M/S. DEMAG DELVAL INDL TURBOMACHINERY PVT. LTD ( BY SUCCESSORS SIEMENS LTD), MUMBAI V. THE ACIT 15(1), MUMBAI

ITA 211/MUM/2008

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6379 (ITAT-MUMBAI)
• Duration Of Justice: 12 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 09-01-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R MANJUNATHA SWAMY
• Keywords: Capital asset; Depreciation; Opportunity of being heard; Valuation report; Revenue expenditure; Capital expenditure; Set aside
• Section: 271(1)(c); 13; 32; 37

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI RAMLAL NEGI (JM) I.T.A. NO. 211/MUM/2008 (ASSESSMENT YEAR 2004-05) I.T.A. NO. 2500/MUM/2010 (ASSESSMENT YEAR 2005-06) DEMAG DELAVAL INDUSTRIES TURBOMACHINERY PVT. LTD. 130, PANDURANG BUDHKAR MARG, WORLI MUMBAI-400 018. PAN : AABCD8878P VS . ACIT 15(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI PERCY PARDIWALA DEPARTMENT BY SHRI R. MANJUNATHA SWAMY DATE OF HEARING 08.09.2020 DATE OF PRONOUNCEMENT 16.09.2020 O R D E R PER SHAMIM YAHYA (AM) :- THESE ARE APPEALS BY THE ASSESSEE DIRECTED AGAINS T RESPECTIVE ORDERS OF LEARNED CIT(A) FOR ASSESSMENT YEARS 2004-05 & 2005- 06. SINCE THE ISSUES ARE COMMON AND CONNECTED AND THE APPEALS WERE HEARD TO IS BEING DISPOSED OF BY THIS COMMON ORDER. 2. GROUNDS OF APPEAL IN ASSESSMENT YEAR 2004-05 REA D AS UNDER :- 1. THE LEARNED COMMISSIONER(APPEALS) ERRED IN CO NFIRMING THE DISALLOWANCE OF RENT OF RS.92,000. 2. THE LEARNED COMMISSIONER(APPEALS) ERRED IN CONF IRMING THE DISALLOWANCE OF SPECIAL ADHESIVE STAMPS EXPENSES OF RS. 59,17,000 AFFIXED ON CONVEYANCE DEED FOR ASSIGNMENT OF BUSINESS OF MS/ AL STOM PROJECT INDIA LIMITED. 3. THE LEARNED COMMISSIONER (APPEALS) ERRED IN DISALLOWING PROVISION FOR WARRANTY OF RS. 2,76,18,000. 4. WITHOUT PREJUDICE, THE LEARNED COMMISSIONER (A PPEALS) OUGHT TO HAVE SPECIFICALLY RESTRICTED THE DISALLOWANCE OF PROVISION FOR WARRANTY TO RS. 44,10,000 WHICH WAS ACTUALLY DEBITED TO THE PROFIT AND LOSS ACCOUNT. DEMAG DELAVAL INDUSTRIES TURBOMACHINERY PVT. LTD. 2 5. THE LEARNED COMMISSIONER (APPEALS) ERRED IN DI SALLOWING THE DEPRECIATION OF RS. 90,10,000 CLAIMED BY THE APPELLANT IN RESPECT OF CUSTOMER CONTRACTS. 6. THE LEARNED COMMISSIONER (APPEALS) ERRED IN HOLDING THAT THE CUSTOMER CONTRACTS CANNOT HE SAID TO BE A COMMERCIAL RIGHT OR BUS INESS RIGHT WHICH IS A DEPRECIABLE INTANGIBLE RIGHT QUALIFYING FOR DEDUCTI ON UNDER SECTION 32(1)(II). 7. WITHOUT PREJUDICE TO THE ABOVE, THE ID. CIT(A) OUGH T TO HAVE APPRECIATED THAT THE EXPENDITURE OF RS. 72,080,000 INCURRED FOR AC QUIRING COMMERCIAL RIGHTS SHOULD BE ALLOWED AS REVENUE EXPENDITURE. 8. THE ID. CIT(A) ERRED IN NOT COMMENTING ON TH E FOLLOWING GROUND: '14. THE LEARNED ASSISTANT COMMISSIONER ERRED IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) ' 9. EACH ONE OF THE ABOVE GROUND OF APPEAL IS WITHOUT P REJUDICE TO THE OTHER. 3. GROUNDS OF APPEAL IN ASSESSMENT YEAR 2005-06 REA D AS UNDER :- THE APPELLANT OBJECTS TO THE ORDER DATED 24 TH NOVEMBER 2009 PASSED BY THE LEARNED COMMISSIONER OF THE INCOME TAX (APPEALS) - 12 ON THE FOLLOWING AMONG OTHER GROUNDS OF APPEALS : 1. THE LEARNED COMMISSIONER (APPEALS) ERRED IN DIS ALLOWING DEPRECIATION OF RS.15,767,500 CLAIMED BY THE APPELLANT IN RESPECT OF CUSTOMER CONTRA CTS. 2. THE LEARNED COMMISSIONER (APPEALS) ERRED IN HOL DING THAT THE CUSTOMER CONTRACTS CANNOT BE SAID TO BE A COMMERCIAL RIGHT OR BUS INESS RIGHT WHICH IS A DEPRECIABLE INTANGIBLE RIGHT QUALIFYING FOR DEDUCTI ON UNDER SECTION 32(L)(II). 4. AS REGARDS GROUND NO. 1 SENIOR COUNSEL SHRI PERC Y PARDIWALA SUBMITTED THAT HE SHOULD NOT BE PRESSING FOR THE SAME. HENCE THIS GROUND IS DISMISSED AS NOT PRESSED. A.Y. 2004-05 APROPOS GROUND NO. 1 5. BRIEF FACTS ON THIS ISSUE ARE THAT ASSESSEE HAS INCURRED EXPENDITURE FOR COST OF ADHESIVE STAMP IN CONNECTION WITH PREPARATI ON OF DEED OF TRANSFER AND ASSIGNMENT OF RECEIVABLES. THE ASSESSEE HAD STATED THAT THE SAME WAS IN CONNECTION WITH ACQUISITION OF BUSINESS AND WAS CLA IMED AS REVENUE DEMAG DELAVAL INDUSTRIES TURBOMACHINERY PVT. LTD. 3 EXPENDITURE. RELIANCE IN THIS REGARD WAS PLACED UPO N SUPREME COURT DECISION IN THE CASE OF CIT VERSUS BOMBAY DYEING AND MANUFAC TURING CO.(219 ITR 521) AND INDIA CEMENT LTD. VS. CIT (60 ITR 52). HOWEVER THIS CLAIM WAS DENIED BY BOTH AUTHORITIES ON THE GROUND THAT EXPENDITURE WAS IN THE CAPITAL FIELD FOR THE PURPOSE OF ACQUISITION OF BUSINESS AND THE CASE LAW S REFERRED WERE NOT APPLICABLE. AGAINST THE ABOVE ORDER THE ASSESSEE IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. THE LEARNED SENIOR COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE EXPENDITURE IN THIS REGARD HAS BEEN INCURRED IN CONNECTION WITH CONVEYANCE DEE D OF RECEIVABLES WHICH ARE PART OF CURRENT ASSETS. HENCE HE PLEADED THAT THE E XPENDITURE CANNOT BE TREATED AS EXPENDITURE FOR THE PURPOSE OF ACQUISITI ON OF CAPITAL ASSET. HE SUBMITTED THAT EXPENDITURE WAS VERY MUCH INCURRED F OR THE PURPOSE OF BUSINESS OF THE ASSESSEE AND THE SAME SHOULD BE ALL OWED AS SUCH. IN THIS REGARD HE REITERATED HIS RELIANCE ON CASE LAWS, IN THE CASE OF BOMBAY DYEING AND MANUFACTURING CO. (SUPRA) AND INDIA CEMENTS LTD . (SUPRA). ASSESSEES SUBMISSION BEFORE LEARNED CIT(A) IS AS U NDER :- THE APPELLANT SUBMITS THAT THE APPELLANT HAD PAID STAMP DUTY OF RS. 59,17,000 ON 13 FEBRUARY 2004 IN RESPECT OF AGREEMEN T. A COPY OF THE AGREEMENT IS ENCLOSED AT PAGES 8 TO 12 OF THE COMPILA TION. AS STATED IN THE SAID AGREEMENT, ALSTOM AGREED TO ACQUIRE WITH EFFECT FR OM 31 DECEMBER 2003 1ST BUSINESS INCLUDING THE RECEIVABLES RELATING THERE TO WHICH WERE OUTSTANDING AND DESCRIBED IN THE SCHEDULE ATTACHED WITH THE AGREEMENT. THE APPELLANT SUBMITS THAT THE APPELLANT HAD INCURRED THE STA MP DUTY OF RS. 59,17,000 FOR THE PURPOSE OF THE BUSINESS OF THE APPE LLANT AND THEREFORE THE SAME SHALL BE ALLOWED AS A DEDUCTION. THE APPELLANT SUBMITS THAT THE FACT THAT THE STAMP DUTY HAD BEEN PAID IN RESPECT OF AGREEME NT FOR ASSIGNMENT OF RECEIVABLES PERTAINING TO 1ST BUSINESS ON AND FROM 1 JANUARY 2004 SHALL NOT MAKE THE PAYMENT OF STAMP DUTY AS A CAPITAL EXPENDITURE . THE APPELLANT INTER-ALIA RELIES ON THE FOLLOWING DECISIONS:- 1. CIT V BOMBAY DYEING AND MANUFACTURING CO. LTD 219 ITR 521 (SC). THE FACTS IN THE SAID DECISION WERE THAT A COMPANY WAS AMALGAMATED WITH THE ASSESSEE COMPANY. IN CONNECTION WITH THE AMALGAMATI ON, THE ASSESSEE INCURRED AN EXPENDITURE OF RS. 10,350 TOWARDS PROFES SIONAL CHARGES. THE APPELLANT CLAIMED DEDUCTION FOR THE SAID AMOUNT. THE INCOME TAX OFFICER AND THE APPELLATE ASSISTANT COMMISSIONER REJECTED THE CLAI M OF THE ASSESSEE BUT THE TRIBUNAL ALLOWED THE CLAIM ON THE GROUND THAT AS BO TH THE COMPANIES DEMAG DELAVAL INDUSTRIES TURBOMACHINERY PVT. LTD. 4 WERE CARRYING ON COMPLEMENTARY BUSINESS AND THEIR AM ALGAMATION WAS NECESSARY FOR THE SMOOTH AND EFFICIENT CONDUCT OF THE BUSINESS, IT WAS AN EXPENDITURE LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PU RPOSE OF THE BUSINESS OF THE ASSESSEE. THE SUPREME COURT AT PAGE 524 REFERRED TO IT'S EARLIER DECISION IN THE CASE OF BOMBAY STEAM NAVIGATION CO. PVT. LTD. 56 ITR 52 AND WHILE HOLDING THAT THE EXPENDITURE WAS ALLOWABLE AS A REVENU E EXPENDITURE, OBSERVED AS UNDER:- 'IT IS AN EXPENDITURE LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. IN VIEW OF THE SAID FIND ING AND ALSO IN VIEW OF THE DECISION OF THIS COURT IN BOMBAY STEAM NAVI GATION CO. (1953) PVT. LTD. VS. CIT (1965) 56 ITR 52 (SC) , WE ARE OF THE OPINION THAT THE TRIBUNAL WAS RIGHT IN ITS CONCLUSION. THE DEC ISION IN BOMBAY STEAM NAVIGATION (SUPRA) ALSO PERTAINS TO AMALGAMATION OF TWO SHIPPING COMPANIES. THE ASSESSEE-COMPANY TOOK OVER TH E ASSETS OF THE OTHER COMPANY AND PART OF THE PRICE WAS TREATED AS A LO AN SECURED BY A PROMISSORY NOTE AND HYPOTHECATION OF ALL MOVABLE PR OPERTIES OF THE ASSESSEE COMPANY. THE LOAN WAS TO CARRY SIMPLE INTER EST AT 6 PER CENT. THE QUESTION THAT AROSE IN THE SAID CASE WAS WHETHER T HE INTEREST PAID UPON THE SAID LOAN WAS DEDUCTIBLE AS REVENUE EXPEND ITURE. IT WAS HELD BY THIS COURT THAT IT WAS AN EXPENDITURE DEDUCTIBLE UN DER S. 10(2)(XV) OF THE IT ACT. IT WAS HELD THAT TRANSACTION OF ACQUISIT ION OF THE ASSET WAS CLOSELY RELATED TO THE COMMENCEMENT AND CARRYING ON OF THE ASSESSEE'S BUSINESS AND, THEREFORE, INTEREST PAID ON THE UNPAID BALANCE OF THE CONSIDERATION FOR THE ASSETS ACQUIRED H AD, IN THE NORMAL COURSE, TO BE REGARDED AS EXPENDITURE FOR THE PURPOSE OF THE BUSINESS WHICH WAS CARRIED ON IN THE ACCOUNTING PER IODS. IN THE COURSE OF THE JUDGMENT THIS COURT REFERRED TO THE EARLI ER DECISION OF THIS COURT IN STATE OF MADRAS VS. G. J. COELHO (1954) 53 ITR 186 (SC) WHEREIN IT WAS HELD THAT THE INTEREST ON THE AMOUNT BO RROWED FOR ACQUIRING A CAPITAL ASSET IS DEDUCTIBLE AS REVENUE EX PENDITURE. IT IS TRUE, THAT IN THE SAID DECISION THIS COURT REAFFIRMED TH E WELL ESTABLISHED PRINCIPLE THAT ANY EXPENDITURE LAID OUT FOR ACQUIRING AN ASSET OF A PERMANENT CHARACTER WOULD BE CAPITAL EXPEND ITURE, HELD AT THE SAME TIME THAT INASMUCH AS THE ACQUISITION OF THE OTH ER COMPANY WAS IN THE COURSE OF CARRYING ON OF THE ASSESSEE'S BU SINESS, THE INTEREST PAID THEREON WAS DEDUCTIBLE UNDER S. 10(2)(XV ) OF THE ACT. IN THIS CASE TOO, THE TRIBUNAL HAS RECORDED A FINDING THA T THE ACQUISITION OF NAWROSJEE WADIA GINNING & PRESSING CO. WAS NECES SARY FOR THE SMOOTH AND EFFICIENT CONDUCT OF THE ASSESSEE'S BUSINES S. FOLLOWING THE RATIO OF THE AFOREMENTIONED DECISIONS OF THE COURT, WE HOLD THAT THE EXPENDITURE INCURRED TOWARDS PROFESSIONAL CHARGES OF THE SOLICITORS FIRM FOR THE SERVICES RENDERED IN CONNECTION WITH THE SAID AMALGAMATION WAS IN THE COURSE OF CARRYING ON OF THE ASSESSEE'S BUSINESS AND, THEREFORE, DEDUCTIBLE AS A REVENUE EXP ENDITURE.' 2. INDIA CEMENTS LIMITED V CIT 60 ITR 52 (SC). THE FACTS IN THE SAID DECISION WERE THAT THE ASSESSEE OBTAINED A LOAN OF RS. 40 LAKHS FROM THE INDUSTRIAL FINANCE CORPORATION SECU RED BY A CHARGE ON DEMAG DELAVAL INDUSTRIES TURBOMACHINERY PVT. LTD. 5 FIXED ASSETS. IN CONNECTION THEREWITH THE ASSESSEE SPEN T A SUM OF RS. 84,633 TOWARDS STAMP DUTY, REGISTRATION FEES, LAWYER'S FEES E TC. AND CLAIMED THE SAME AS A DEDUCTION. IN THE BOOKS OF ACCOUNT THE AMOU NTS WERE CAPITALIZED. HOWEVER, FOR THE PURPOSE OF INCOME TAX, THE EXPENDITU RE WAS CLAIMED AS A DEDUCTION. THE SUPREME COURT IN THE ABOVE DECISION HELD THAT IT W AS IRRELEVANT TO CONSIDER THE OBJECT WITH WHICH THE LOAN WAS OBTAINED. THE EXPENDITURE OF RS. 84,633 WAS INCURRED FOR THE PURPOSE OF ASSESSEE'S BU SINESS AND WAS THEREFORE ALLOWABLE AS A DEDUCTION. THE SUPREME COURT HELD THAT WHERE THERE IS NO EXPRESS PROHIBITION, ON OUTGOING, BY MEANS OF WHICH AN ASSESSEE PROCURES THE USE OF A THING BY WHICH HE MAKES A PROFI T, IS DEDUCTIBLE FROM THE RECEIPT OF THE BUSINESS TO ASCERTAIN THE TAXABLE INC OME. IT IS SUBMITTED THAT THE EXPENDITURE OF RS. 59,17,000 WAS INCURRED DURING THE COURSE OF THE APPELLANT'S BUSINESS AND THEREFORE N O DISALLOWANCE OF THE SAME OUGHT TO BE MADE. 7. WE MAY GAINFULLY REFER TO THE ORDER OF LEARNED CIT( A) ON THIS ISSUE AS UNDER :- 3.3 I HAVE TRIED TO ADDRESS THE LEGAL ISSUE RAISED B EFORE ME ON THE POINT OF DETERMINING THE CHARACTER OF EXPENDITURE DEBITED AT R S.59,17,000/-. I FIND THAT THE FACT IS NOT IN DISPUTE THAT THE IMPUGNED EXPENDITU RE PERTAINED TO COST OF ADHESIVE STAMP WHICH WAS INCURRED IN CONNECTIO N WITH PREPARATION OF CONVEYANCE DEED FOR ACQUISITION OF INDUSTRIAL STEAM TURBINE OF M/S. ALSTOM PROJECT INDIA LTD. IN OTHER WORDS, THE APPELLANT COMPA NY HAS ACQUIRED AN INDUSTRIAL UNIT OF M/S. ALSTOM PROJECT INDIA LTD. AND THE APPELLANT COMPANY HAS TO INCUR SOME STAMP DUTY IN ORDER TO PREPARE THE C ONVEYANCE DEED TO FACILITATE THE LEGAL TRANSFER OF THE INDUSTRIAL UNIT. TH ERE IS NO DOUBT ON THE FACT THAT THE APPELLANT COMPANY HAS IN FACT ACQUIRED A CA PITAL ASSET ON WHICH THE APPELLANT COMPANY HAS INCURRED STAMP DUTY WHICH CA N BE SAID TO BE A PART & PARCEL CAPITAL COST OF ACQUIRING A CAPITAL ASSE T. THE PURCHASING OF AN INDUSTRIAL UNIT REPRESENTS THE ACQUIRING OF A CAPITAL APPARATUS TO EARN INCOME. ANY EXPENDITURE DIRECTLY OR INDIRECTLY RELA TED TO ACQUIRING SUCH ASSET IS GOING TO BE A PART OF CAPITAL COST BY SIMPLE & PURE LOGIC. IT IS TO BE NOTED THAT THE STAMP DUTY HAS NOT BEEN INCURRED IN PROCESS OF CARRYING ON BUSINESS BUT TO ACQUIRE A BUSINESS AS SUCH IN LOCK & BARREL. R EGARDING THE APPELLANT'S RELIANCE ON DECISION OF SUPREME COURT IN THE CASE OF CIT V. BOMBAY DYEING, IT MAY BE REFERRED THAT THE SAID DECISION RELATED TO TH E EXPENDITURE OF AMALGAMATION TOWARDS PROFESSIONAL CHARGES. THE HON'B LE SUPREME COURT HELD THAT IT WAS A REVENUE EXPENDITURE LAID OUT WHOLLY & EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AS THE TWO COMPANIES WERE CARRYI NG ON COMPLIMENTARY BUSINESSES AND THEIR AMALGAMATION WAS NECESSARY FOR SMOOTH & EFFICIENT CONDUCT OF BUSINESS. IN THIS WAY, THE HON'BLE SUPREME COURT HELD THAT THE AMALGAMATION EXPENDITURE WAS INCURRED IN COURSE OF C ARRYING ON BUSINESS AND IT HAS ARISEN IN REVENUE FIELD. THE APPELLANT'S C ASE ON THE OTHER HAND IS STRIKINGLY DIFFERENT IN ITS FACTUAL FOUNDATION IN THE SEN SE THAT THE APPELLANT COMPANY HAS ACQUIRED AN INCOME GENERATING CAPITAL APP ARATUS WHICH IS ALTOGETHER OPERATING IN CAPITAL FIELD. IT IS TO BE APPR ECIATED THAT THE DEMAG DELAVAL INDUSTRIES TURBOMACHINERY PVT. LTD. 6 PURCHASING OF A INDUSTRIAL UNIT FROM OTHER COMPANY IS ALTOGETHER A DIFFERENT COMMERCIAL DECISION IN TOTAL CONTRAST OF THE PROCESS O F AMALGAMATION BETWEEN THE TWO COMPANIES. THESE ARE TWO DIFFERENT SI TUATION OF COMMERCIAL HAPPENING WHICH ARE INCOMPARABLE IN SUBSTANCE OPERA TIONAL IN TWO DIFFERENT FIELDS. THEREFORE. I AM IN TOTAL CONSONANCE WITH THE V IEW OF THE AO THAT THE RATIO OF THE DECISION OF CIT V. BOMBAY DYEING MFG. CA NNOT BE MADE APPLICABLE IN THIS CASE. FURTHER, I ALSO FIND THAT THE DECISION OF INDIA CEMENT LTD. V. CIT, 60 ITR 52 (SC) WAS IN DIFFERENT CONTEXT WHERE THE STAMP DUTY & PROFESSIONAL CHARGE WAS ALLOWED AS A REVENUE EXPENDITURE. ' 3.4 IN THIS CONNECTION, I AM INCLINED TO REFER THE DECISION OF SUPREME COURT IN THE CASE OF BROOKE BOND INDIA LTD. V. CIT, 225 IT R 798 (SC) WHEREIN THE EXPENDITURE ON FEES PAID FOR ENHANCEMENT OF CAPITAL WA S HELD AS CAPITAL EXPENDITURE. THE RATIONALE OF DECISION BEHIND TREATIN G THE SHARE ISSUE EXPENSES AS CAPITAL EXPENDITURE WAS THAT IT WAS A PART & PARCEL OF CAPITAL APPARATUS. FOLLOWING THE LEGAL ANALOGY OF AFORESAID C ASE, IT CAN BE SAFELY INFERRED THAT STAMP DUTY INCURRED IN RESPECT OF A PURCH ASE OF GOING ON BUSINESS IS AN INALIENABLE PART OF CAPITAL COST. 3.5 THE LINE THAT DIVIDES REVENUE EXPENDITURE FROM CA PITAL EXPENDITURE IS OFTEN VERY THIN AND HAZY. NONE OF THE TESTS EVOLVED FR OM TIME TO TIME TO DETERMINE WHAT IS ATTRIBUTABLE TO CAPITAL AND WHAT TO REVE NUE IS EITHER EXHAUSTIVE OR OF UNIVERSAL APPLICATION. EACH CASE DE PENDS ON ITS OWN FACTS. TO DECIDE, THEREFORE, ON WHICH SIDE OF THE LINE THE E XPENDITURE FALLS, IT IS NECESSARY TO LOOK AT THE NATURE OF THE BUSINESS, THE NA TURE OF THE EXPENDITURE AND THE NATURE OF THE RIGHT ACQUIRED. IF IT IS INCURR ED BY THE ASSESSEE FOR THE PURPOSE OF CREATING, CURING OR COMPLETING HIS TITLE TO CAPITAL, IT MUST BE REGARDED AS CAPITAL EXPENDITURE. BUT, IF IT IS FOR THE PURPOSE OF PROTECTING HIS BUSINESS, IT WOULD BE CONSIDERED AS REVENUE EXPENDIT URE. MOREOVER, IT IS THE TRUE NATURE OF THE EXPENDITURE THAT IS RELEVANT AND NOT T HE DESCRIPTION GIVEN TO IT BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT OR OTHER DOCUMENTS - MINOO F. MEHTA V. CIT (1996) 217 ITR 578 (BOM.). IN THIS PARTI CULAR CASE OF THE APPELLANT, I FIND THAT THE STAMP DUTY IS NOTHING BUT AN EXPENDITURE INCURRED IN ORDER TO CURE OR COMPLETE THE TILE TO CAPITAL. HENCE, IT IS CAPITAL EXPENDITURE. 8. UPON CAREFUL CONSIDERATION WE FIND THAT LEARNED CIT(A) HAS ERRED IN OBSERVING THAT STAMP FEE IS IN CONNECTION WITH CONV EYANCE DEED FOR ACQUISITION OF INDUSTRIAL STEAM TURBINE. HENCE HE INFERRED THAT IT IS FOR ACQUIRING AN INDUSTRIAL UNIT. HOWEVER, AS SUBMITTED BY LEARNED C OUNSEL OF THE ASSESSEE AS EVIDENT FROM THE CONVEYANCE DEED SUBMITTED IN PAPER BOOK PAGE NO. 28-32, CONVEYANCE DEED INVOLVING DUTY OF RS. 59,17,000/- W AS FOR THE PURPOSE OF ASSIGNMENT OF RECEIVABLES. HENCE, THE CASE LAWS REF ERRED BY LEARNED CIT(A) THAT WHEN EXPENDITURE IS FOR ACQUIRING CAPITAL ASSET AND HENCE IN THE CAPITAL FIELD, DEMAG DELAVAL INDUSTRIES TURBOMACHINERY PVT. LTD. 7 AND CONSEQUENTLY CANNOT BE ALLOWED AS REVENUE EXPEN DITURE AND ARE NOT APPLICABLE HERE. HOWEVER, LEARNED CIT(A)S CONCLUSI ON THAT THE EXPENDITURE IS TO CURE AND COMPLETE THE TITLE TO CAPITAL IS WITHOU T APPRECIATING THE FACTS OF THE CASE. THIS ASSIGNMENT IS ADMITTEDLY FOR FACILITATIN G THE BUSINESS OF THE ASSESSEE BY ASSIGNING RECEIVABLES AND AS THE ASSESSEE HAS AC QUIRED THE SAID INDUSTRIAL UNIT FOR A LUMP SUM CONSIDERATION. THE EXPENDITURE IS IN CONNECTION WITH FACILITATING RECOVERY OF RECEIVABLES WHICH IS A PAR T OF CURRENT ASSET. HENCE THE EXPENDITURE IN THIS REGARD CANNOT BE SAID TO BE IN THE CAPITAL FILED OF ACQUIRING BUSINESS. IT IS IN FACT FOR FACILITATING THE BUSINE SS OF THE ASSESSEE AND IN THIS VIEW OF THE MATTER EXPENDITURE IS ALLOWABLE AS BUSI NESS EXPENDITURE. THE CASE LAWS REFERRED BY LEARNED COUNSEL OF THE ASSESSEE IN THE CASE OF BOMBAY DYEING MFG. (SUPRA) AND INDIA CEMENTS LTD. (SUPRA) ARE ACC ORDINGLY GERMANE AND SUPPORT THE CASE OF THE ASSESSEE. LEARNED CIT(A) H AS BEEN IN ERROR IN HOLDING THAT THE CASE LAWS ARE NOT APPLICABLE HERE. APROPOS GROUND NO. 3 AND 4 . 9. THE ASSESSEE HAD MADE PROVISION FOR WARRANTY OF RS. 2,76,18,000/- WHICH WAS CLAIMED AS EXPENDITURE. THE SAME WAS DENI ED BY THE ASSESSING OFFICER ON THE GROUND THAT IT IS AN UNASCERTAINED L IABILITY AND A CONTINGENT LIABILITY. LEARNED CIT(A) IN PRINCIPAL UPHELD THE A CTION OF THE ASSESSING OFFICER BUT DIRECTED THAT ONLY THE PROVISION MADE DURING TH E YEAR SHOULD BE DISALLOWED. 10. AGAINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE US. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT ISSUE IS SQUARELY COVER ED BY THE DECISION OF HONOURABLE SUPREME COURT IN THE CASE OF ROTORK CONT ROLS INDIA P. LTD. VS. CIT (314 ITR 62)(SC). HE SUBMITTED THAT SUBSEQUENTLY T HE ASSESSING OFFICER AND LEARNED CIT APPEALS HAVE FOLLOWED THIS DECISION OF SUPREME COURT AND ALLOWED ASSESSEE'S CLAIM IN SUBSEQUENT YEARS. DEMAG DELAVAL INDUSTRIES TURBOMACHINERY PVT. LTD. 8 11. UPON HEARING BOTH THE COUNSEL AND PERUSING THE RECORD, WE FIND THAT HON'BLE SUPREME COURT IN THE CASE OF ROTORK CONTROL S INDIA P. LTD. (SUPRA) HAS BEEN EXPOUNDED THE FOLLOWING :- (1) A PROVISION IS A LIABILITY WHICH CAN BE MEASUR ED ONLY BY USING A SUBSTANTIAL DEGREE OF ESTIMATION. A PROVISION IS REC OGNIZED WHEN: (A) AN ENTERPRISE HAS A PRESENT OBLIGATION AS A RESULT OF A PAST EVENT; (B) IT IS PROBABLE THAT AN OUTFLOW OF RESOURCES WILL BE REQUIR ED TO SETTLE THE OBLIGATION; AND (C) A RELIABLE ESTIMATE CAN BE MADE OF THE AMOUNT OF THE OBLIGATION. IF THESE CONDITIONS ARE NOT MET, NO PROVISION CAN BE RECO GNIZED; (2) A LIABILITY IS DEFINED AS A PRESENT OBLIGATION ARISING FROM PAST EVENTS, THE SETTLEMENT OF WHICH IS EXPECTED TO RESULT IN AN OUTFLO W FROM THE ENTERPRISE OF RESOURCES EMBODYING ECONOMIC BENEFITS; (3) A PAST EVENT THAT LEADS TO A PRESENT OBLIGATION IS CA LLED AS AN OBLIGATING EVENT. THE OBLIGATING EVENT IS AN EVENT THAT CREATES AN OBLIGATION WHICH RESULTS IN AN OUTFLOW OF RESOURCES. IT IS ONLY THOSE OBLIGATIONS ARISING FROM PAST EVENTS EXISTING INDEPENDENTLY OF THE FUTURE CONDU CT OF THE BUSINESS OF THE ENTERPRISE THAT IS RECOGNIZED AS PROVISION. FOR A LIABILITY TO QUALIFY FOR RECOGNITION THERE MUST BE NOT ONLY PRESENT OBLIGATION BUT ALSO THE PROBABILITY OF AN OUTFLOW OF RESOURCES TO SETTLE THAT OBLIGATION. WHERE THERE ARE A NUMBER OF OBLIGATIONS (E.G. PRODUCT WARRANTIES OR SIMILAR C ONTRACTS) THE PROBABILITY THAT AN OUTFLOW WILL BE REQUIRED IN SETTLEMENT, IS DETE RMINED BY CONSIDERING THE SAID OBLIGATIONS AS A WHOLE; (4) IN THE CASE OF A MANUFACTURE AND SALE OF ONE SI NGLE ITEM THE PROVISION FOR WARRANTY COULD CONSTITUTE A CONTINGENT LIABILITY NOT ENTITLED TO DEDUCTION U/S 37 OF THE SAID ACT. HOWEVER, WHEN THERE IS MANUFACTU RE AND SALE OF AN ARMY OF ITEMS RUNNING INTO THOUSANDS OF UNITS OF SOPHISTICA TED GOODS, THE PAST EVENT OF DEFECTS BEING DETECTED IN SOME OF SUCH ITEMS LEADS TO A PRESENT OBLIGATION WHICH RESULTS IN AN ENTERPRISE HAVING NO ALTERNATIVE TO SETTLING THAT OBLIGATION. 12. EXAMINING THE PRESENT CASE ON THE TOUCHSTONE OF ABOVE DECISION WE FIND THAT THE AUTHORITIES BELOW HAVE ERRED IN CONSIDERIN G THE PROVISIONS OF WARRANTY AS CONTINGENT LIABILITY. AS ALREADY SUBMITTED BY LE ARNED COUNSEL OF THE ASSESSEE IN ASSESSEES OWN CASE, SUBSEQUENTLY REVEN UE AUTHORITIES HAVE ALLOWED THE EXPENDITURE ON THE BASIS OF SAME HON'BL E SUPREME COURT DECISION. HENCE, WE SET ASIDE THE ORDER OF THE AUTHORITY BELO W AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. APROPOS GROUND NO. 5 AND 6 & ADDITIONAL GROUND DEMAG DELAVAL INDUSTRIES TURBOMACHINERY PVT. LTD. 9 13. THE ASSESSEE HAS CLAIMED DEPRECIATION IN RESPEC T OF CUSTOMER CONTRACTS. THE ASSESSEE HAD CLAIMED THAT THE CUSTOMER CONTRACT S ARE VALUABLE RIGHT AND THEREFORE CAPITAL ASSET. IN THIS REGARD ASSESSEE RE FERRED TO THE PROVISIONS OF SECTION 2(11) & 32(1)(II) OF THE ACT. THIS WAS DENI ED BY THE AUTHORITIES BELOW IT WAS HELD THAT THE ASSESSEE CANNOT BE ALLOWED DEPREC IATION AS INTANGIBLE ASSET UNDER SECTION 32(1)(II) ON THIS, AS THIS DOES NOT F ALL UNDER THE DEFINITION OF INTANGIBLE ASSET AS CONTAINED IN SECTION 2(11). WE MAY REFER TO THE ORDER OF LEARNED CIT(A) AS UNDER :- 5.7 I HAVE CONSIDERED THE ENTIRE GAMUT OF ARGUMENT S TAKEN BY THE APPELLANT. I FIND THAT SEC.2(11) DEFINES 'BLOCK OF AS SET' WHICH IS ELIGIBLE FOR DEPRECIATION. SEC.2(11)(B) DEFINES 'INTANGIBLE ASSET , BEING KNOW-HOW, PATENT, COPYRIGHT, TRADEMARK, LICENCE, FRANCHISEE OR ANY OTH ER BUSINESS OR COMMERCIAL RIGHT OF SIMILAR NATURE. FURTHER, I ALSO FIND THAT DEPRECIATION HAS BEEN PROVIDED ON SUCH 'INTANGIBLE RIGHT' U/S. 32(1) (II). FIRST OF ALL, IT IS TO BE LOOKED INTO AS TO WHETHER THE 'CUSTOMER CONTRACT 1 IS REALLY REPRESENTING ANY 'INTANGIBLE RIGHT' OR NOT WHICH IS COMING UNDER THE P URVIEW OF SEC.2(11). I FIND THAT 'CUSTOMER CONTRACT' CANNOT BE BROUGHT WITHIN THE PURVIE W OF KNOW-HOW, PATENT, COPYRIGHT, TRADEMARK, LICENCE, FRANCHISEE BY ANY STRETCH OF IMAGINATION. IF WE TRY TO UNDERSTAND THE NATURE OF 'CUSTO MER CONTRACT' WHICH THE APPELLANT GOT IT FROM M/S. ALSTOM ALONGWITH THE PURCH ASE OF INDUSTRIAL UNIT, I FIND THAT THE MOST, IT CAN BE CATEGORISED AS A C OMMERCIAL ADVANTAGE ACCRUED IN THE HAND OF THE APPELLANT BY VIRTUE OF PUR CHASE OF BUSINESS OF GOING CONCERN KNOWN AS '1ST BUSINESS'. THE CUSTOMER CONTRACT OF '1ST BUSINESS' HAS BEEN RECEIVED AS A PART & PARCEL OF BU SINESS PURCHASED FROM M/S. ALSTOM PROJECT (INDIA) LTD. THE APPELLANT HAS NOT PAID ANYTHING SEPARATELY FOR ACQUIRING SUCH CUSTOMER CONTRACT. THE A GREEMENT BETWEEN THE M/S. ALSTOM PROJECT INDIA LTD. AND THE APPELLANT DTD. 19.01.2004 DOES NOT SPECIFICALLY MENTION ABOUT THE SALE OF SUCH CUSTOMER C ONTRACT FOR ANY SPECIFIC PRICE. IT WAS A SLUMP PURCHASE OF BUSINESS IN ESSENC E. THEREFORE, NO SEPARATE PRICE HAS BEEN PAID BY THE APPELLANT FOR ACQUIRING AN Y SPECIFIC ASSET. SUCH COMMERCIAL ADVANTAGE IN FORM OF 'CUSTOMER CONTRACT' CA NNOT BE SAID TO BE A COMMERCIAL RIGHT OR BUSINESS RIGHT WHICH IS A DEPRECI ABLE INTANGIBLE RIGHT QUALIFYING FOR DEDUCTION U/S.32(1)(II). THE APPELLA NT HAS TRIED TO TAKE ADVANTAGE OF SUCH SECTION TO CLAIM DEPRECIATION ON A AR TIFICIAL VALUE ASSIGNED BY HIM BASED ON SOME VALUATION REPORT. FROM THE CLOSE READING OF SEC. 2(11) & SEC.32(1)(II), I FIND THAT DEPRECIATION HAS BEEN CO NTEMPLATED TO PROVIDE ON SUCH INTANGIBLE ASSET WHICH HAS INHERENT PROPERTY TO GE T DEPRECIATED WITH THE PASSAGE OF TIME. THE CUSTOMER CONTRACT IS NOT SUCH DEPR ECIABLE INTANGIBLE ASSET BY ANY STRETCH OF LOGIC. IN FACT, THE CUSTOMER CON TRACT IS SUCH COMMERCIAL ADVANTAGE CONFERRED BY A BUSINESS ENTITY WHICH VALUE DEPENDS UPON THE DEGREE OF COMMERCIAL ACTIVITY CARRIED ON B Y THE PARTICULAR BUSINESS ORGANISATION. GENERALLY, THE CUSTOMER CONTRACT HAS A I NHERENT TENDENCY TO GO UP IF THE BUSINESS ACTIVITY OF THE ENTITY IS INTENSIFI ED IN ITS VOLUME AND SCOPE OF BUSINESS. THEREFORE, IT CAN BE CONCLUDED THAT IT IS NOT A DEPRECIABLE ASSET. DEMAG DELAVAL INDUSTRIES TURBOMACHINERY PVT. LTD. 10 5.8 FURTHER, IT MAY ALSO BE POINTED OUT THAT THE CONNOTAT ION 'ANY OTHER BUSINESS OR COMMERCIAL RIGHT OF SIMILAR NATURE' HAS TO DERIVE MEANING FROM WORDS KNOW-HOW, PATENT, COPYRIGHT, TRADEMARK, LICENCE , FRANCHISEE. HERE THE PRINCIPLE OF EJUSDEM GENERIS APPLIES. THE MAXIM EJUSDEM GENERIS SERVES TO RESTRICT THE MEANING OF A GENERAL WORD TO THINGS OR MA TTERS OF THE SAME GENUS AS THE PRECEEDING PARTICULAR WORDS (CIT V. STATESMAN LTD. (1992) 198 ITR 582 (CAL.). IT IS A WELL RECOGNISED RULE OF CONSTRUCT ION THAT WHEN TWO OR MORE WORDS WHICH ARE SUSCEPTIBLE OF ANALOGOUS MEANING ARE COUPLED TOGETHER NOSCITUR A SOCIIS, THEY ARE UNDERSTOOD TO BE USED IN THEIR COGNATE SENSE. T HEY TAKE THEIR COLOUR FROM EACH OTHER THAT IS, THE MORE GENE RAL IS RESTRICTED TO A SENSE ANALOGOUS TO THE LESS GENERAL. THE WORDS USED TOGETHER SHOULD BE UNDERSTOOD AS DERIVING COLOUR AND SENSE FROM EACH OTH ER. THEY SHOULD BE READ TOGETHER AS ONE. IT NORMALLY FOLLOWS THE PRINCIP LE OF ENGLISH DECISION IN GRENFELL V. IRC (1876) 1 EXD 242. SIMILAR VIEW IS TA KEN IN US LAW (CHESTS OF TEA 1824 9 WHEATON (S) 430). INDIAN LAW HAS ADOPTED I T IN A NUMBER OF CASES AS IN MOTIPUR ZAMINDARY CO. (P) LTD. V. STATE OF BI HAR (1962) 13 STC 1 (SC) AND IN THE SALES TAX LAW AS FILTERCO V. CST (1986) 61 STC 318.) IF WE APPLY THE PRINCIPLE OF EJUSDEM GENERIS IN THE CONTEXT OF INTERPRETATION OF SEC.2(II), I FIND THAT THE MEANING COMMERCIAL RIGHT IS TO BE UNDERSTO OD IN RESTRICTED SENSE SO AS TO SIGNIFY THE SAME AS SYNONYMOUS WITH, KN OW-HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENCES, FRANCHISES. IT IS A LREADY SAID THAT NO WAY THE 'CUSTOMER CONTRACT' CAN BE NEARER TO THE MEANING ABO VE WORDS. HENCE 'CUSTOMER CONTRACT' DOES NOT COME UNDER PURVIEW OF SE C.2(II). 5.9 IN VIEW OF THE ABOVE ARGUMENT, I AM CONVINCED T HAT SUCH CUSTOMER CONTRACT COULD NOT BE QUALIFIED FOR DEPRECIATION U/S.32 (1)(II). HENCE, THE FINDING OF THE AQ IS CONFIRMED, DISMISSING THE APPE AL ON THIS POINT. 14. IN THIS REGARD LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE SAME DE CISION OF SUPREME COURT IN THE CASE OF CIT VS. SMIFS SECURITIES LTD. (CIVIL AP PEAL NO. 5961 OF 2012 DT. 22.8.2012)(SC). IN THIS CONNECTION LEARNED COUNSEL OF THE ASSESSEE REFERRED TO AN ADDITIONAL GROUND. HE SUBMITTED THAT ON THE SAME BASIS AS CUSTOMER CONTRACT ASSESSEE DESERVES TO SUCCEED. 15. WE FIND THAT THE ASSESSEE HAS RAISED AN ADDITIO NAL GROUND BEFORE US. IT HAS BEEN SUBMITTED THAT THE AUTHORITIES BELOW SHOUL D HAVE GRANTED DEPRECIATION ON GOODWILL OF RS. 10,61,03,000/- UNDE R SECTION 32 OF THE INCOME TAX ACT. 16. SINCE THE ABOVE IS A LEGAL GROUND WE ADMIT THE SAME. IN THIS CONNECTION LEARNED SENIOR COUNSEL OF THE ASSESSEE SUBMITTED TH AT THIS ISSUE NOW IS DEMAG DELAVAL INDUSTRIES TURBOMACHINERY PVT. LTD. 11 SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF HONOURABLE SUPREME COURT IN THE CASE OF CIT VS. SMIFS SECURITI ES LTD. (SUPRA) 17. BRIEF FACTS AS TO BOW THIS GOODWILL AND CUSTOME R CONTRACT AROSE IS EMANATING OUT OF SCHEDULES TO THE FINANCIAL STATEME NT CONTINUED IN PAPER BOOK PAGE 81 AS UNDER :- ACQUISITION OF THE INDUSTRIAL STEAM TURBINES BUSINE SS OF ALSTOM SIEMENS AG ACQUIRED THE STEAM AND GAS TURBINE BUSINESS OF A LSTOM WORLDWIDE DURING 2003. IN INDIA, AS A PART OF THIS GLOBAL TRA NSACTION, THE COMPANY ACQUIRED THE INDUSTRIAL STEAM TURBINE ('1ST') BUSIN ESS OF ALSTOM EFFECTIVE 1 JANUARY 2004 FOR A PURCHASE CONSIDERATI ON OF RS 260,507 THOUSAND. THIS PURCHASE CONSIDERATION HAS BEEN ALLO CATED TO FIXED AND INTANGIBLE ASSETS AT FAIR VALUES BASED ON AN INDEPE NDENT VALUATION CARRIED OUT. ALL OTHER CURRENT ASSETS AND LIABILITI ES BEEN TAKEN OVER AT CARRYING VALUES AT THE DATE OF THE TRANSACTION NET OF FAIR VALUE ADJUSTMENTS AS IDENTIFIED BY MANAGEMENT. THE APPORT IONMENT OF PURCHASE CONSIDERATION TO INDIVIDUAL ASSETS AND LIA BILITIES IS AS SET OUT BELOW: RS.000 FIXED ASSETS 25,122 TECHNICAL KNOW-HOW 48,520 CUSTOMER CONTRACTS 72,080 DEFERRED TAX ASSET NET 19,297 RECEIVABLES NET 184,147 INVENTORIES NET 178,462 LOANS AND ADVANCES 146,401 CASH 150 674,179 LESS : CURRENT LIABILITIES AND PROVISIONS (519,775) NET ASSETS TAKEN OVER 154,404 PURCHASE CONSIDERATION 260,507 GOODWILL, BEING EXCESS OF PURCHASE CONSIDERATION OVER ASSETS TAKEN OVER 106,103 18. IN THIS REGARD WE MAY GAINFULLY REFER TO THE PR OVISIONS OF SECTION 32(1)(II) EXPLANATION (3), WHICH DEFINES THE ASSETS ELIGIBLE FOR DEPRECIATION AS UNDER :- EXPLANATION 3.FOR THE PURPOSES OF THIS SUB-SECTION, TH E EXPRESSION 'ASSETS' SHALL MEAN (A) TANGIBLE ASSETS, BEING BUILDINGS, MACHINERY, PL ANT OR FURNITURE; (B) INTANGIBLE ASSETS, BEING KNOW-HOW, PATENTS, COPYR IGHTS, TRADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMER CIAL RIGHTS OF SIMILAR NATURE. DEMAG DELAVAL INDUSTRIES TURBOMACHINERY PVT. LTD. 12 19. IN THIS REGARD WE FIND THAT HON'BLE SUPREME COURT IN TECHNO SHARES AND STOCKS LIMITED, BSE MEMBERSHIP CARD CAN BE CONSIDER ED AS INTANGIBLE ASSET FOR THE PURPOSE OF DEPRECIATION U/S. 32(1)(II) (37 ITR 323). FROM THIS THE RATIO EMERGES THAT THAT DEPRECIATION IS ALLOWABLE NOT ONL Y ON THE SPECIFIED CATEGORY OF INTANGIBLES BUT ALSO FOR OTHER CATEGORIES OF INT ANGIBLE ASSETS WHICH FALL WITHIN THE PURVIEW OF THE EXPRESSION 'BUSINESS OR COMMERCI AL RIGHTS OF SIMILAR NATURE. ANOTHER JUDGMENT DELIVERED BY THE HON'BLE SUPREME C OURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SMIFS SECURITIES LTD ., ALLOWS DEPRECIATION ON GOODWILL BEING AN INTANGIBLE ASSET. IN THIS CASE IN CIVIL APPEAL NO. 5961 OF 2012 DATED AUGUST 22, 2012, THE HON'BLE SUPREME COU RT HAS HELD THAT GOODWILL IS AN INTANGIBLE ASSET ELIGIBLE FOR DEPR ECIATION UNDER THE PROVISIONS OF SECTION 32 OF THE I.T. ACT, 1961. IN THIS CASE 'GOO DWILL' HAD ARISEN AS A RESULT OF AMALGAMATION OF TWO COMPANIES. THE DIFFERENCE BETWE EN THE CONSIDERATION FOR AMALGAMATION AND THE NET BOOK VALUE OF ASSETS OF TH E AMALGAMATING COMPANY WAS REGARDED AS 'GOODWILL' AND DEPRECIATION WAS CLA IMED THEREON. IT WAS ARGUED BY THE ASSESSEE THAT THE EXTRA CONSIDERATION WAS PA ID TOWARDS THE REPUTATION WHICH THE AMALGAMATING COMPANY WAS ENJOYING IN ORDE R TO RETAIN ITS EXISTING CLIENTELE. THE SUPREME COURT HAS REAFFIRMED ITS EAR LIER POSITION TAKEN IN TECHNO SHARES (SUPRA). IT WAS HELD THAT THE PRINCIP LE OF EJUSDEM GENERIS WOULD STRICTLY APPLY WHILE INTERPRETING THE EXPRESSION 'B USINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE'. CONSEQUENTLY, 'GOODWILL' IS AN ASSET UNDER EXPLANATION 3(B) TO SECTION 32(1) OF THE ACT AND IS ACCORDINGLY ELIG IBLE FOR DEPRECIATION. 20. HERE WE NOTE THAT THE ABOVE DECISIONS ARE APPLI CABLE FOR DEPRECIATION ON GOODWILL AND SIMILAR INTANGIBLE ASSETS WHICH HAVE B EEN PURCHASED. THE CUSTOMER CONTRACT IS REFLECTED IN PAGE NO. 81 OF TH E PAPER BOOK EXTRACTED ABOVE IS A FAIR VALUE DONE BY VALUER. WE NOTE THAT IT IS THE CLAIM OF LEARNED COUNSEL THAT GOODWILL ARISING OUT OF SLUMP SALE AGREEMENT A ND CUSTOMER CONTRACT WHICH ARE AKIN TO THE GOODWILL BEING AN INTANGIBLE ASSET ARE ALSO ELIGIBLE FOR DEPRECIATION. ALTHOUGH WE FIND THAT THERE IS NO DIS PUTE NOW THAT GOODWILL IS ELIGIBLE FOR DEPRECIATION. IT WILL BE PERTINENT TO REMEMBER HERE THAT GOODWILL HAS DEMAG DELAVAL INDUSTRIES TURBOMACHINERY PVT. LTD. 13 ARISEN PURSUANT TO SLUMP SALE AGREEMENT WHEREIN THE ASSESSEE HAS ACQUIRED ASSETS, ON A PURCHASE CONSIDERATION OF RS. 7,60,5,0 7,000/-. IN THE CASE OF AREVA T&D INDIA LTD. VS. CIT IN ITA NO. 315/2010 AN D OTHERS, HON'BLE HIGH COURT HAS HELD THAT EXCESS AMOUNT PAID OVER AND ABO VE TANGIBLE ASSET FOR ACQUISITION OF VARIOUS BUSINESS AND COMMERCIAL RIGH TS AND SLUMP SALE CAN BE CATEGORISED UNDER THE GOODWILL AND DIFFERENCE BETWE EN PURCHASE CONSIDERATION AND VALUE OF TANGIBLE ASSET TAKEN OVER BEING THE BA LANCING FIGURE WAS HELD TO BE GOODWILL AND DEPRECIATION THEREON WAS HELD TO BE ALLOWABLE ON THE TOUCHSTONE OF DECISION OF HON'BLE SUPREME COURT IN THE CASE OF TECHNO SHARES AND STOCKS LTD. (SUPRA) AND CIT VS. SIMFS SECURITIE S LTD. (SUPRA). THIS DECISION OF HON'BLE DELHI HIGH COURT HAS SUBSEQUENTLY BEEN C ONFIRMED BY HON'BLE SUPREME COURT. THE DETAILS OF VALUE OF TANGIBLE ASS ETS TAKEN OVER BY THE ASSESSEE BY THE SLUMP SALE AGREEMENT ARE NECESSARY TO BE CONSIDERED FOR ADJUDICATION OF THIS ISSUE. HENCE, IN OUR CONSIDERE D OPINION THE ISSUE OF DEPRECIATION OF GOODWILL AND CUSTOMER CONTRACTS BEI NG AN INTANGIBLE ASSET CLAIMED IN THIS CASE BY THE ASSESSEE NEEDS TO BE EX AMINED BY THE ASSESSING OFFICER ON THE TOUCHSTONE OF THE AFORESAID DECISION . ACCORDINGLY THE ISSUE OF DEPRECIATION OF CUSTOMER CONTRACTS AND GOODWILL IS REMITTED TO THE FILE OF THE AO. NEEDLESS TO ADD THE ASSESSEE SHOULD BE GRANTED AN OPPORTUNITY OF BEING HEARD. A.Y. 2005-06 21. SOLITARY ISSUE RAISED IN THIS APPEAL IS TO DEPR ECIATION ON CUSTOMER CONTRACTS. WE HAVE ALREADY REMITTED THIS ISSUE IN A SSESSEES APPEAL FOR A.Y. 2004-05. THE ISSUE HERE BEING CONSEQUENTIAL, ALSO S TANDS REMITTED. 22. IN THE RESULT, THESE APPEALS ARE PARTLY ALLOWED . ORDER PRONOUNCED ON 16.9.2020 UNDER RULE 34(4) OF I TAT RULES. SD/- SD/- (RAMLAL NEGI) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DEMAG DELAVAL INDUSTRIES TURBOMACHINERY PVT. LTD. 14 MUMBAI; DATED : 16/09/2020 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI