARNED D.R. FOR T HE REVENUE IN HIS WRITTEN SUBMISSIONS, WAS THAT THE ASSESSEE WAS ENLARGING THE SCOPE OF GOODWILL WITHOUT ANY BASIS. WE FIND NO ME RIT IN THE ABOVE SAID OBSERVATION OF BOTH THE ASSESSING OFFICE R AND THE CIT (APPEALS) AND THE PLEADINGS OF THE LEARNED D.R. FOR THE REVENUE IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN AREVA T AND D INDIA LTD. VS. DCIT (SUPRA). THE SECOND PLEA OF THE LEARNED D.R. FOR THE REVENUE WAS THAT THE AS SESSEE WAS WHOLLY OWNED SUBSIDY OF THE SELLER COMPANY AND PERU SAL OF PARAS OF THE BPA REFLECTS THAT THE PAYMENT OF THE PURCHAS E PRICE BY THE ASSESSEE WOULD MAKE IT ENTITLE TO ALL RIGHTS, TITLE S AND INTEREST OF THE SELLER IN THE ALLIED BUSINESS. WE FIND NO MERI T IN THE PLEA OF THE LEARNED D.R. FOR THE REVENUE IN THIS REGARD. T HE ASSESSEE HAVING PAID COMPOSITE AMOUNT FOR ACQUISITION OF COM PLETE ALLIED BUSINESS OF RANBAXY LABORATORIES LTD. AND AUDITORS HAVING ALLOCATED THE VALUE TO THE TANGIBLE ASSETS, THE BRA NDS AND BALANCE TO GOODWILL, ESTABLISH THE CASE OF THE ASSE SSEE THAT IT HAD PAID THE CONSIDERATION FOR ACQUISITION OF THE E NLISTED ASSETS I.E. THE LIST OF STOCKISTS, DISTRIBUTION AND MARKET ING AGREEMENTS, LEASE AGREEMENTS, LIST OF EMPLOYEES, VARIOUS LICENC ES AND MANUFACTURING KNOW-HOW OF THE ALLIED BUSINESS AND T HE ASSESSEE WAS ENTITLED TO CLAIM OF DEPRECIATION ON VALUE OF S UCH ASSETS UNDER SECTION 32(1)(II) OF THE ACT. THE NEXT STAND OF THE LEARNED D.R. FOR THE REVENUE THAT GOODWILL WAS COVERED IN T HE AGREEMENT AND IS DESCRIBED AS PART OF THE AGREEMENT ESTABLISH ES THE CASE OF THE ASSESSEE THAT IT HAD CONTRIBUTED PART OF THE CO NSIDERATION FOR ACQUISITION OF THE GOODWILL OF THE BUSINESS BEING R UN BY THE SELLER AND ONCE SUCH CONTRIBUTION HAS BEEN SO MADE, THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEPRECIATION ON SUCH GO ODWILL AS HELD BY THE HON'BLE SUPREME COURT IN CIT VS. SNIFS SECUR ITIES LTD. (SUPRA). SIMILARLY OTHER ARGUMENTS RAISED BY THE L EARNED D.R. FOR THE REVENUE THAT RESIDUAL CONCESSION, VARIOUS R IGHTS, LICENCES, APPROVALS, ETC. WAS NOT CORRECT, DOES NOT STAND IN VIEW OF OUR DECISION IN PARAS HEREINABOVE IN TURN FOLLOW ING THE RATIO LAID DOWN BY THE HON'BLE DELHI IN AREVA T AND D IND IA LTD. VS. DCIT (SUPRA). 30. THE LAST OBJECTION OF THE AUTHORITIES BELOW AND LEARNED D.R. FOR THE REVENUE WAS THAT THE TAX AUDITORS HAD DENIED BENEFIT OF DEPRECIATION ON GOODWILL BOOKED IN THE B ALANCE SHEET. IT IS AN ESTABLISHED RULE THAT THE TREATMENT OF AN ENTRY IN THE BOOKS OF ACCOUNT DOES NOT ESTABLISH ITS ALLOWABILIT Y IN THE HANDS OF THE ASSESSEE. IT IS THE NATURE OF THE EXPENDITU RE WHICH DETERMINES ALLOWABILITY OF THE EXPENDITURE IN THE H ANDS OF THE ASSESSEE. THE OPINION OF THE AUDITORS IS NOT DETER MINATIVE OF THE CORRECT POSITION OF LAW AND WHILE ALLOWING THE CLAI M IN THE HANDS OF THE ASSESSEE, THE AUTHORITIES HAVE TO INDE PENDENTLY EXAMINE ITS ALLOWABILITY UNDER THE PROVISIONS OF TH E ACT AND ALSO AS PER THE RELEVANT JUDICIAL PRECEDENTS. IN VIEW T HEREOF, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE VIS--VIS DEPRECIATION WITH REGARD TO CLAIM OF DEPR ECIATION ON INTANGIBLE ASSETS BOOKED AS GOODWILL IN THE BOOKS O F ACCOUNT VALUED AT RS.12.74 CRORES. THE GROUNDS OF APPEAL R AISED BY THE ASSESSEE IN ITA NO.293/CHD/2012 ARE THUS ALLOWED. 12 14. IN VIEW OF THE FACTS OF THE PRESENT ASSESSMENT YEAR BEING IDENTICAL TO THE FACTS REFERRED TO IN ASSESSMENT YEAR 2007-08 , WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSE E I.E. DEPRECIATION ON INTANGIBLE ASSETS BOOKED AS GOODWILL VALUED AT RS.1 2.74 CRORES. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HON'BLE SUP REME COURT IN CIT VS. SMIFS SECURITIES LIMITED [348 ITR 302)(SC)]. T HE GROUND NOS.3,5 TO 9 IN ASSESSMENT YEAR 2006-07 ARE THUS ALLOWED. 15. COMING TO THE APPEAL FILED BY THE ASSESSEE RELA TING TO ASSESSMENT YEAR 2009-10 THE ISSUE RAISED IS AGAINST DISALLOWAN CE OF DEPRECIATION CLAIMED ON INTANGIBLE ASSETS RECORDED AS GOODWILL I N THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAD CLAIMED GOODWILL ON VARIOUS ACQUISITIONS AND THE ASSESSING OFFICER HAD DISALLOW ED THE CLAIM OF THE ASSESSEE FOLLOWING HIS EARLIER ORDER IN ASSESSMENT YEARS 2007-08 AND 2008-09. DURING THE YEAR UNDER CONSIDERATION THE A SSESSING OFFICER HAD DISALLOWED DEPRECIATION TO THE TUNE OF RS.2,82,19,9 50/-. WE FIND THAT THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN ASSESSMENT YEAR 2008-09 WHEREIN THE ASSESSEE IN ADDITION TO THE EAR LIER ACQUISITION OF ANIMAL HEALTH CARE AND DIAGNOSTICS BUSINESS OF RANB AXY LABORATORIES LTD. HAD FURTHER ACQUIRED ENTIRE BIOMED DIVISION OF WIPRO LTD. AND ENTIRE MEDICAL DIAGNOSTICS BUSINESS OF GODREJ INDUSTRIES. WE FIND THAT THE TRIBUNAL IN ITA NO.294/CHD/2012 ALONGWITH LEAD ORDE R IN ITA NO.293/CHD/2012 HAD ADDRESSED THE FACTS OF ACQUISIT ION MADE BY THE ASSESSEE VIDE PARAS 30 TO 38 OF THE ORDER DATED 2.4 .2013. THE TRIBUNAL VIDE PARAS 30 TO 38 VIDE ORDER DATED 2.4.2013 DIREC TED THE ASSESSING OFFICER TO ALLOW DEPRECIATION ON INTANGIBLE ASSETS BOOKED AS GOODWILL IN LINE WITH THE DECISION IN ITA NO.294/CHD/2012. THE RELEVANT PARAS OF THE ORDER OF THE TRIBUNAL (SUPRA) ARE AS UNDER: 13 30. THE FACTS OF THE CASE IN ITA NO.294/CHD/2012 A RE SIMILAR TO THE FACTS IN ITA NO.293/CHD/2012. THE A SSESSEE DURING THE YEAR UNDER CONSIDERATION HAD CLAIMED DEP RECIATION ON GOODWILL REPRESENTED BY VARIOUS INTANGIBLE ASSET S AMOUNTING TO RS.3,34,82,355/-. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD CLAIMED THE SAID DEPRECIATI ON ON INTANGIBLE ASSETS ON ACCOUNT OF FOLLOWING ACQUISITI ONS: A) PURCHASE OF ENTIRE ANIMAL HEALTH CARE AND DIAGNOSTI CS BUSINESS DIVISIONS OF RANBAXY LABORATORIES LIMITED ('RANBAXY ACQUISITION') B) PURCHASE OF THE ENTIRE BIOMED DIVISION OF WIPRO LIM ITED COMPRISING OF DIAGNOSTICS, MEDICAL SYSTEMS AND LIFE SCIENCES BUSI NESS ('WIPRO ACQUISITION') C) PURCHASE OF THE ENTIRE MEDICAL DIAGNOSTIC BUSINESS OF GODREJ INDUSTRIES LIMITED ('GODREJ ACQUISITION') 32. THE ASSESSEE HAS TABULATED VALUE OF INTANGIBLE ASSETS UNDER ALL THE ABOVE ACQUISITION AND CORRESPONDING DEPRECIATION CLAIMED DURING THE YEAR, IN ITS WRITTE N SUBMISSIONS AND THE SAME ARE AS UNDER: PARTICULARS FINANCIAL YEAR OF ACQUISITION VALUE OF INTANGIBLE ASSETS ACQUIRED (RS.IN CRORES) DEPRECIATION CLAIMED (AMOUNT IN RS) RANBAXY ACQUISITION 2005-06 12.74 33,482,355 WIPRO ACQUISITION 2007-08 3.788 GODREJ ACQUISITION 2007-078 2.486 33. THE FIRST ITEM OF CLAIM OF DEPRECIATION WAS I N RESPECT OF BPA ENTERED INTO WITH M/S RANBAXY LABORATORIES LTD. FOR PURCHASE OF ENTIRE ANIMAL HEALTH CARE AND DIAGNOSTI CS BUSINESS DIVISIONS OF RANBAXY. WE HAVE DEALT WITH THE ISSUE OF ALLOWABILITY OF DEPRECIATION ON GOODWILL BOOKED BY THE ASSESSEE IN THE PRECEDING YEAR IN THE PARAS HEREINABOVE AND FOLLOWING OUR DECISION IN THE PARAS HEREINABOVE, WE DIRECT THE AS SESSING OFFICER TO ALLOW THE CLAIM IN ENTIRETY IN RELATION TO DEPRECIATION ON GOODWILL OF ACQUISITION OF ALLIED BUSINESS OF RA NBAXY LABORATORIES LTD. 34. DURING THE YEAR UNDER CONSIDERATION THE ASSESS EE ENTERED INTO BUSINESS ACQUISITION AGREEMENT (HEREINAFTER RE FERRED AS BAA) WITH M/S WIPRO LTD. AND PURCHASED THE ENTIRE BIOMED DIVISION OF WIPRO LTD. COMPRISING OF DIAGNOOSTICES, MEDICAL SYSTEMS AND LIFE SCIENCES BUSINESS (HEREINAFTER REF ERRED TO AS THE ALLIED BUSINESS). CLAUSE 2.2 OF THE BAA DETA ILS THE ASSETS, RIGHTS, TITLES, ETC OF M/S WIPRO LTD. THAT WERE CON VEYED TO THE ASSESSEE IN CONSIDERATION FOR THE PURCHASE PRICE AS A GOING CONCERN ON A SLUMP SALE BASIS. THE RELEVANT EXTRAC T OF CLAUSE 2.2 IS AS UNDER: 14 2.2 THE SELLER SHALL ACCORDING TO THE PROVISIONS O F THIS AGREEMENT ON THE CLOSING DATE, AS PART OF THE SPECIFIED BUSINESS, TRANSFER ALL RIGHTS, TITLE AND INTEREST OF THE SELLER IN THE SPECIFIED BUSINESS, TOGETHER WITH THE SAID MOVABLE ASSETS, CURRENT ASSETS, ASSUMED LIABILITIES, SAKE EMPLOYEES, SAID CONTRACTS, GOODWILL, CONSUMABLES AND ALL OTHER RIGHTS AND PRIVILEGES IN RELATION THERETO TO THE PURCHASER. 35. THE ALLIED BUSINESS OF M/S WIPRO LTD. WAS PURCH ASED BY THE ASSESSEE FOR A CONSIDERATION OF RS.13.297 CRORE S. THE LIST OF TRADEMARKS, CONTRACTS AND LICENSES, EMPLOYEES, I NSURANCE POLICIES ETC THAT WERE ACQUIRED BY THE ASSESSEE AS PART OF THE BAA ARE DETAILED IN SCHEDULES TO THE BAA, PLACED AT PAGES 54 TO 65 OF THE PAPER BOOK. THE VALUER ALLOCATED RS.13.297 CRORES TO FIXED ASSE TS, DEBTORS, INVENTORY, LIABILITIES. THE REMAINING PURCHASE CON SIDERATION OF RS.3.788 CRORES, REPRESENTS THE VALUE ATTRIBUTAB LE TO THE INTANGIBLE ASSETS DETAILED IN CLAUSE 2.2 ARE TABULA TED BELOW AND THE SAME WAS RECORDED AS GOODWILL IN THE BOOKS OF A CCOUNT OF THE ASSESSEE: S.NO. DETAILS OF INTANGIBLE ASSETS ACQUIRED PAPER BOOK REFERENCE PAGE NUMBERS 1 DETAILS OF TRADE MARKS 54 2. LIST OF CONTRACTS 55 3. DETAILS OF LICENSES 56 4. LIST OF EMPLOYEES 58 5. DETAILS OF INSURANCE POLICIES 65 36. THE THIRD ACQUISITION BY THE ASSESSEE DURING TH E YEAR WAS BY WAY OF BAA WITH M/S GODREJ INDUSTRIES LTD. THE ASSESSEE PURCHASED THE ENTIRE MEDICAL DIAGNOSTIC BUSINESS O F GODREJ (HEREINAFTER REFERRED TO AS THE ALLIED BUSINESS). AS A PART OF THE BAA, ALL THE ASSETS, LIABILITIES, EMPLOYEES, CO NTRACTS, CONSUMABLES AND ALL OTHER RIGHTS AND PRIVILEGES, ET C RELATED TO THE ALLIED BUSINESS DIVISION WERE TRANSFERRED BY M/ S GODREJ INDUSTRIES LTD. FOR A CONSIDERATION OF RS.6 CRORES. CLAUSE 2.1 OF THE BAA DETAILS THE ASSETS, RIGHTS, TITLES ETC. THAT WERE CONVEYED TO THE ASSESSEE AS A GOING CONCERN ON A SL UMP SALE BASIS. THE RELEVANT EXTRACT OF CLAUSE 2.1 READS AS UNDER: 15 2.1 SUBJECT TO THE PROVISIONS OF THIS AGREEMENT, O N THE CLOSING DATE, THE SELLER SHALL SELL,TRANSFER, CONVEY AND DELIVER TO THE PURCHASER AND THE PURCHASER SHALL PURCHASE, ACQUIRE AND ACCEPT FROM THE SELLER, ALL RIGHTS, TITLE AND INTEREST OF THE SELLER IN AND TO THE SPECIFIED BUSINESS, AS A GOING CONCERN ON A SLUMP SALE BASIS. THE TERM 'SPECIFIED BUSINESS' HAS BEEN DEFINED IN THE BAA TO MEAN AND INCLUDE THE CURRENT ASSETS, TRANSFERRED LIABILITIES, SPECIFIED EMPLOYEES, SAID CONTRACTS, GOODWILL, CONSUMABLES AND ALL OTHER RIGHTS AND PRIVILEGES IN RELATION TO THE MEDICAL DIAGNOSTIC BUSINESS OF THE SELLER 37. THE ALLIED BUSINESS WAS PURCHASED BY THE ASSESS EE FOR TOTAL CONSIDERATION OF RS. 6 CRORES. THE LIST OF CO NTRACTS AND IMPORT LICENSES, EMPLOYEES ETC. THAT WERE ACQUIRED AS PART OF THE BAA HAVE BEEN DETAILED IN THE SCHEDULES TO THE BAA, PLACED AT PAGES 131 TO 133 OF THE PAPER BOOK. THE VALUER ALLOCATED RS.3.450 CRORES TO DEBTORS, INVENTORY, LIABILITIES. THE REMAINING PURCHASE CONSIDERATION OF RS.2.486 CRORES , REPRESENTED THE VALUE ATTRIBUTABLE TO THE INTANGIBL E ASSETS DETAILED IN CLAUSE 2.2 AND TABULATED BELOW WAS RECO RDED AS GOODWILL IN THE BOOKS OF ACCOUNT OF THE ASSESSEE: S.NO. DETAILS OF INTANGIBLE ASSETS ACQUIRED PAPER BOOK REFERENCE PAGE NUMBERS 1. LIST OF CONTRACTS 131 2. DETAILS OF IMPORT LICENSES 132 3. LIST OF EMPLOYEES 133 38. THE ASSESSEE CLAIMED DEPRECIATION ON THE INTAN GIBLE ASSETS ACQUIRED UNDER THE ABOVE SAID BAA AND THE SAME WAS DISALLOWED BY THE ASSESSING OFFICER AND THE CIT (APPEALS). WE FIND THAT THE FACTS OF ACQUISITION OF ALLIED BUSINESS OF M/S WIPR O LTD. AND M/S GODREJ INDUSTRIES LTD. ARE IDENTICAL TO THE FACTS O F ACQUISITION OF ALLIED BUSINESS OF RANBAXY LABORATORIES LTD. IN LI NE WITH OUR DECISION IN ITA NO/293/CHD/2012 AND THE FACTS BEING IDENTICAL OUR DECISION IN ITA NO.293/CHD/2012 WOULD APPLY MUT ATIS MUTANDIS TO THE FACTS IN ITA NO.294/CHD/2012. WE H AVE ALREADY DIRECTED THE ASSESSING OFFICER TO ALLOW DEPRECIATIO N ON GOODWILL OF ALLIED BUSINESS OF RANBAXY LABORATORIES LTD. TH E GROUND NO.2 RAISED BY THE ASSESSEE IN THIS REGARD IS THUS ALLOWED. 16. THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN ASSESSMENT YEAR 2008-09 AND FOLLOWING THE SAME PARI TY OF REASONING WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE VIS--VIS THE DEPRECIATION ON INTANGIBLE ASSETS/GOODWILL CLAI MED BY THE ASSESSEE AT 16 RS.2.82 CRORES. THE GROUNDS OF APPEAL EXCEPT GROUN D NOS.1 AND 3 RAISED BY THE ASSESSEE IN ASSESSMENT YEAR 2009-10 ARE THUS ALLOWED. 17. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF APRIL, 2012. SD/- SD/- (T.R. SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 29 TH APRIL, 2013 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH