Johnson diversey India (P) Ltd, V. DCIT Circle 4 (1),

ITA 3050/DEL/2007

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3484 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 26-11-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 21-06-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 32

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUM BAI BEFORE S/SHRI B.R.MITTAL (JM) AND SANJAY ARORA (AM) . . , , ./I.T.A. NO.3050/DEL/2007 ( / ASSESSMENT YEAR: 2003-04) DIVERSEY INDIA PRIVATE LIMITED, (EARLIER KNOWN AS JOHNSON DIVERSEY INDIA PVT LTD), 501, 5 TH FLOOR, ACKRUTI CENTRE POINT, MIDC CENTRAL ROAD, ANDHERI(E), MUMBAI0400093 / VS. DCIT, CIRCLE 4(1), NEW DELHI. ./ ./PAN/GIR NO. : ( ' / APPELLANT) .. ( ( ' / RESPONDENT) ' / APPELLANT BY : MS AARTI SATHE ( ' * /RESPONDENT BY : SHRI PRAVEEN KUMAR * , /DATE OF HEARING : 6.6.2013 * , /DATE OF PRONOUNCEMENT: 12.6.2013 / O R D E R PER B.R.MITTAL, JM: THE ASSESEE HAS FILED THIS APPEAL FOR ASSESSMENT Y EAR 2003-04 AGAINST ORDER DATED 9.2.2007 OF LD CIT(A). 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS AS TO WHETHER ASSESSEE IS ENTITLED FOR DEPRECIATION ON THE SUM OF RS.29,51,45,822/- PAID F OR ACQUIRING DIVERSEY LEVER, THE INSTITUTIONAL INDUSTRIAL CLEANING BUSINESS OF HINDU STAN LEVER LIMITED TOWARDS GOODWILL ACCOUNT. 2 3. WE HAVE CONSIDERED SUBMISSIONS OF LD REPRESENTAT IVES OF PARTIES AND ORDERS OF AUTHORITIES BELOW. 4. WE OBSERVE THAT ASSESSEE COMPANY ACQUIRED DIVE RSEY LEVER, THE INSTITUTIONAL INDUSTRIAL CLEANING BUSINESS OF HINDUSTAN LEVER LIMITED AS A G OING CONCERN UNDER A BUSINESS TRANSFER AGREEMENT FOR A CONSIDERATION OF RS.5603.97 LAKHS WHICH INCLUDED AN AMOUNT OF RS.29,51,45,822/- PAID ON ACCOUNT OF GOODWILL. ASS ESSEE CLAIMED DEPRECIATION @ 25% AMOUNTING TO RS.7,37,86,455/- ON THE GOODWILL AMOU NT FOR THE PURPOSE OF COMPUTATION OF TAXABLE INCOME. THE ASSESSING OFFICER DISALLOWED S AID CLAIM OF DEPRECIATION ON THE GROUND THAT THE PAYMENT OF GOODWILL AMOUNT IS NOT COVERED UNDER THE DEFINITION OF INTANGIBLE ASSETS AS PER THE ACT. IN FIRST APPEAL, LD CIT(A) CONFIRMED THE ACTION OF AO ON THE GROUND THAT ALTHOUGH THE GOODWILL IS AN INTANGIBLE ASSET BUT SAME IS NOT A DEPRECIABLE ASSET WHICH COULD BE CATEGORIES INTO BUSINESS OF COMMERCIAL RIGHT. LD CIT(A) HAS S TATED THAT THE INTENTION OF THE AMENDMENT OF SECTION 32 BY THE FINANCE ACT, 1992 HAS DELIBERATEL Y OMITTED THE OLDEST AND FOREMOST INTANGIBLE ASSET BEING GOODWILL FROM THE LIST OF DEPRECIABLE I NTANGIBLE ASSETS. 5. DURING THE COURSE OF HEARING, LD A.R. SUBMITTED THAT IN THE ASSESSMENT YEAR 2008-09, AO IN THE ASSESSMENT ORDER PASSED ON 25.10.2012, AL LOWED THE DEPRECIATION OF GOODWILL AS PER THE DIRECTION OF DRP AS THE ISSUE IS SQUARELY COVER ED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SMIF SECURITIES LTD, 3 48 ITR 302(SC). LD A.R. ALSO FILED A COPY OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2008-0 9 TO SUBSTANTIATE HER SUBMISSION AS WELL AS COPY OF THE ORDER OF HONBLE SUPREME COURT IN TH E CASE OF SMIF SECURITIES LTD (SUPRA) AND SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAV OUR OF ASSESSEE BY THE DECISION OF HONBLE SUPREME COURT (SUPRA) AND ASSESSEE IS ENTITLED FOR DEPRECIATION ON GOODWILL AMOUNT. LD D.R. DID NOT DISPUTE ABOVE FACT SAVE AND EXCEPT RELYING ON ORDERS OF AUTHORITIES BELOW. 6. CONSIDERING THE FACT THAT IN THE ASSESSMENT YEAR 2008-09, THE AO ALLOWED THE DEPRECIATION OF GOODWILL AMOUNT AS PER THE DIRECTIO N OF DRP AND ALSO THE FACT THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE DECIS ION OF HONBLE SUPREME COURT IN THE CASE OF SMIF SECURITIES LTD (SUPRA), WHEREIN, IT HAS BEEN H ELD THAT GOODWILL IS AN ASSET ELIGIBLE FOR DEPRECIATION, WE ALLOW THE GROUND OF APPEAL TAKEN B Y ASSESSEE BY DELETING THE ADDITION MADE BY THE AUTHORITIES BELOW. 3 7. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOW ED. / / * * ORDER PRONOUNCED IN THE OPEN COURT ON 12TH JUNE, 2013 * 5 6 12TH JUNE, 2013 * SD/- SD/- ( /SANJAY ARORA) ( . . /B.R.MITTAL) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 6 DATED 12/ 06/2013 . . ./ PARIDA , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. ( ' / THE RESPONDENT. 3. 8 ( ) / THE CIT(A)- 4. 8 / CIT 5. 9 (; , , ; , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, # //TRUE COPY// (ASSTT. REGISTRAR) , /ITAT, MUMBAI