THERMO FISHER SCIENTIFIC INDIA PVT LTD. , Mumbai V. DCIT-15(3)(1), MUMBAI

ITA 769/MUM/2023

AI Insights

The case involves Thermo Fisher Scientific India Pvt. Ltd., which appealed against the orders of the Deputy Commissioner of Income-tax and the Dispute Resolution Panel, which had disallowed the company's claim for depreciation on goodwill amounting to Rs. 21,28,26,691. This goodwill arose from the acquisition of business units through slump sales from GlaxoSmithKline Pharmaceuticals Limited and Chemito Technologies Private Limited. The primary legal contention was whether the goodwill recognized from these transactions was eligible for depreciation under the Income Tax Act, 1961, particularly in light of the provisions concerning slump sales and amalgamations. The Tribunal examined the nature of the transactions, the applicable legal provisions, and previous judicial decisions to arrive at its decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123435 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: E
• Next Hearing Date: 25-07-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 12-03-2023
• Other Referred Cases: Smifs Securities Ltd. [2012] 348 IT 302 (SC), United Breweries Ltd. [2016] 76 taxmann.com 103 (Bangalore - Trib.), Triune Energy Services (P.) Ltd. v. DCIT [2016] 65 taxmann.com 288 (Delhi), Triune Energy Services (P.) Ltd. v. DCIT [2018] 96 taxmann.com 580 (Delhi - Trib.), M/s. Pitney Bowes India v. DCIT (ITA Nos. 289 to 293/Del/2013), Grindwell Norton Ltd. v. ACIT (ITA Nos.528/Mum/2012 and 5800/Mum/2013), I & B Seeds (P.) Ltd. v. DCIT [2022] 142 taxmann.com 274 (Bangalore - Trib.)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Transfer pricing; Opportunity of being heard; International transaction; Cost of acquisition; Valuation report; Scheme of amalgamation; Revenue expenditure; Capital expenditure; Set aside; Capital Gains
• Section: 32; 271(1)(c); 143(3); 244A; 274; 191; 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 769/MUM/2023 Assessment Year: 2009-10 Thermo Fisher Scientific India Pvt. Ltd., 403-404, ‘B’ Wing, Delphi, Hiranandani Business Park, Mumbai-400076. Vs. Dy. CIT-15(3)(1), Room No. 360, Aayakar Bhavan, New Marine Lines, Mumbai-400020. PAN NO. AABCT 3207 A Appellant Respondent Assessee by : Mr. Niraj Sheth Revenue by : Mr. Mudit Nagpal, CIT-DR Date of Hearing : 26/07/2023 Date of pronouncement : 31/07/2023 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 13.12.2022 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2009-10, raising following grounds: 1. Ground 1 - General On the facts and in the circumstances of the case and in law, the directions of the Hon'ble Dispute Resolution Panel - 2 ('Hon'ble DRP and the final assessment order passed by the learned Deputy Commissioner of Income (learned DCIT°) It is prayed that the directions of DRP and the final assessment order passed by the learned DCIT be set aside. 2. Ground 2 2.1 On the facts and in the circumstances of the case and in law, the learned DCIT and the Hon'ble DR have erred in disallowing the Appellant's claim for depreciation of Rs. 21,28,26,691 on goodwill arising on acquisition of business from GlaxoSmithkline Pharmaceuticals Limited ('GSK) and Chemito Technologies Private It is prayed that the learned DCIT be directed to allow depreciation of Rs. 21,28,26,691 on goodwill acquired by the Appellant as part of the business acquisition from GSK and CTPL. 2.2 On the facts and circumstances of the case and in learned DCIT and Hon'ble DR erred in relying on Explanation 7 to section 43(1) of the Income that the value of goodwill in the books of the Appellant should be nil without appreciating that the said Explanation 7 applicable only in case of transfer of capital asset under a scheme of amalgamation, whereas in the instant case, there is no amalgamation, but the Appellant had acquired goodwill on slump sale as part of business acquisition from GSK and CTPL. It is prayed that learned DCIT be directed to hold that the above referred provision has no applicability to the Appellant's case. On the facts and circumstances of the case and in law, the learned DCIT and Hon'ble DR erred in relying on the erstwhile fifth proviso to section 32(1) (ii) [now sixth proviso to section 32(1) (ii)I read with Explanation 1 to section 43(6) of the IT Act of the Act and holding that the cost of goodwill in the hands of Appellant should be nil, without appreciating that the said proviso applies to depreciation to be allowed in case of transfer of depreciable assets in case of amalgamation/ demerger/ succession of business under section 170 of the IT Act, whereas, in the instant case, there is no amalgamation/ Thermo Fisher Scientific India Pvt. Ltd. learned Deputy Commissioner of Income-tax - 15(3)(1), Mumbai (learned DCIT°) are bad in law and merit to be set aside. It is prayed that the directions of DRP and the final assessment order passed by the learned DCIT be set aside. 2. Ground 2 - Depreciation on goodwill On the facts and in the circumstances of the case and in aw, the learned DCIT and the Hon'ble DR have erred in disallowing the Appellant's claim for depreciation of Rs. 21,28,26,691 on goodwill arising on acquisition of business from GlaxoSmithkline Pharmaceuticals Limited ('GSK) and Chemito Technologies Private Limited ('CTPL'). It is prayed that the learned DCIT be directed to allow depreciation of Rs. 21,28,26,691 on goodwill acquired by the Appellant as part of the business acquisition from GSK and On the facts and circumstances of the case and in learned DCIT and Hon'ble DR erred in relying on Explanation 7 to section 43(1) of the Income-tax Act, 1961 (IT Act) and holding that the value of goodwill in the books of the Appellant should be nil without appreciating that the said Explanation 7 applicable only in case of transfer of capital asset under a scheme of amalgamation, whereas in the instant case, there is no amalgamation, but the Appellant had acquired goodwill on slump sale as part of business acquisition from GSK and CTPL. rayed that learned DCIT be directed to hold that the above referred provision has no applicability to the Appellant's On the facts and circumstances of the case and in law, the learned DCIT and Hon'ble DR erred in relying on the erstwhile so to section 32(1) (ii) [now sixth proviso to section 32(1) (ii)I read with Explanation 1 to section 43(6) of the IT Act of the Act and holding that the cost of goodwill in the hands of Appellant should be nil, without appreciating that the said pplies to depreciation to be allowed in case of transfer of depreciable assets in case of amalgamation/ demerger/ succession of business under section 170 of the IT Act, whereas, in the instant case, there is no amalgamation/ Thermo Fisher Scientific India Pvt. Ltd. 2 ITA No. 769/Mum/2023 15(3)(1), Mumbai are bad in law and merit to be set aside. It is prayed that the directions of DRP and the final assessment On the facts and in the circumstances of the case and in aw, the learned DCIT and the Hon'ble DR have erred in disallowing the Appellant's claim for depreciation of Rs. 21,28,26,691 on goodwill arising on acquisition of business from GlaxoSmithkline Pharmaceuticals Limited ('GSK) and It is prayed that the learned DCIT be directed to allow depreciation of Rs. 21,28,26,691 on goodwill acquired by the Appellant as part of the business acquisition from GSK and On the facts and circumstances of the case and in law, the learned DCIT and Hon'ble DR erred in relying on Explanation 7 tax Act, 1961 (IT Act) and holding that the value of goodwill in the books of the Appellant should be nil without appreciating that the said Explanation 7 is applicable only in case of transfer of capital asset under a scheme of amalgamation, whereas in the instant case, there is no amalgamation, but the Appellant had acquired goodwill on slump sale as part of business acquisition from GSK and CTPL. rayed that learned DCIT be directed to hold that the above referred provision has no applicability to the Appellant's On the facts and circumstances of the case and in law, the learned DCIT and Hon'ble DR erred in relying on the erstwhile so to section 32(1) (ii) [now sixth proviso to section 32(1) (ii)I read with Explanation 1 to section 43(6) of the IT Act of the Act and holding that the cost of goodwill in the hands of Appellant should be nil, without appreciating that the said pplies to depreciation to be allowed in case of transfer of depreciable assets in case of amalgamation/ demerger/ succession of business under section 170 of the IT Act, whereas, in the instant case, there is no amalgamation/ demerger / succession of the b acquired goodwill on slump sale through payment of monetary consideration as part of business acquisition from GSK and CTPL It is prayed that learned DCIT be directed to hold that the above referred provision has no applicabi case. 2.3 On the facts and circumstances of the case and in law, the learned DCIT and Hon'ble DR erred in holding that the valuation of intangible assets, its inter se proportions and valuation report obtained by the Appellant are u without appreciating that the fair value of the assets of business, including goodwill acquired from GSK and CTPL was determined by an independent valuer in the valuation report based on the purchase price allocation after duly considering the methodology prescribed under the Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI). It is prayed that learned DCIT be directed to consider the fair value of the assets including goodwill of business acquired from GSK and independent valuer, the same being in accordance with the Accounting Standards issued by the ICAI. 2.4 On the facts and circumstances of the case and in law, the learned DCIT and Hon'ble DRP erred in not applying th the judgment of the Hon'ble Supreme Court in Smifs Securities Ltd. [2012) 348 IT 302 (SC) to the Appellant's case wherein the Hon'ble Supreme Court had held that goodwil is an intangible asset eligible for depreciation under section 32 of the IT 3. Ground No. 3 3.1 On the facts and circumstances of the case and in law, the Ld. DCIT has erred in not granting depreciation on purchase of software based on the directions of DRP for AY 2007 3.2 It is prayed that the Ld. DCIT be directed to grant depreciation amounting to Rs.1,04,938/ 4. Ground 4 80,79,043 Thermo Fisher Scientific India Pvt. Ltd. demerger / succession of the business, but the Appellant had acquired goodwill on slump sale through payment of monetary consideration as part of business acquisition from GSK and It is prayed that learned DCIT be directed to hold that the above referred provision has no applicability to the Appellant's On the facts and circumstances of the case and in law, the learned DCIT and Hon'ble DR erred in holding that the valuation of intangible assets, its inter se proportions and valuation report obtained by the Appellant are u without appreciating that the fair value of the assets of business, including goodwill acquired from GSK and CTPL was determined by an independent valuer in the valuation report based on the purchase price allocation after duly considering ethodology prescribed under the Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI). It is prayed that learned DCIT be directed to consider the fair value of the assets including goodwill of business acquired from GSK and CTPL based on the valuation report of an independent valuer, the same being in accordance with the Accounting Standards issued by the ICAI. On the facts and circumstances of the case and in law, the learned DCIT and Hon'ble DRP erred in not applying th the judgment of the Hon'ble Supreme Court in Smifs Securities 348 IT 302 (SC) to the Appellant's case wherein the Hon'ble Supreme Court had held that goodwil is an intangible asset eligible for depreciation under section 32 of the IT 3. Ground No. 3 – Depreciation on purchase of software 3.1 On the facts and circumstances of the case and in law, the Ld. DCIT has erred in not granting depreciation on purchase of software based on the directions of DRP for AY 2007 rayed that the Ld. DCIT be directed to grant depreciation amounting to Rs.1,04,938/- purchase of software. Ground 4 - Deletion of erroneous demand of Rs. Thermo Fisher Scientific India Pvt. Ltd. 3 ITA No. 769/Mum/2023 usiness, but the Appellant had acquired goodwill on slump sale through payment of monetary consideration as part of business acquisition from GSK and It is prayed that learned DCIT be directed to hold that the lity to the Appellant's On the facts and circumstances of the case and in law, the learned DCIT and Hon'ble DR erred in holding that the valuation of intangible assets, its inter se proportions and valuation report obtained by the Appellant are unrealistic without appreciating that the fair value of the assets of business, including goodwill acquired from GSK and CTPL was determined by an independent valuer in the valuation report based on the purchase price allocation after duly considering ethodology prescribed under the Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI). It is prayed that learned DCIT be directed to consider the fair value of the assets including goodwill of business acquired CTPL based on the valuation report of an independent valuer, the same being in accordance with the On the facts and circumstances of the case and in law, the learned DCIT and Hon'ble DRP erred in not applying the ratio of the judgment of the Hon'ble Supreme Court in Smifs Securities 348 IT 302 (SC) to the Appellant's case wherein the Hon'ble Supreme Court had held that goodwil is an intangible asset eligible for depreciation under section 32 of the IT Act. Depreciation on purchase of software 3.1 On the facts and circumstances of the case and in law, the Ld. DCIT has erred in not granting depreciation on purchase of software based on the directions of DRP for AY 2007-08. rayed that the Ld. DCIT be directed to grant purchase of software. Deletion of erroneous demand of Rs. 4.1 On the facts and circumstances of the case and in law, the learned DCIT (irit final determining a demand of Rs. 80,79,043 as payable by the Appellant (in its final assessment order) as a difference between refund of Rs. 4,48,30,280 issued to the Appellant and refund of Rs. 3,67,51,237 determined as payable Appellant. 4.2 The learned DCIT has failed to consider that the Appellant has received interest of Rs. 80,79,043 the IT Act on the refund of Rs. 3,67,51,237 and accordingly, has received a total refund of Rs. 4,48,30,280 (Rs. 3 plus Rs. 80,79,043) including interest under section 244A of the IT Act and the erroneous demand of Rs. 80,79,043 determined is on account of non IT Act in the computation sheet of the final assessment 4.3 It is prayed that the learned DCIT be directed to consider interest under section 244A of the IT Act in the computation sheet and delete the erroneous demand of Rs. 80,79,043. Ground 5 - Penalty proceeding 5.1 On the facts and in the circumstan law, the learned DCIT erred in initiating penalty proceedings under section 274 r.w.s. 271(1)(c) of the IT Act stating that the Appellant has furnished inaccurate particulars of income. 5.2 It is prayed that the learned DCIT be direc penalty proceedings under section 2. Briefly stated facts of the case are that Thermo Fisher Scientific India Private Limited (previously "Thermo Electron LLS India Private Limited") in the manufacturing, installation and sale (including trading) of scientific/ medical laboratories equipment. consideration, the assessee filed return of income on 30/09/2009 declaring loss of Rs. ( Thermo Fisher Scientific India Pvt. Ltd. On the facts and circumstances of the case and in law, the learned DCIT (irit final assessment order) has erred in determining a demand of Rs. 80,79,043 as payable by the Appellant (in its final assessment order) as a difference between refund of Rs. 4,48,30,280 issued to the Appellant and refund of Rs. 3,67,51,237 determined as payable The learned DCIT has failed to consider that the Appellant has received interest of Rs. 80,79,043 under Section 244A of the IT Act on the refund of Rs. 3,67,51,237 and accordingly, has received a total refund of Rs. 4,48,30,280 (Rs. 3 plus Rs. 80,79,043) including interest under section 244A of the IT Act and the erroneous demand of Rs. 80,79,043 determined is on account of non-grant of interest under section 244A of the IT Act in the computation sheet of the final assessment It is prayed that the learned DCIT be directed to consider interest under section 244A of the IT Act in the computation sheet and delete the erroneous demand of Rs. 80,79,043. Penalty proceeding On the facts and in the circumstances of the case and in law, the learned DCIT erred in initiating penalty proceedings under section 274 r.w.s. 271(1)(c) of the IT Act stating that the Appellant has furnished inaccurate particulars of income. It is prayed that the learned DCIT be directed not to initiate penalty proceedings under section 271(1)(c) of the IT Act. Briefly stated facts of the case are that the assessee i.e. M/s Thermo Fisher Scientific India Private Limited (previously "Thermo Electron LLS India Private Limited"), is an Indian company engaged in the manufacturing, installation and sale (including trading) of scientific/ medical laboratories equipment. For the year under consideration, the assessee filed return of income on 30/09/2009 (-) 17, 82, 24, 085/-. The return of income filed Thermo Fisher Scientific India Pvt. Ltd. 4 ITA No. 769/Mum/2023 On the facts and circumstances of the case and in law, the assessment order) has erred in determining a demand of Rs. 80,79,043 as payable by the Appellant (in its final assessment order) as a difference between refund of Rs. 4,48,30,280 issued to the Appellant and refund of Rs. 3,67,51,237 determined as payable to the The learned DCIT has failed to consider that the Appellant under Section 244A of the IT Act on the refund of Rs. 3,67,51,237 and accordingly, has received a total refund of Rs. 4,48,30,280 (Rs. 3,67,51,237 plus Rs. 80,79,043) including interest under section 244A of the IT Act and the erroneous demand of Rs. 80,79,043 determined grant of interest under section 244A of the IT Act in the computation sheet of the final assessment order. It is prayed that the learned DCIT be directed to consider interest under section 244A of the IT Act in the computation sheet and delete the erroneous demand of Rs. 80,79,043. ces of the case and in law, the learned DCIT erred in initiating penalty proceedings under section 274 r.w.s. 271(1)(c) of the IT Act stating that the Appellant has furnished inaccurate particulars of income. ted not to initiate 271(1)(c) of the IT Act. the assessee i.e. M/s Thermo Fisher Scientific India Private Limited (previously "Thermo n Indian company engaged in the manufacturing, installation and sale (including trading) of For the year under consideration, the assessee filed return of income on 30/09/2009 . The return of income filed by the assessee was selected for scrutiny assessment notices under the Income issued and complied with carried out by the assessee with its Associated E the Assessing Officer referred the matter of determination of length price of those international transactions to the learned transfer pricing officer (TPO). The learned TPO proposed an adjustment of ₹2,90,14, transactions. The learned Assessing Officer after taking into account adjustment to the value of the international transactions , proposed a draft order on 06/03/2013 incorporating other additions and assessin further objections raised by the assessee, the learned dispute resolution panel (DRP) issued certain direc Officer vide order dated 26/12/2013. The Assessing Officer passed the consequent final assessment order on 04/02/2014 assessing loss at Rs. (-)13,74,77,247/ appeal before the Income ITA No. 2701/Mum/2014 allowed the appeal of the assessee partly and restored the issue of taxability of goodwill to the file of the Assessing Officer. The Assessing Officer following the due procedure of law passed this impugned assessee is on appeal before the ITAT in second round. Thermo Fisher Scientific India Pvt. Ltd. by the assessee was selected for scrutiny assessment notices under the Income-tax Act, 1961( In short ‘ The Act’) were issued and complied with. In view of the international transactions assessee with its Associated Enterprises the Assessing Officer referred the matter of determination of price of those international transactions to the learned transfer pricing officer (TPO). The learned TPO proposed an ,90,14,438/- to the value of the international transactions. The learned Assessing Officer after taking into account adjustment to the value of the international transactions , proposed a draft order on 06/03/2013 incorporating other assessing the total loss to Rs.(-)13,57,75,279/ further objections raised by the assessee, the learned dispute resolution panel (DRP) issued certain directions to the Assessing ide order dated 26/12/2013. The Assessing Officer passed inal assessment order on 04/02/2014 assessing 13,74,77,247/-. Aggrieved, the assessee preferred ppeal before the Income-Tax Appellate Tribunal (ITAT /Mum/2014 allowed the appeal of the assessee partly the issue of taxability of goodwill to the file of the Assessing Officer. The Assessing Officer following the due procedure impugned final assessment order assessee is on appeal before the ITAT in second round. Thermo Fisher Scientific India Pvt. Ltd. 5 ITA No. 769/Mum/2023 by the assessee was selected for scrutiny assessment and statutory tax Act, 1961( In short ‘ The Act’) were . In view of the international transactions nterprises (AEs), the Assessing Officer referred the matter of determination of arm’s price of those international transactions to the learned transfer pricing officer (TPO). The learned TPO proposed an to the value of the international transactions. The learned Assessing Officer after taking into account adjustment to the value of the international transactions , proposed a draft order on 06/03/2013 incorporating other 13,57,75,279/-. On further objections raised by the assessee, the learned dispute tions to the Assessing ide order dated 26/12/2013. The Assessing Officer passed inal assessment order on 04/02/2014 assessing assessee preferred TAT). The ITAT in /Mum/2014 allowed the appeal of the assessee partly the issue of taxability of goodwill to the file of the Assessing Officer. The Assessing Officer following the due procedure final assessment order, against which assessee is on appeal before the ITAT in second round. 3. The ground No. 1 of the appeal, being general in nature are not required to adjudicate upon specifically and therefore same is dismissed as infructuous. Ground 2: Depreciation on Goodwill 4. The facts qua the ground No. 2 of the appeal are that assessee acquired two units and recognised goodwill in those transactions. Firstly Assessment Year ("AY") 2008 slump sale on a going concern basis the Division from Glaxo Smith Kline Pharmaceuticals Limited ("GSK" i.e. an independent third 234.20 crores vide a Business Transfer Agreement ("BTA") dated 26 July 2007 (pages 1-100 of the paper book). The consideration paid was allocated over various tangible and intangible assets based on a valuation report dated 31 December 2008 issued by M/s Bansi S. Mehta and Co., Chartered Accountants (p book) and balance amount was treated as Goodwill of business. 4.1 Secondly, during the previous year relevant to the Assessment Year ("AY") 2009 slump sale on a going concern basis the and Environmental Instrumentation Division Technologies Private Limited ("CTPL*) for a consideration of Rs.67.18 crores vide a BTA dated 27 May 2008 (pages 138 Thermo Fisher Scientific India Pvt. Ltd. und No. 1 of the appeal, being general in nature are not required to adjudicate upon specifically and therefore same is dismissed as infructuous. Ground 2: Depreciation on Goodwill - Rs. 21,28,26,691 The facts qua the ground No. 2 of the appeal are that assessee acquired two units and recognised goodwill in those Firstly, during the previous year relevant to the Assessment Year ("AY") 2008-09, the assessee acquired by way of a ale on a going concern basis the Qualigens Fine Chemicals from Glaxo Smith Kline Pharmaceuticals Limited ("GSK" an independent third-party seller) for a consideration of Rs. 234.20 crores vide a Business Transfer Agreement ("BTA") dated 26 100 of the paper book). The consideration paid was allocated over various tangible and intangible assets based on a valuation report dated 31 December 2008 issued by M/s Bansi S. Mehta and Co., Chartered Accountants (pages 101-137 of the book) and balance amount was treated as Goodwill of business. uring the previous year relevant to the Assessment Year ("AY") 2009-10, the assessee acquired by way of a slump sale on a going concern basis the Analytical Techno and Environmental Instrumentation Division Technologies Private Limited ("CTPL*) for a consideration of Rs.67.18 crores vide a BTA dated 27 May 2008 (pages 138 Thermo Fisher Scientific India Pvt. Ltd. 6 ITA No. 769/Mum/2023 und No. 1 of the appeal, being general in nature, we are not required to adjudicate upon specifically and therefore same Rs. 21,28,26,691 The facts qua the ground No. 2 of the appeal are that the assessee acquired two units and recognised goodwill in those uring the previous year relevant to the acquired by way of a Qualigens Fine Chemicals from Glaxo Smith Kline Pharmaceuticals Limited ("GSK")( party seller) for a consideration of Rs. 234.20 crores vide a Business Transfer Agreement ("BTA") dated 26 100 of the paper book). The consideration paid was allocated over various tangible and intangible assets based on a valuation report dated 31 December 2008 issued by M/s Bansi S. 137 of the paper book) and balance amount was treated as Goodwill of business. uring the previous year relevant to the current acquired by way of a Analytical Technologies from Chemito Technologies Private Limited ("CTPL*) for a consideration of Rs.67.18 crores vide a BTA dated 27 May 2008 (pages 138-287 of the paper book). The consideration paid was allocated over various tangible and intangible assets based on a valuation report dated 29 September 2009 issued by M/s Bansi S. Mehta and Co., Chartered Accountants (pages 288 amount was treated as Goodwill of business. 4.2 In both acquisitions fair values of the assets and liabilities was attributed to Goodwill. In the return of income for AY 2008 not claimed on goodwill. The assessment for AY 2008 picked up for scrutiny. During the course of the assessment proceedings for the assessment year 2009 depreciation on Goodwill in view of the decision of the Hon'ble Supreme Court in the case of ITR 302). 4.3 The details of the claim made by the Assessing Officer ("AO") during the 2009-10 are as follows: Particulars Value of Goodwill acquired from GSK in AY 2008 Less: Depreciation @ Written Down Value ('WDV) as on 1 April 2008 Add: Value of Goodwill acquired from CTPL in AY 2009 10 Total value of Goodwill eligible for depreciation for AY 2009-10 Less: Depreciation @ 25% for the AY under consideration Thermo Fisher Scientific India Pvt. Ltd. the paper book). The consideration paid was allocated over various ngible and intangible assets based on a valuation report dated 29 September 2009 issued by M/s Bansi S. Mehta and Co., Chartered ages 288-342 of the paper book) and balance amount was treated as Goodwill of business. In both acquisitions, the excess of consideration paid over the fair values of the assets and liabilities was attributed to Goodwill. In the return of income for AY 2008-09 and 2009-10, depreciation was not claimed on goodwill. The assessment for AY 2008 for scrutiny. During the course of the assessment proceedings for the assessment year 2009-10, the assessee depreciation on Goodwill in view of the decision of the Hon'ble Supreme Court in the case of CIT v. Smifs Securities Ltd. (348 The details of the claim made by the assessee sing Officer ("AO") during the assessment proceedings for AY 10 are as follows: Value of Goodwill acquired from GSK in AY 2008-09 Less: Depreciation @ 25% for AY 2008-00 Written Down Value ('WDV) as on 1 April 2008 Add: Value of Goodwill acquired from CTPL in AY 2009- Total value of Goodwill eligible for depreciation for AY Less: Depreciation @ 25% for the AY under Thermo Fisher Scientific India Pvt. Ltd. 7 ITA No. 769/Mum/2023 the paper book). The consideration paid was allocated over various ngible and intangible assets based on a valuation report dated 29 September 2009 issued by M/s Bansi S. Mehta and Co., Chartered 342 of the paper book) and balance , the excess of consideration paid over the fair values of the assets and liabilities was attributed to Goodwill. In 10, depreciation was not claimed on goodwill. The assessment for AY 2008-09 was not for scrutiny. During the course of the assessment assessee claimed depreciation on Goodwill in view of the decision of the Hon'ble CIT v. Smifs Securities Ltd. (348 assessee before the assessment proceedings for AY Amount (Rs.) 74.94.11.161 (18,73.52,790) 56.20,58,371 -28,92,48.395 Total value of Goodwill eligible for depreciation for AY 85,13,06,766 Less: Depreciation @ 25% for the AY under (21,28,26,691) WDV as on 31 March 2009 4.4 The AO did not accept the goodwill on the ground that the same was not made by filing revised return of income, which was upheld by the Hon'ble Dispute Resolution Panel ("DRP") vide directions dated 26 December 2013. Accordingly, the final assessment order dated 6 February 2014 was passed denying the claim. 4.5 On appeal, the ITAT vide order dated pleased to remand the matter to the AO for adjudicating the issue of depreciation on goodwill on merits. 4.6 In the second round, the AO passed a draft assessment order dated 31 March 2022 under section 143(3) read with section 254 of the Income-tax Act, 1961 ("the Act") denying the claim for depreciation on goodwill. The AO accepted in view of the decision of the Hon'ble Supreme Court in Smifs Securities' case (supra) Goodwill was a depreciable decision in Smifs Securities' case was confined to the issue as to whether Goodwill was a depreciable asset and the other issues such as valuation thereof were required to be gone into. He heavily relied upon the decision of (2016) 76 taxmann.com 103 (Bangalore distinguished the other decisions relied upon by the Thermo Fisher Scientific India Pvt. Ltd. WDV as on 31 March 2009 The AO did not accept the assessee's claim for depreciation on goodwill on the ground that the same was not made by filing revised return of income, which was upheld by the Hon'ble Dispute Resolution Panel ("DRP") vide directions dated 26 December 2013. Accordingly, the final assessment order dated 6 February 2014 was passed denying the claim. On appeal, the ITAT vide order dated 28 June 2019 was pleased to remand the matter to the AO for adjudicating the issue of depreciation on goodwill on merits. In the second round, the AO passed a draft assessment order dated 31 March 2022 under section 143(3) read with section 254 of tax Act, 1961 ("the Act") denying the claim for depreciation on goodwill. The AO accepted in view of the decision of e Hon'ble Supreme Court in Smifs Securities' case (supra) Goodwill was a depreciable asset. However, he held that the decision in Smifs Securities' case was confined to the issue as to whether Goodwill was a depreciable asset and the other issues such as valuation thereof were required to be gone into. He heavily relied upon the decision of the ITAT in the case of United Breweries Ltd. (2016) 76 taxmann.com 103 (Bangalore - Trib.) distinguished the other decisions relied upon by the Thermo Fisher Scientific India Pvt. Ltd. 8 ITA No. 769/Mum/2023 63.84,80,075 's claim for depreciation on goodwill on the ground that the same was not made by filing revised return of income, which was upheld by the Hon'ble Dispute Resolution Panel ("DRP") vide directions dated 26 December 2013. Accordingly, the final assessment order dated 6 February 2014 was 28 June 2019 was pleased to remand the matter to the AO for adjudicating the issue of In the second round, the AO passed a draft assessment order dated 31 March 2022 under section 143(3) read with section 254 of tax Act, 1961 ("the Act") denying the claim for depreciation on goodwill. The AO accepted in view of the decision of e Hon'ble Supreme Court in Smifs Securities' case (supra) that . However, he held that the decision in Smifs Securities' case was confined to the issue as to whether Goodwill was a depreciable asset and the other issues such as valuation thereof were required to be gone into. He heavily relied United Breweries Ltd. Trib.) and also distinguished the other decisions relied upon by the assessee. 4.7 In the final analysis at page 17, in para 12, the AO observed as under: "12. To sum up, the claim for depreciation on goodwill recorded in the books of the assessee arising out of slump purchase into the assessee company cannot be allowed for the foll 1. The assessee has not followed the proper system of accounting as mandated by the Accounting Standard was of the nature of 'purchase', the assessee was required to adjust the difference between the amount recorded as s and the amount of share capital of the transferor company in appropriate reserves, following the 'Pooling of Interest method. The recording of the excess consideration over the net assets as Goodwill is not a proper accounting. 2. 2. The 'actual cost of the intangible asset, Goodwill, of the amalgamating company was not properly recorded in the books of the amalgamated company. In the books of Chemito Technologies and Glaxosmithkline Pharmaceuticals Ltd., the value of Goodwill was Nil. As per the provisions of Explanation 7 to section 43(1), the value of Goodwill in the books of Thermo Fisher should also have been Nil. 3. 3. The written down value of the block of assets of intangible assets, in the books of Thermo Fisher, should have recorded against Goodwill, as per the provisions of Explanation 2 to section 43(6) of the Act. 4. Without prejudice, the depreciation allowable to the assessee on Goodwill post-purchase should have been at the same rate as allowable to seller prior to amalga 22(1)G of the Act. Accordingly, the depreciation allowable to the assessee on Goodwill should have been o (zero). 5. A homogeneous reading of the provisions of sections 2(1B). 32 and 43 of the Act make it evident that in nature of 'merger', which is case of the Appellant, the goodwill so recorded should be of the nature of 'reserves and no depreciation would be allowable on it. 6. The decision of Hon'ble Supreme Court in case of Smifs Securities and the other decisions relied upon by the assessee, which followed Smifs Securities only, is not applicable in the 7. The decision of the Hon'ble ITAT Bangalore in case of United Breweries is applicable in the Thermo Fisher Scientific India Pvt. Ltd. In the final analysis at page 17, in para 12, the AO observed "12. To sum up, the claim for depreciation on goodwill recorded in the books of the assessee arising out of slump purchase into the assessee company cannot be allowed for the following reasons: The assessee has not followed the proper system of accounting as mandated by the Accounting Standard-14. As the amalgamation was of the nature of 'purchase', the assessee was required to adjust the difference between the amount recorded as share capital issued and the amount of share capital of the transferor company in appropriate reserves, following the 'Pooling of Interest method. The recording of the excess consideration over the net assets as Goodwill is not a proper accounting. actual cost of the intangible asset, Goodwill, of the amalgamating company was not properly recorded in the books of the amalgamated company. In the books of Chemito Technologies and Glaxosmithkline Pharmaceuticals Ltd., the value of Goodwill was Nil. er the provisions of Explanation 7 to section 43(1), the value of Goodwill in the books of Thermo Fisher should also have been Nil. 3. The written down value of the block of assets of intangible assets, in the books of Thermo Fisher, should have recorded against Goodwill, as per the provisions of Explanation 2 to section Without prejudice, the depreciation allowable to the assessee purchase should have been at the same rate as allowable to seller prior to amalgamation as per the o proviso to section 22(1)G of the Act. Accordingly, the depreciation allowable to the assessee on Goodwill should have been o (zero). A homogeneous reading of the provisions of sections 2(1B). 32 and 43 of the Act make it evident that in an amalgamation of the nature of 'merger', which is case of the Appellant, the goodwill so recorded should be of the nature of 'reserves and no depreciation allowable on it. The decision of Hon'ble Supreme Court in case of Smifs e other decisions relied upon by the assessee, which followed Smifs Securities only, is not applicable in the facts of the case. The decision of the Hon'ble ITAT Bangalore in case of United Breweries is applicable in the facts or the case. Thermo Fisher Scientific India Pvt. Ltd. 9 ITA No. 769/Mum/2023 In the final analysis at page 17, in para 12, the AO observed "12. To sum up, the claim for depreciation on goodwill recorded in the books of the assessee arising out of slump purchase into the assessee- The assessee has not followed the proper system of accounting 14. As the amalgamation was of the nature of 'purchase', the assessee was required to adjust hare capital issued and the amount of share capital of the transferor company in appropriate reserves, following the 'Pooling of Interest method. The recording of the excess consideration over the net assets as Goodwill is actual cost of the intangible asset, Goodwill, of the amalgamating company was not properly recorded in the books of the amalgamated company. In the books of Chemito Technologies and Glaxosmithkline Pharmaceuticals Ltd., the value of Goodwill was Nil. er the provisions of Explanation 7 to section 43(1), the value of Goodwill in the books of Thermo Fisher should also have been Nil. 3. The written down value of the block of assets of intangible assets, in the books of Thermo Fisher, should have recorded Nil value against Goodwill, as per the provisions of Explanation 2 to section Without prejudice, the depreciation allowable to the assessee purchase should have been at the same rate as mation as per the o proviso to section 22(1)G of the Act. Accordingly, the depreciation allowable to the A homogeneous reading of the provisions of sections 2(1B). 32 an amalgamation of the nature of 'merger', which is case of the Appellant, the goodwill so recorded should be of the nature of 'reserves and no depreciation The decision of Hon'ble Supreme Court in case of Smifs e other decisions relied upon by the assessee, which facts of the case. The decision of the Hon'ble ITAT Bangalore in case of United 4.8 Based on above disallowed in the draft assessment order. assessment order, the also rejected the Appellant's claim vide directions dated December 2022. The Ld. succession and therefore the AO was justified in invoking sixth proviso to section 32 of the Act. valuation reports were unrealistic since they were primarily based on the projection of r provided by management, without sharing any transparent, discernible and acceptable methodology based on authenticated market size / market share of the businesses research / studies, other relevan final assessment order dated 31 143(3) read with 144C(13) read with section 254 of the Act denying the claim of depreciation on goodwill. 5. Before us the ld. Counsel of the assessee submitted himself has accepted the Goodwill section 32(1)(ii) of the Act by the decision of the Hon'ble Supreme Court in Smifs Securities Ltd. 348 IT 302 (SC). summarised as under: Transactions in question are in the nature of slump sale, not amalgamation Thermo Fisher Scientific India Pvt. Ltd. ove reasoning, depreciation on goodwill was disallowed in the draft assessment order. Against the draft assessment order, the assessee filed objections before DRP. DR also rejected the Appellant's claim vide directions dated The Ld. DRP held that the present was a case of succession and therefore the AO was justified in invoking sixth proviso to section 32 of the Act. The Ld. DRP also stated that valuation reports were unrealistic since they were primarily based on the projection of revenues for subsequent 5 years, which were provided by management, without sharing any transparent, discernible and acceptable methodology based on authenticated market size / market share of the businesses acquired research / studies, other relevant factors, etc. The AO passed the final assessment order dated 31st January 2023 under section 144C(13) read with section 254 of the Act denying the claim of depreciation on goodwill. Before us the ld. Counsel of the assessee submitted himself has accepted the Goodwill as a depreciable asset under section 32(1)(ii) of the Act. Even otherwise, this issue is concluded by the decision of the Hon'ble Supreme Court in Smifs Securities Ltd. 348 IT 302 (SC). The submission of assessee before us are summarised as under: Transactions in question are in the nature of slump sale, not Thermo Fisher Scientific India Pvt. Ltd. 10 ITA No. 769/Mum/2023 reasoning, depreciation on goodwill was Against the draft filed objections before DRP. DRP also rejected the Appellant's claim vide directions dated 13 th DRP held that the present was a case of succession and therefore the AO was justified in invoking sixth DRP also stated that valuation reports were unrealistic since they were primarily based evenues for subsequent 5 years, which were provided by management, without sharing any transparent, discernible and acceptable methodology based on authenticated acquired market The AO passed the January 2023 under section 144C(13) read with section 254 of the Act denying Before us the ld. Counsel of the assessee submitted that AO depreciable asset under Even otherwise, this issue is concluded by the decision of the Hon'ble Supreme Court in Smifs Securities The submission of assessee before us are Transactions in question are in the nature of slump sale, not The acquisition of the business undertakings by the Appellant from GSK and CTPL were by way of a slump sale. A review BTAs clearly show that the business undertakings were taken over as a whole for a lump sum consideration. For instance, a reference may be made to the following: a. Page 4 of the paper book (Recitals): GSK is desirous of selling and Purchaser (i.e., the Appellant) is desirous of purchasing the QFC undertaking as a going concern comprised of its assets, liabilities, rights and obligations as provided for in the agreement at or for a lump sum consideration b. Page 4 of the paper book (para 3 240 crores c. Page 5 of the paper book (para 3.2): The parties acknowledge and agree that the acquisition will constitute an outright slump sale of the entire QFC undertaking as a going concern for a lump sum consideration. d. Page 17 of the paper book (para 6.14): Take over of employees, which shows that the takeover was on a going concern basis. Also to the same effect is para 7.4, 8.2, 8.3, etc. e. Page 23 of the paper book (para 9.2): GSK to continue operation of the undertaking till its takeover by the Appellant. f. Page 30 of the paper book (para 12): GSK gave a non undertaking for a period of 3 years g. Page 45 of the paper book: Details of registered trademarks taken over by the Appellant h. Pages 46-55 of th the Appellant. i. Page 62-64 of the paper book: Details of material contracts j. Page 67-70 of the paper book: Statement of assets and liabilities and accounting policies k. Pages 73-83 of the paper book: Similar is the case of acquisition from CTPL. The following clauses of the BTA with CTPL may be noted: Thermo Fisher Scientific India Pvt. Ltd. The acquisition of the business undertakings by the Appellant from GSK and CTPL were by way of a slump sale. A review of the respective BTAs clearly show that the business undertakings were taken over as a whole for a lump sum consideration. For instance, a reference may be made to the following: a. Page 4 of the paper book (Recitals): GSK is desirous of selling and aser (i.e., the Appellant) is desirous of purchasing the QFC undertaking as a going concern comprised of its assets, liabilities, rights and obligations as provided for in the agreement at or for a lump b. Page 4 of the paper book (para 3): Lump sum consideration of Rs. Page 5 of the paper book (para 3.2): The parties acknowledge and agree that the acquisition will constitute an outright slump sale of the entire QFC undertaking as a going concern for a lump sum d. Page 17 of the paper book (para 6.14): Take over of employees, which shows that the takeover was on a going concern basis. Also to the same effect is para 7.4, 8.2, 8.3, etc. e. Page 23 of the paper book (para 9.2): GSK to continue operation of dertaking till its takeover by the Appellant. f. Page 30 of the paper book (para 12): GSK gave a non undertaking for a period of 3 years g. Page 45 of the paper book: Details of registered trademarks taken over by the Appellant 55 of the paper book: Details of fixed assets taken over by 64 of the paper book: Details of material contracts 70 of the paper book: Statement of assets and liabilities and 83 of the paper book: Details of material agreements Similar is the case of acquisition from CTPL. The following clauses of the BTA with CTPL may be noted: Thermo Fisher Scientific India Pvt. Ltd. 11 ITA No. 769/Mum/2023 The acquisition of the business undertakings by the Appellant from of the respective BTAs clearly show that the business undertakings were taken over as a whole for a lump sum consideration. For instance, a reference may a. Page 4 of the paper book (Recitals): GSK is desirous of selling and aser (i.e., the Appellant) is desirous of purchasing the QFC undertaking as a going concern comprised of its assets, liabilities, rights and obligations as provided for in the agreement at or for a lump ): Lump sum consideration of Rs. Page 5 of the paper book (para 3.2): The parties acknowledge and agree that the acquisition will constitute an outright slump sale of the entire QFC undertaking as a going concern for a lump sum d. Page 17 of the paper book (para 6.14): Take over of employees, which shows that the takeover was on a going concern basis. Also to e. Page 23 of the paper book (para 9.2): GSK to continue operation of f. Page 30 of the paper book (para 12): GSK gave a non-compete g. Page 45 of the paper book: Details of registered trademarks taken e paper book: Details of fixed assets taken over by 64 of the paper book: Details of material contracts 70 of the paper book: Statement of assets and liabilities and Details of material agreements Similar is the case of acquisition from CTPL. The following clauses of the a. Page 139 of the paper book (Recitals): Seller (CTPL) is desirous of selling and Purchaser (Appellant) is desirous of Undertaking comprised of its assets, liabilities, rights and obligations (the "Acquired Business") as provided for in this Agreement. b. Page 140 of the paper book (para 3): Lump sum consideration of Rs. 58 crores plus earnout amount, which to the seller in respect of the profits made by the undertaking over and above an agreed threshold amount between the date of contract and the date of actual acquisition. c. Page 143 of the paper book (para 3.2): The parties agree that the transaction will constitute an outright slump sale of the entire Acquired Business as an inseparable whole as a going concern for a lump sum consideration. d. Page 149-150 of the paper book (para 5.3.3): The consideration to paid by wire transfer. e. Page 181 of the paper book: Statement of assets and liabilities f. Page 186 of the paper book: Schedule of fixed assets, which shows there was no goodwill in CTPL. g. g. Page 191 of the paper book: List of assets (no goodwill) h. Pages 208-222: List of material contracts i. Page 223: List of distributors 5.1 The assessee further illustrative list of the relevant clauses of the two BTAs, which show that: (i) The undertakings were acquired by th CTPL by way of a slump sale and on a going concern basis (ii) The consideration for such acquisition was paid by wire transfer (i.e., in monetary terms) and (iii) There was no goodwill in seller's books and depreciation by the sellers on goodwill Thermo Fisher Scientific India Pvt. Ltd. a. Page 139 of the paper book (Recitals): Seller (CTPL) is desirous of selling and Purchaser (Appellant) is desirous of purchasing the Undertaking comprised of its assets, liabilities, rights and obligations (the "Acquired Business") as provided for in this Agreement. Page 140 of the paper book (para 3): Lump sum consideration of Rs. 58 crores plus earnout amount, which would be paid by the purchaser to the seller in respect of the profits made by the undertaking over and above an agreed threshold amount between the date of contract and the date of actual acquisition. c. Page 143 of the paper book (para 3.2): The parties acknowledge and agree that the transaction will constitute an outright slump sale of the entire Acquired Business as an inseparable whole as a going concern for a lump sum consideration. 150 of the paper book (para 5.3.3): The consideration to paid by wire transfer. e. Page 181 of the paper book: Statement of assets and liabilities Page 186 of the paper book: Schedule of fixed assets, which shows there was no goodwill in CTPL. g. Page 191 of the paper book: List of assets (no goodwill) 222: List of material contracts . Page 223: List of distributors further submitted that the above is only an illustrative list of the relevant clauses of the two BTAs, which show (i) The undertakings were acquired by the assesee from GSK and CTPL by way of a slump sale and on a going concern basis ) The consideration for such acquisition was paid by wire transfer (i.e., in monetary terms) and not by issuance of shares (iii) There was no goodwill in seller's books and no claim of depreciation by the sellers on goodwill Thermo Fisher Scientific India Pvt. Ltd. 12 ITA No. 769/Mum/2023 a. Page 139 of the paper book (Recitals): Seller (CTPL) is desirous of purchasing the Undertaking comprised of its assets, liabilities, rights and obligations (the "Acquired Business") as provided for in this Agreement. Page 140 of the paper book (para 3): Lump sum consideration of Rs. would be paid by the purchaser to the seller in respect of the profits made by the undertaking over and above an agreed threshold amount between the date of contract and acknowledge and agree that the transaction will constitute an outright slump sale of the entire Acquired Business as an inseparable whole as a going concern 150 of the paper book (para 5.3.3): The consideration to be e. Page 181 of the paper book: Statement of assets and liabilities Page 186 of the paper book: Schedule of fixed assets, which shows Page 191 of the paper book: List of assets (no goodwill) that the above is only an illustrative list of the relevant clauses of the two BTAs, which show from GSK and CTPL by way of a slump sale and on a going concern basis ) The consideration for such acquisition was paid by wire transfer no claim of (iv) Lumpsum consideration paid by the undertakings was allocated over various assets and liabilities and recognised in the books of the Appellant at their respective fair valu based on valuation report as per the requirement of Accounting Standard 10. (v) Accordingly, the transactions in question were in the nature of slump sale. This has been acknowledged by the AO and DR as well in their orders. 5.3 The Ld. Counsel provisions relating to amalgamation to the facts of the The AO stated that the accounting as mandated by homogeneous reading of the Act make it evident that in an amalgamation of the nature of merger, which is case of the should be of the nature of reserves and no depreciation should be allowed on it. Since the acquisition of businesses was by way of slump sale, the fair value of assets is required to be determined by a valuer and the consideration paid to the seller is required to be allocated amongst the different assets identified by the valuer through purchase price allocation in accordance with para 15.3 of AS 10, which provides that "where several assets are purchased for a consolidated price, the consideration is apportioned to the various assets on a fair basis as determined by competent valu Similarly, para 16.1 of the said AS provides: "16.1 Goodwill, in general, is recorded in the books only when some consideration in money or money's worth has been paid for it. Whenever a business Thermo Fisher Scientific India Pvt. Ltd. (iv) Lumpsum consideration paid by the assessee for acquiring the undertakings was allocated over various assets and liabilities and recognised in the books of the Appellant at their respective fair valu based on valuation report as per the requirement of Accounting (v) Accordingly, the transactions in question were in the nature of slump sale. This has been acknowledged by the AO and DR as well Counsel further submitted the AO has applied various provisions relating to amalgamation to the facts of the The AO stated that the assessee has not followed proper system of accounting as mandated by AS 14. The AO has further stated that a homogeneous reading of the provisions of sections 2(1B), 32 and 43 of the Act make it evident that in an amalgamation of the nature of merger, which is case of the assessee, the goodwill so recorded should be of the nature of reserves and no depreciation should be it. Since the acquisition of businesses was by way of slump sale, the fair value of assets is required to be determined by a valuer and the consideration paid to the seller is required to be allocated amongst the different assets identified by the valuer hrough purchase price allocation in accordance with para 15.3 of AS 10, which provides that "where several assets are purchased for a consolidated price, the consideration is apportioned to the various assets on a fair basis as determined by competent valu Similarly, para 16.1 of the said AS provides: "16.1 Goodwill, in general, is recorded in the books only when some consideration in money or money's worth has been paid for it. Whenever a business Thermo Fisher Scientific India Pvt. Ltd. 13 ITA No. 769/Mum/2023 for acquiring the undertakings was allocated over various assets and liabilities and recognised in the books of the Appellant at their respective fair values based on valuation report as per the requirement of Accounting (v) Accordingly, the transactions in question were in the nature of slump sale. This has been acknowledged by the AO and DR as well AO has applied various provisions relating to amalgamation to the facts of the assessee. has not followed proper system of AS 14. The AO has further stated that a of the provisions of sections 2(1B), 32 and 43 of the Act make it evident that in an amalgamation of the nature of , the goodwill so recorded should be of the nature of reserves and no depreciation should be it. Since the acquisition of businesses was by way of slump sale, the fair value of assets is required to be determined by a valuer and the consideration paid to the seller is required to be allocated amongst the different assets identified by the valuer hrough purchase price allocation in accordance with para 15.3 of AS 10, which provides that "where several assets are purchased for a consolidated price, the consideration is apportioned to the various assets on a fair basis as determined by competent valuers". Similarly, para 16.1 of the said AS provides: "16.1 Goodwill, in general, is recorded in the books only when some consideration in money or money's worth has been paid for it. Whenever a business is acquired for a price (payable either in cash or in otherwise) which is in excess of the value of the net assets of the business taken over, the excess is termed as 'goodwill'. Goodwill arises from business connections, trade name or reputation of an enterprise or from other intangible benefits en enterprise." Therefore, the AO is not justified in relying on the provisions of AS 14, sections 2(1B), 32 and 43 of the Act, which apply to cases of amalgamation and other transactions, where transferor of the business is exempted from paying t of the assets and, therefore, the transferee does not get a higher cost of assets acquired but the cost in its hands continues to be what was the cost in the transferor's hands. Non-applicability of Explanation 7 to section 43() and Explanation 2 to section 43(6) of the Act 5.4 The ld counsel further submitted that t value of goodwill in the books of GSK and CTPL is Nil and as per the provisions of Explanation 7 to section 43(1) of the Act, the value of Goodwill in the book Further, it is stated that WDV of the block of assets of intangible assets in the books of the Nil value against the goodwill as per the provisions of Explanation 2 to section 43(6) of the Act. Thermo Fisher Scientific India Pvt. Ltd. is acquired for a price (payable either in cash or in otherwise) which is in excess of the value of the net assets of the business taken over, the excess is termed as 'goodwill'. Goodwill arises from business connections, trade name or reputation of an enterprise or from other intangible benefits en enterprise." Therefore, the AO is not justified in relying on the provisions of AS 14, sections 2(1B), 32 and 43 of the Act, which apply to cases of amalgamation and other transactions, where transferor of the business is exempted from paying t of the assets and, therefore, the transferee does not get a higher cost of assets acquired but the cost in its hands continues to be what was the cost in the transferor's hands. applicability of Explanation 7 to section 43() and ion 2 to section 43(6) of the Act 5.4 The ld counsel further submitted that the AO has held that value of goodwill in the books of GSK and CTPL is Nil and as per the provisions of Explanation 7 to section 43(1) of the Act, the value of Goodwill in the books of the assessee should also have been Nil. Further, it is stated that WDV of the block of assets of intangible assets in the books of the assessee should have been recorded as Nil value against the goodwill as per the provisions of Explanation 2 on 43(6) of the Act. Thermo Fisher Scientific India Pvt. Ltd. 14 ITA No. 769/Mum/2023 is acquired for a price (payable either in cash or in shares or otherwise) which is in excess of the value of the net assets of the business taken over, the excess is termed as 'goodwill'. Goodwill arises from business connections, trade name or reputation of an enterprise or from other intangible benefits enjoyed by an enterprise." Therefore, the AO is not justified in relying on the provisions of AS 14, sections 2(1B), 32 and 43 of the Act, which apply to cases of amalgamation and other transactions, where transferor of the business is exempted from paying tax on transfer of the assets and, therefore, the transferee does not get a higher cost of assets acquired but the cost in its hands continues to be applicability of Explanation 7 to section 43() and he AO has held that value of goodwill in the books of GSK and CTPL is Nil and as per the provisions of Explanation 7 to section 43(1) of the Act, the value of should also have been Nil. Further, it is stated that WDV of the block of assets of intangible should have been recorded as Nil value against the goodwill as per the provisions of Explanation 2 5.5 It is submitted by the assessee 43(1) and Explanation 2 to section 43(6) of the Act are applicable to transactions in the scheme of an amalgamation and, therefore, not applicable in the case of the assessee are in the nature of slump sale. Non-applicability of fifth proviso (now si 32(1)(ii) of the Act 5.6 The ld counsel further submitted that t order has stated that without prejudice, the depreciation allowable to the assessee on Goodwill post same rate as allowable to seller prior to amalgamation as per the fifth proviso (now sixth proviso accordingly, the depreciation allowable to the should have been zero. 5.7 Regarding above , it in cases of tax neutral transactions, such as amalgamation demerger, succession, etc. where the transferor (i.e., the amalgamating company or the demerged company or the predecessor, as the case may be) is not taxed on the transfer of the assets and, therefore, the scheme of the Act is that the transferee does not get the benefit of the fair value of the assets even if the said value is higher for the purposes of claiming depreciation thereon. However, the said principle cannot apply in the case of Thermo Fisher Scientific India Pvt. Ltd. by the assessee that Explanation 7 to section 43(1) and Explanation 2 to section 43(6) of the Act are applicable to transactions in the scheme of an amalgamation and, therefore, not applicable in the case of the assessee, since transactions of the are in the nature of slump sale. applicability of fifth proviso (now sixth proviso) to section 5.6 The ld counsel further submitted that the AO in the assessment order has stated that without prejudice, the depreciation allowable on Goodwill post-purchase should have been at the same rate as allowable to seller prior to amalgamation as per the fifth proviso (now sixth proviso) to section 32(1)(ii) of the Act and accordingly, the depreciation allowable to the assessee should have been zero. Regarding above , it was submitted that the said proviso applies in cases of tax neutral transactions, such as amalgamation demerger, succession, etc. where the transferor (i.e., the amalgamating company or the demerged company or the predecessor, as the case may be) is not taxed on the transfer of the assets and, therefore, the scheme of the Act is that the transferee ot get the benefit of the fair value of the assets even if the said value is higher for the purposes of claiming depreciation However, the said principle cannot apply in the case of Thermo Fisher Scientific India Pvt. Ltd. 15 ITA No. 769/Mum/2023 that Explanation 7 to section 43(1) and Explanation 2 to section 43(6) of the Act are applicable to transactions in the scheme of an amalgamation and, therefore, not , since transactions of the xth proviso) to section he AO in the assessment order has stated that without prejudice, the depreciation allowable purchase should have been at the same rate as allowable to seller prior to amalgamation as per the ) to section 32(1)(ii) of the Act and assessee on Goodwill submitted that the said proviso applies in cases of tax neutral transactions, such as amalgamation, demerger, succession, etc. where the transferor (i.e., the amalgamating company or the demerged company or the predecessor, as the case may be) is not taxed on the transfer of the assets and, therefore, the scheme of the Act is that the transferee ot get the benefit of the fair value of the assets even if the said value is higher for the purposes of claiming depreciation However, the said principle cannot apply in the case of transactions by way of slump sale, where the sellers viz. GSK and CTPL were assessable to capital gains tax as per the provisions of section 50B of the Act. Therefore, in the present case, the cannot be denied the benefit of higher cost by relying on the sixth proviso to section 32. 5.8 It was further submitted in cases where goodwill appears in the books of the seller / predecessor and who has claimed depreciation thereon. In a case such as the present one, where the goodwill neither appears in the books of the seller no sellers, the question of aggregation of depreciation claimed by both and thereafter apportionment of such aggregate to the seller and buyer in the ratio of number of days for which the same was used by them does not arise. For this reason also, sixth proviso is not applicable. Non-applicability of decision of Hon of United Breweries (supra) 5.9 The ld counsel submitted that t decision of Hon’ble Bangalore ITAT (supra) is squarely applicable in the facts of the Appellant's case. 5.10 In this regard the Ld said case are completely distinguishable from the facts in the present case. In case of Unit Thermo Fisher Scientific India Pvt. Ltd. transactions by way of slump sale, where the sellers viz. GSK and CTPL were assessable to capital gains tax as per the provisions of section 50B of the Act. Therefore, in the present case, the cannot be denied the benefit of higher cost by relying on the sixth proviso to section 32. It was further submitted that in any event, sixth proviso applies in cases where goodwill appears in the books of the seller / predecessor and who has claimed depreciation thereon. In a case such as the present one, where the goodwill neither appears in the books of the seller nor is any depreciation claimed thereon by the sellers, the question of aggregation of depreciation claimed by both and thereafter apportionment of such aggregate to the seller and buyer in the ratio of number of days for which the same was used not arise. For this reason also, sixth proviso is not applicability of decision of Hon’ble Bangalore ITAT in case of United Breweries (supra) ld counsel submitted that the AO has a ble Bangalore ITAT in case of United Breweries (supra) is squarely applicable in the facts of the Appellant's case. the Ld counsel submitted that the facts of the said case are completely distinguishable from the facts in the present case. In case of United Breweries (UB): Thermo Fisher Scientific India Pvt. Ltd. 16 ITA No. 769/Mum/2023 transactions by way of slump sale, where the sellers viz. GSK and CTPL were assessable to capital gains tax as per the provisions of section 50B of the Act. Therefore, in the present case, the assessee cannot be denied the benefit of higher cost by relying on the sixth n any event, sixth proviso applies in cases where goodwill appears in the books of the seller / predecessor and who has claimed depreciation thereon. In a case such as the present one, where the goodwill neither appears in the r is any depreciation claimed thereon by the sellers, the question of aggregation of depreciation claimed by both and thereafter apportionment of such aggregate to the seller and buyer in the ratio of number of days for which the same was used not arise. For this reason also, sixth proviso is not ble Bangalore ITAT in case he AO has alleged that the in case of United Breweries (supra) is squarely applicable in the facts of the Appellant's case. that the facts of the said case are completely distinguishable from the facts in the (i) There was an amalgamation of three wholly owned subsidiaries with UB (ii) Goodwill existed in the books of one of the subsidiaries at Rs. 7.45 crores which was enhanced to Rs. 62.30 crores in the books of UB based on revaluation before amalgamation (iii) The AO in that case had doubted the deflated value of tangible assets and observed that in case replacement cost of building, plant and machinery and higher value of land was taken into account, there would not be any goodwill. Accordingly, resort was taken to Explanation 3 to section 43(1) of the Act. It is submitted that no application in the present case since goodwill did not exist in the books of GSK or CTPL and, hence, there was no question of them using the assets before acquisition of the undertakings by the Appellant. Moreover no finding by the AO that the transfer was done for the purposes of claiming enhanced depreciation. 5.11 But in the case of (i) The divisions were acquired by way of a slump sale as a going concern from GSK and CTPL, which are in United Breweries parties were related. (ii) The sellers continue to exist after their respective businesses were sold to the Appellant (iii) Goodwill did not exist in the books of the sellers. The goodwill was determined based on the purchase price allocation made by an independent valuer by assigning fair values to the assets in accordance with the relevant accounting standard. Excess consideration paid to the sellers over the net assets acquired was considered as goodwill Thermo Fisher Scientific India Pvt. Ltd. (i) There was an amalgamation of three wholly owned subsidiaries with UB (ii) Goodwill existed in the books of one of the subsidiaries at Rs. 7.45 crores which was enhanced to Rs. 62.30 crores in the books of UB based on revaluation before amalgamation (iii) The AO in that case had doubted the deflated value of tangible assets and observed that in case replacement cost of building, plant and machinery and higher value of land was taken into account, there would not be any goodwill. Accordingly, resort was taken to Explanation 3 to section 43(1) of the Act. It is submitted that Explanation 3 to section 43(1) can have no application in the present case since goodwill did not exist in the books of GSK or CTPL and, hence, there was no question of them using the assets before acquisition of the undertakings by the Appellant. Moreover no finding by the AO that the transfer was done for the purposes of claiming enhanced depreciation. But in the case of assessee, however: (i) The divisions were acquired by way of a slump sale as a going concern from GSK and CTPL, which are unrelated entities whereas in United Breweries parties were related. (ii) The sellers continue to exist after their respective businesses were sold to the Appellant (iii) Goodwill did not exist in the books of the sellers. The goodwill ed on the purchase price allocation made by an independent valuer by assigning fair values to the assets in accordance with the relevant accounting standard. Excess consideration paid to the sellers over the net assets acquired was considered as goodwill Thermo Fisher Scientific India Pvt. Ltd. 17 ITA No. 769/Mum/2023 (i) There was an amalgamation of three wholly owned subsidiaries with UB (ii) Goodwill existed in the books of one of the subsidiaries at Rs. 7.45 crores which was enhanced to Rs. 62.30 crores in the books of UB based on (iii) The AO in that case had doubted the deflated value of tangible assets and observed that in case replacement cost of building, plant and machinery and higher value of land was taken into account, there would not be any goodwill. Accordingly, resort was taken to Explanation 3 to section Explanation 3 to section 43(1) can have no application in the present case since goodwill did not exist in the books of GSK or CTPL and, hence, there was no question of them using the assets before acquisition of the undertakings by the Appellant. Moreover, there is no finding by the AO that the transfer was done for the purposes of claiming (i) The divisions were acquired by way of a slump sale as a going unrelated entities whereas (ii) The sellers continue to exist after their respective businesses (iii) Goodwill did not exist in the books of the sellers. The goodwill ed on the purchase price allocation made by an independent valuer by assigning fair values to the assets in accordance with the relevant accounting standard. Excess consideration paid to the sellers over the net assets acquired was (iv)The valuation of other assets except for goodwill was not challenged by the Ld. AO in case of (v) The DRP has not found any any particular asset but has generally stated that the valuation reports became "unrealistic" because the underlying information and assumptions were not shared. It is submitted that the valuation reports firstly identify various intangible assets and thereafter adopt accepted methods for valuing the same. without any specific material, the same cannot be disregarded or held to be unrealistic. In any event, it is submitted that even if the valuation of the asset undergoes a change, it will merely result in reallocation of the total cost over assets, which therefore cannot result in denial of depreciation. 5.12 Accordingly, it was submitted United Breweries are clearly distinct and not applicable to the facts of the case of the Appellant. Observations of DRP with respect to the valuation of inta assets 5.13 The ld counsel submitted that t valuation reports are primarily based on the projection of revenues for subsequent 5 years, which is provided by the management, reflects increase/ variations, without sharing any transparent, discernible and acceptable methodo Thermo Fisher Scientific India Pvt. Ltd. The valuation of other assets except for goodwill was not challenged by the Ld. AO in case of the Appellant ) The DRP has not found any discrepancy in the value assigned to any particular asset but has generally stated that the valuation e "unrealistic" because the underlying information and assumptions were not shared. It is submitted that the valuation reports firstly identify various intangible assets and thereafter adopt accepted methods for valuing the same. cific material, the same cannot be disregarded or held to be unrealistic. In any event, it is submitted that even if the valuation of the asset undergoes a change, it will merely result in reallocation of the total cost over assets, which therefore cannot result in denial of depreciation. it was submitted that the facts of the case of United Breweries are clearly distinct and not applicable to the facts of the case of the Appellant. Observations of DRP with respect to the valuation of inta The ld counsel submitted that the DRP has remarked that the valuation reports are primarily based on the projection of revenues for subsequent 5 years, which is provided by the management, reflects increase/ variations, without sharing any transparent, discernible and acceptable methodology based on authenticated Thermo Fisher Scientific India Pvt. Ltd. 18 ITA No. 769/Mum/2023 The valuation of other assets except for goodwill was not in the value assigned to any particular asset but has generally stated that the valuation e "unrealistic" because the underlying information and assumptions were not shared. It is submitted that the valuation reports firstly identify various intangible assets and thereafter adopt accepted methods for valuing the same. Therefore, cific material, the same cannot be disregarded or held to be unrealistic. In any event, it is submitted that even if the valuation of the asset undergoes a change, it will merely result in reallocation of the total cost over assets, which therefore cannot facts of the case of United Breweries are clearly distinct and not applicable to the facts Observations of DRP with respect to the valuation of intangible he DRP has remarked that the valuation reports are primarily based on the projection of revenues for subsequent 5 years, which is provided by the management, reflects increase/ variations, without sharing any transparent, logy based on authenticated market size/ market share of the businesses acquired, market research/ studies, other relevant factors etc. observed that in their above referred deficiencies, the va inter se proportions, the valuation reports beca 5.14 The counsel in this regard, depreciable assets as a part of the business acquisition. In this regard, without prejudice to what has been submitted above, even if it is considered that valuation of intangible assets viz. trademarks, technical know-how, copyrights, quality control know software, commercial rights in the form of supply/ vendor/ manufacturing contrac is to be assigned to such intangible assets, the lowering of the value of goodwill would be offset by the higher allocation of the consideration paid by the there would effectively not be denial of depreciation. Therefore, on this count also, there is no justification of denying depreciation. 5.15 Reliance is placed on the following decisions, wherein it has been categorically held that depreciation is allowable on goodwil a slump sale, after taking into account all relevant provisions of the Act, including fifth proviso (now sixth proviso) to section 32 of the Act. Thermo Fisher Scientific India Pvt. Ltd. market size/ market share of the businesses acquired, market research/ studies, other relevant factors etc. the ld DRP further their considered opinion, for the reasons of the above referred deficiencies, the valuation of intangible assets and its ions, the valuation reports became unrealistic. n this regard, submitted that it has only acquired depreciable assets as a part of the business acquisition. In this udice to what has been submitted above, even if it is considered that valuation of intangible assets viz. trademarks, how, copyrights, quality control know software, commercial rights in the form of supply/ vendor/ manufacturing contracts etc. are lower, and in case a higher value is to be assigned to such intangible assets, the lowering of the value of goodwill would be offset by the higher allocation of the consideration paid by the assessee to the sellers and resultantly ffectively not be denial of depreciation. Therefore, on this count also, there is no justification of denying depreciation. Reliance is placed on the following decisions, wherein it has been categorically held that depreciation is allowable on goodwil a slump sale, after taking into account all relevant provisions of the Act, including fifth proviso (now sixth proviso) to section 32 of the Thermo Fisher Scientific India Pvt. Ltd. 19 ITA No. 769/Mum/2023 market size/ market share of the businesses acquired, market the ld DRP further considered opinion, for the reasons of the luation of intangible assets and its me unrealistic. it has only acquired depreciable assets as a part of the business acquisition. In this udice to what has been submitted above, even if it is considered that valuation of intangible assets viz. trademarks, how, copyrights, quality control know-how, software, commercial rights in the form of supply/ vendor/ ts etc. are lower, and in case a higher value is to be assigned to such intangible assets, the lowering of the value of goodwill would be offset by the higher allocation of the to the sellers and resultantly ffectively not be denial of depreciation. Therefore, on this count also, there is no justification of denying depreciation. Reliance is placed on the following decisions, wherein it has been categorically held that depreciation is allowable on goodwill in a slump sale, after taking into account all relevant provisions of the Act, including fifth proviso (now sixth proviso) to section 32 of the (i) Triune Energy Services (P.) Ltd. v. DCIT [2016] 65 taxmann.com 288 (Delhi) In this decision, the Hon' depreciation on goodwill arising on account of slump sale has held in favour of the assessee stating as under: "As indicated hereinbefore Goodwill includes a host of intangible assets, which a person acquires, on acq concern and valuing the same at the excess consideration paid over and above the value of net tangible assets is an acceptable accounting practice. Thus, a further exercise to value the goodwill is not warranted." (ii) Triune Energy Services (P.) Ltd. v. DCIT [2018] 96 taxmann.com 580 (Delhi The Hon'ble Delhi Tribunal in this case placed reliance on the decision of Hon ble High Court in case of the same assessee and directed the Id. A to delete the disallowance on depreciation on intangibles/ goodwill. (iii) M/s. Pitney Bowes India v. DCIT (ITA Nos. 289 to 293/Del/2013) The Hon'ble Delhi ITAT in this case has held as under: Thermo Fisher Scientific India Pvt. Ltd. (i) Triune Energy Services (P.) Ltd. v. DCIT [2016] 65 taxmann.com 288 (Delhi) In this decision, the Hon'ble Delhi High Court while dealing with depreciation on goodwill arising on account of slump sale has held in favour of the assessee stating as under: "As indicated hereinbefore Goodwill includes a host of intangible assets, which a person acquires, on acquiring a business as a going concern and valuing the same at the excess consideration paid over and above the value of net tangible assets is an acceptable accounting practice. Thus, a further exercise to value the goodwill is nergy Services (P.) Ltd. v. DCIT [2018] 96 taxmann.com 580 (Delhi -Trib.) The Hon'ble Delhi Tribunal in this case placed reliance on the decision of Hon ble High Court in case of the same assessee and directed the Id. A to delete the disallowance on depreciation on intangibles/ goodwill. (iii) M/s. Pitney Bowes India v. DCIT (ITA Nos. 289 to The Hon'ble Delhi ITAT in this case has held as under: Thermo Fisher Scientific India Pvt. Ltd. 20 ITA No. 769/Mum/2023 (i) Triune Energy Services (P.) Ltd. v. DCIT [2016] 65 ble Delhi High Court while dealing with depreciation on goodwill arising on account of slump sale has held "As indicated hereinbefore Goodwill includes a host of intangible uiring a business as a going concern and valuing the same at the excess consideration paid over and above the value of net tangible assets is an acceptable accounting practice. Thus, a further exercise to value the goodwill is nergy Services (P.) Ltd. v. DCIT [2018] 96 The Hon'ble Delhi Tribunal in this case placed reliance on the decision of Hon ble High Court in case of the same assessee and directed the Id. A to delete the disallowance on account of (iii) M/s. Pitney Bowes India v. DCIT (ITA Nos. 289 to The Hon'ble Delhi ITAT in this case has held as under: "We are of the view that list of transferred asset included business know-how, customer and vendor list etc which are business or commercial rights of similar nature as specified in 32(1)(i) of the Act, which constitute part of the "goodwill" of the business, transferred as going concern to the assessee. Since in the case tangible assets alongwith other business/commercial rights, have been transferred to the assessee, the value of "Goodwill" should be computed by reducing the value of all liabilities, the tangible assets, Government Authorizations valued by the valuer and non fee valued by the valuer, out of the slump sale consideration and then depreciation should be allowed at the rate prescribed for the intangible assets under section32(1) (it) of the Act." (iv) Grindwell Norton Ltd. v. ACIT (ITA Nos.528/Mum/2012 and 5800/Mum/2013) In this case, the Hon'ble ITAT while dealing with the facts similar to that of the Appellant has held as under: "we can say that since the assessee had purchased the Grinding Wheel Business from OAL as a going concern, therefore, amount of consideration paid in excess of value of tangible assets would be accounted for in its books of accounts as 'Goodwill'. Under these circumstances, no further exercise would be required to make precise valuation of the amount of 'Goodwill'. Thermo Fisher Scientific India Pvt. Ltd. "We are of the view that list of transferred asset included business tomer and vendor list etc which are business or commercial rights of similar nature as specified in 32(1)(i) of the Act, which constitute part of the "goodwill" of the business, transferred as going concern to the assessee. Since in the case s alongwith other business/commercial rights, have been transferred to the assessee, the value of "Goodwill" should be computed by reducing the value of all liabilities, the tangible assets, Government Authorizations valued by the valuer and non e valued by the valuer, out of the slump sale consideration and then depreciation should be allowed at the rate prescribed for the intangible assets under section32(1) (it) of the Act." (iv) Grindwell Norton Ltd. v. ACIT (ITA Nos.528/Mum/2012 and In this case, the Hon'ble ITAT while dealing with the facts similar to that of the Appellant has held as under: "we can say that since the assessee had purchased the Grinding Wheel Business from OAL as a going concern, therefore, amount of ion paid in excess of value of tangible assets would be accounted for in its books of accounts as 'Goodwill'. Under these circumstances, no further exercise would be required to make precise valuation of the amount of 'Goodwill'. Thermo Fisher Scientific India Pvt. Ltd. 21 ITA No. 769/Mum/2023 "We are of the view that list of transferred asset included business tomer and vendor list etc which are business or commercial rights of similar nature as specified in 32(1)(i) of the Act, which constitute part of the "goodwill" of the business, transferred as going concern to the assessee. Since in the case s alongwith other business/commercial rights, have been transferred to the assessee, the value of "Goodwill" should be computed by reducing the value of all liabilities, the tangible assets, Government Authorizations valued by the valuer and non-compete e valued by the valuer, out of the slump sale consideration and then depreciation should be allowed at the rate prescribed for the (iv) Grindwell Norton Ltd. v. ACIT (ITA Nos.528/Mum/2012 and In this case, the Hon'ble ITAT while dealing with the facts similar to "we can say that since the assessee had purchased the Grinding Wheel Business from OAL as a going concern, therefore, amount of ion paid in excess of value of tangible assets would be accounted for in its books of accounts as 'Goodwill'. Under these circumstances, no further exercise would be required to make ...Thus, viewed from any ang of depreciation us 32(1)(ii) on the amount of intangible assets acquired by it as per Business Transfer Agreement, and thus action of lower authorities was not factually or legally justified while making disallowance of the depreciation on the intangible assets. The AD is directed to grant the benefit of depreciation in terms of section 32(1)(i) upon the intangible assets acquired by Thus, these grounds are al (v) I & B Seeds (P.) Ltd. v. DCIT [20221 142 taxmann.com 274 (Bangalore - Trib.) In this case, the Hon'ble ITAT had allowed depreciation on goodwill which arose pursuant to slump sale. Further, with respect to the amendment in section 32(1) by Finance Act, 2021, th has held as under: 13.13 The Finance Act, 2021, inserted a series of amendments in relation to the allowance of depreciation on Goodwill. Post such amendments, no depreciation is allowable to an Assessee on goodwill. However, it has been spe aforementioned amendments will take effect from April 01, 2021 and will, accordingly, apply in relation to AY 2021 subsequent AYS.. ...13.15 Therefore, the intention of the legislature is that depreciation on goodwill is Thermo Fisher Scientific India Pvt. Ltd. ...Thus, viewed from any angle, the assessee is eligible for the claim of depreciation us 32(1)(ii) on the amount of intangible assets acquired by it as per Business Transfer Agreement, and thus action of lower authorities was not factually or legally justified while nce of the depreciation on the intangible assets. The AD is directed to grant the benefit of depreciation in terms of section 32(1)(i) upon the intangible assets acquired by Thus, these grounds are allowed in favour of the assessee” Seeds (P.) Ltd. v. DCIT [20221 142 taxmann.com 274 In this case, the Hon'ble ITAT had allowed depreciation on goodwill which arose pursuant to slump sale. Further, with respect to the amendment in section 32(1) by Finance Act, 2021, th 13.13 The Finance Act, 2021, inserted a series of amendments in relation to the allowance of depreciation on Goodwill. Post such amendments, no depreciation is allowable to an Assessee on goodwill. However, it has been specifically provided that the aforementioned amendments will take effect from April 01, 2021 and will, accordingly, apply in relation to AY 2021 ...13.15 Therefore, the intention of the legislature is that depreciation on goodwill is allowable prior to the said Amendments, Thermo Fisher Scientific India Pvt. Ltd. 22 ITA No. 769/Mum/2023 le, the assessee is eligible for the claim of depreciation us 32(1)(ii) on the amount of intangible assets acquired by it as per Business Transfer Agreement, and thus action of lower authorities was not factually or legally justified while nce of the depreciation on the intangible assets. The AD is directed to grant the benefit of depreciation in terms of section 32(1)(i) upon the intangible assets acquired by the assessee. lowed in favour of the assessee” Seeds (P.) Ltd. v. DCIT [20221 142 taxmann.com 274 In this case, the Hon'ble ITAT had allowed depreciation on goodwill which arose pursuant to slump sale. Further, with respect to the amendment in section 32(1) by Finance Act, 2021, the Hon'ble ITAT 13.13 The Finance Act, 2021, inserted a series of amendments in relation to the allowance of depreciation on Goodwill. Post such amendments, no depreciation is allowable to an Assessee on cifically provided that the aforementioned amendments will take effect from April 01, 2021 and will, accordingly, apply in relation to AY 2021-22 and ...13.15 Therefore, the intention of the legislature is that allowable prior to the said Amendments, is manifest from the adjustment mechanism. If the legislative intention was to deny depreciation for the past years as well, then there was no need for any adjustment to the cost of acquisition of the goodwill. Such an interpretation would lead to a provision of the law being redundant or otiose and such interpretation should be rejected. 5.16 The ld counsel further submitted 2008-09 was not picked up for scrutiny, it did not have an occa to claim depreciation on goodwill in AY 2008 goodwill arising out of slump purchase of undertaking from GSK. Therefore, certain claims were raised before the Hon'ble ITAT in the appeal for AY 2009- August 2022 was pleased to restore these claims to the file of the AO by observing as under: "5. Admittedly, the contentions raised by the assessee in Ground No. 10 and 11 are claims related to the main ground regarding allowing depreciation on goodw claim. We noticed that the main issue relating to depreciation on goodwill has been restored to the file of the A 06-2019. The new claim raised in Ground no.12 also requires examination at the end of the AO. 6. Accordingly, we deem it proper to restore all these additional grounds also to the file of AO for examining them in acco affording adequate opportunity of being heard to the assessee. 7. In the result, all the three additional grounds mentioned above are treated as allowed for statistical purposes. Thermo Fisher Scientific India Pvt. Ltd. is manifest from the adjustment mechanism. If the legislative intention was to deny depreciation for the past years as well, then there was no need for any adjustment to the cost of acquisition of an interpretation would lead to a provision of the law being redundant or otiose and such interpretation should be ld counsel further submitted that since assessment for AY 09 was not picked up for scrutiny, it did not have an occa to claim depreciation on goodwill in AY 2008-09 in respect of goodwill arising out of slump purchase of undertaking from GSK. Therefore, certain claims were raised before the Hon'ble ITAT in the -10. The Hon'ble ITAT by its order dat August 2022 was pleased to restore these claims to the file of the AO by observing as under: "5. Admittedly, the contentions raised by the assessee in Ground No. 10 and 11 are claims related to the main ground regarding allowing depreciation on goodwill. The contention raised in ground no. 12 is a new claim. We noticed that the main issue relating to depreciation on goodwill has been restored to the file of the AO by the Tribunal in its order dated 28 2019. The new claim raised in Ground no.12 also requires examination at the end of the AO. 6. Accordingly, we deem it proper to restore all these additional grounds also to the file of AO for examining them in accordance with law, after affording adequate opportunity of being heard to the assessee. 7. In the result, all the three additional grounds mentioned above are treated as allowed for statistical purposes. Thermo Fisher Scientific India Pvt. Ltd. 23 ITA No. 769/Mum/2023 is manifest from the adjustment mechanism. If the legislative intention was to deny depreciation for the past years as well, then there was no need for any adjustment to the cost of acquisition of an interpretation would lead to a provision of the law being redundant or otiose and such interpretation should be that since assessment for AY 09 was not picked up for scrutiny, it did not have an occasion 09 in respect of goodwill arising out of slump purchase of undertaking from GSK. Therefore, certain claims were raised before the Hon'ble ITAT in the 10. The Hon'ble ITAT by its order dated 24 August 2022 was pleased to restore these claims to the file of the "5. Admittedly, the contentions raised by the assessee in Ground No. 10 and 11 are claims related to the main ground regarding allowing ill. The contention raised in ground no. 12 is a new claim. We noticed that the main issue relating to depreciation on goodwill by the Tribunal in its order dated 28- 2019. The new claim raised in Ground no.12 also requires examination 6. Accordingly, we deem it proper to restore all these additional grounds rdance with law, after affording adequate opportunity of being heard to the assessee. 7. In the result, all the three additional grounds mentioned above are 5.17 The ld counsel submitted that directions of the ITAT in its order dated in deciding the present appeal may be pleased to issue necessary directions / clarifications, if deemed necessary, to the AO so that the assessee is not precluded from pursuing the the AO by the order dated 24 August 2022. 5.18 We have heard rival submission of parties. The issue in dispute is claim of depreciation on Goodwill recognised by the assessee in two transaction of acquisition of two units. The claimed that those acquisitions are lumpsum consideration, as going concerns sale, which is subject to capital gain tax u/s 50B in the hand of seller. Whereas the according the Assessing officer the acquisiti are in the nature of amalgamation. Before us has referred to various clauses of business transfer agreement (BTA) in respect of units acquired from GSK and CTPL respectively. On perusal of relevant clauses referred, we find that tr both the cases are of slump sale and not, amalgamation as stated by the Assessing Officer. 5.19 The learned Assessing Officer has further relied on the Explanation 7 to section 43(1) of the Act not entitled for depreciation on the Goodwill recognised. For ready reference, the relevant explanation is reproduced as under: Thermo Fisher Scientific India Pvt. Ltd. ld counsel submitted that keeping in mind the directions of the ITAT in its order dated 24 August 2022, the ITAT in deciding the present appeal may be pleased to issue necessary directions / clarifications, if deemed necessary, to the AO so that is not precluded from pursuing the claims restored to the AO by the order dated 24 August 2022. We have heard rival submission of parties. The issue in dispute is claim of depreciation on Goodwill recognised by the assessee in two transaction of acquisition of two units. The that those acquisitions are for purchase of unit for lumpsum consideration, as going concerns in the nature of slump ale, which is subject to capital gain tax u/s 50B in the hand of seller. Whereas the according the Assessing officer the acquisiti in the nature of amalgamation. Before us, the learned counsel has referred to various clauses of business transfer agreement (BTA) in respect of units acquired from GSK and CTPL respectively. On perusal of relevant clauses referred, we find that tr both the cases are of slump sale and not, amalgamation as stated by the Assessing Officer. The learned Assessing Officer has further relied on the Explanation 7 to section 43(1) of the Act, to hold that assessee is not entitled for depreciation on the Goodwill recognised. For ready reference, the relevant explanation is reproduced as under: Thermo Fisher Scientific India Pvt. Ltd. 24 ITA No. 769/Mum/2023 keeping in mind the above 24 August 2022, the ITAT in deciding the present appeal may be pleased to issue necessary directions / clarifications, if deemed necessary, to the AO so that claims restored to We have heard rival submission of parties. The issue in dispute is claim of depreciation on Goodwill recognised by the assessee in two transaction of acquisition of two units. The assessee for purchase of unit for in the nature of slump ale, which is subject to capital gain tax u/s 50B in the hand of seller. Whereas the according the Assessing officer the acquisitions , the learned counsel has referred to various clauses of business transfer agreement (BTA) in respect of units acquired from GSK and CTPL respectively. On perusal of relevant clauses referred, we find that transaction in both the cases are of slump sale and not, amalgamation as stated The learned Assessing Officer has further relied on the to hold that assessee is not entitled for depreciation on the Goodwill recognised. For ready reference, the relevant explanation is reproduced as under: “Explanation 7.—Where, in a scheme of amalgamation, any capital asset is transferred by the amalgamati company and the amalgamated company is an Indian company, the actual cost of the transferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalgamating company had continue own business. Explanation 7A.— by the demerged company to the resulting company and the resulting company is an Indian company, the actual cost of the asset to the resulting company shall be taken to be the same as it would have been if the demerged company had continued to hold the capital asset for the purpose of its own business : Provided that such actual cost shall not exceed th of such capital asset in the hands of the demerged company. 5.20 On perusal of the above E relation to transactions of amalgamation and not related to slump sale transactions, which is the case of th 5.21 The learned Assessing Officer has further relied on Explanation-2 to section 43(6) of the Act, which reads as under: “Explanation 2.— transferred,— (a) by a holding company to its company to its holding company and the conditions of clause (iv) or, as the case may be, of clause (v) of (b) by the amalgamating company to the amalgamated company in a scheme of amalgamation, and the amalgamated company is an Indian company, then, notwithstanding anything contained in clause (1), the actual cost of the block of assets in the c amalgamated company, as the case may be, shall be the written down value of the block of assets as in the case of the transferor amalgamating company for the immediately preceding previous year as reduced by the amount of depreciation actually allowed in relation to the said preceding previous year. Thermo Fisher Scientific India Pvt. Ltd. Where, in a scheme of amalgamation, any capital asset is transferred by the amalgamating company to the amalgamated company and the amalgamated company is an Indian company, the actual cost of the transferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalgamating company had continued to hold the capital asset for the purposes of its —Where, in a demerger, any capital asset is transferred by the demerged company to the resulting company and the resulting company is an Indian company, the actual cost of the asset to the resulting company shall be taken to be the same as it would have been if the demerged company had continued to hold the capital asset for the purpose of its own business : that such actual cost shall not exceed the written down value of such capital asset in the hands of the demerged company. perusal of the above Explanation, we find that same is in relation to transactions of amalgamation and not related to slump which is the case of the assessee. The learned Assessing Officer has further relied on 2 to section 43(6) of the Act, which reads as under: —Where in any previous year, any block of assets is by a holding company to its subsidiary company or by a subsidiary company to its holding company and the conditions of clause (iv) or, as the case may be, of clause (v) of section 47 are satisfied; or by the amalgamating company to the amalgamated company in a scheme of amalgamation, and the amalgamated company is an Indian then, notwithstanding anything contained in clause (1), the actual cost of the block of assets in the case of the transferee amalgamated company, as the case may be, shall be the written down value of the block of assets as in the case of the transferor amalgamating company for the immediately preceding previous year as by the amount of depreciation actually allowed in relation to the said preceding previous year. Thermo Fisher Scientific India Pvt. Ltd. 25 ITA No. 769/Mum/2023 Where, in a scheme of amalgamation, any capital asset ng company to the amalgamated company and the amalgamated company is an Indian company, the actual cost of the transferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalgamating d to hold the capital asset for the purposes of its Where, in a demerger, any capital asset is transferred by the demerged company to the resulting company and the resulting transferred capital asset to the resulting company shall be taken to be the same as it would have been if the demerged company had continued to hold the capital e written down value of such capital asset in the hands of the demerged company.” xplanation, we find that same is in relation to transactions of amalgamation and not related to slump The learned Assessing Officer has further relied on 2 to section 43(6) of the Act, which reads as under: Where in any previous year, any block of assets is subsidiary company or by a subsidiary company to its holding company and the conditions of clause (iv) or, as the satisfied; or by the amalgamating company to the amalgamated company in a scheme of amalgamation, and the amalgamated company is an Indian then, notwithstanding anything contained in clause (1), the actual cost of ase of the transferee-company or the amalgamated company, as the case may be, shall be the written down value of the block of assets as in the case of the transferor-company or the amalgamating company for the immediately preceding previous year as by the amount of depreciation actually allowed in relation to the 5.22 On perusal of above E to acquisition of a subsidiary company by its holding company or vice versa and in relatio in respect of slump sale. 5.23 The learned Assessing Officer proviso ( now sixth proviso) to section 32(1)(ii) of the Act, which is reproduced for ready reference: “Provided also depreciation of buildings, machinery, plant or furniture, being tangible assets or know trademarks, licences, franchises or any other business or commercial rights of similar nature, being int allowable to the predecessor and the successor in the case of succession referred to in clause (xiii), clause (xiiib) and clause (xiv) of section 47 company and the amalgamated company in the case of amalgamation, or to the demerged company and the resulting company in the case not exceed in any previous year the deduction calculated at the prescribed rates as if the succession or the amalgamation or the demerger, as the case may be, had not taken place, and such deduction shall be apportion and the successor, or the amalgamating company and the amalgamated company, or the demerged company and the resulting company, as the case may be, in the ratio of the number of days for which the assets were used by them. 5.24 On plain reading of the above proviso, it is clear that same is in relation to allocation of the depreciation on the asset between predecessor and successor entities, whereas in the instant case goodwill was not in existence as intangible asset in the case predecessor companies from whom the assessee has acquired Thermo Fisher Scientific India Pvt. Ltd. On perusal of above Explanation, we find that it is in relation to acquisition of a subsidiary company by its holding company or vice versa and in relation to transactions of amalgamation and not in respect of slump sale. The learned Assessing Officer has further relied on fifth proviso ( now sixth proviso) to section 32(1)(ii) of the Act, which is reproduced for ready reference: “Provided also that the aggregate deduction, in respect of depreciation of buildings, machinery, plant or furniture, being tangible assets or know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets allowable to the predecessor and the successor in the case of succession referred to in clause (xiii), clause (xiiib) and clause section 47 or section 170 or to the amalgamating company and the amalgamated company in the case of amalgamation, or to the demerged company and the resulting company in the case of demerger, as the case may be, shall not exceed in any previous year the deduction calculated at the prescribed rates as if the succession or the amalgamation or the demerger, as the case may be, had not taken place, and such deduction shall be apportioned between the predecessor and the successor, or the amalgamating company and the amalgamated company, or the demerged company and the resulting company, as the case may be, in the ratio of the number of days for which the assets were used by them. n plain reading of the above proviso, it is clear that same is in relation to allocation of the depreciation on the asset between predecessor and successor entities, whereas in the instant case goodwill was not in existence as intangible asset in the case predecessor companies from whom the assessee has acquired Thermo Fisher Scientific India Pvt. Ltd. 26 ITA No. 769/Mum/2023 xplanation, we find that it is in relation to acquisition of a subsidiary company by its holding company or n to transactions of amalgamation and not further relied on fifth proviso ( now sixth proviso) to section 32(1)(ii) of the Act, which is he aggregate deduction, in respect of depreciation of buildings, machinery, plant or furniture, being how, patents, copyrights, trademarks, licences, franchises or any other business or angible assets allowable to the predecessor and the successor in the case of succession referred to in clause (xiii), clause (xiiib) and clause or to the amalgamating company and the amalgamated company in the case of amalgamation, or to the demerged company and the resulting of demerger, as the case may be, shall not exceed in any previous year the deduction calculated at the prescribed rates as if the succession or the amalgamation or the demerger, as the case may be, had not taken place, and ed between the predecessor and the successor, or the amalgamating company and the amalgamated company, or the demerged company and the resulting company, as the case may be, in the ratio of the number of days for which the assets were used by them.” n plain reading of the above proviso, it is clear that same is in relation to allocation of the depreciation on the asset between predecessor and successor entities, whereas in the instant case goodwill was not in existence as intangible asset in the case of predecessor companies from whom the assessee has acquired corresponding units under slump sale. Therefore, the said provision is also not applicable of the facts of the instant case. 5.25 The ratio is in the case of United Breweries (supra) applicable over the facts of amalgamation of the three wholly owned subsidiaries whereas in the instant case there is a acquisition of units of third parties by way of slump sale. 5.26 The learned DR before to the fixed asset acquired has been on lower side for creating goodwill as intangible asset. But in our opinion, if the quantum of goodwill is reduced, the valuation of the fixed asset will increase, which are also eligible for reallocation of values among the goodwill and other fixed asset be a revenue neutral exercise. 5.27 In view of the above discussion, we concur with the arguments of the learned counsel of the assessee that transactions of acquisition of units of GSK and CTPL, is eligible for depreciation under the provisions of the Act. As far as claim of the assessee for allowing depreciation on said goodwill corresponding to assessment year 2008 respect to depreciation for assessment years 2008 allowed in the appeal for assessment year 2009 assessee to explore necessary remedy under the provisions of the Thermo Fisher Scientific India Pvt. Ltd. corresponding units under slump sale. Therefore, the said provision is also not applicable of the facts of the instant case. The ratio is in the case of United Breweries (supra) the facts of case as in the said case there was amalgamation of the three wholly owned subsidiaries whereas in the instant case there is a acquisition of units of third parties by The learned DR before us submitted that allocation of values to the fixed asset acquired has been on lower side for creating goodwill as intangible asset. But in our opinion, if the quantum of goodwill is reduced, the valuation of the fixed asset will increase, which are also eligible for depreciation and thus in the exercise of reallocation of values among the goodwill and other fixed asset revenue neutral exercise. In view of the above discussion, we concur with the arguments of the learned counsel of the assessee that goodwill arising from transactions of acquisition of units of GSK and CTPL, is eligible for depreciation under the provisions of the Act. As far as claim of the assessee for allowing depreciation on said goodwill corresponding to assessment year 2008-09, we are of the opinion that claim with respect to depreciation for assessment years 2008 allowed in the appeal for assessment year 2009-10. It is for the assessee to explore necessary remedy under the provisions of the Thermo Fisher Scientific India Pvt. Ltd. 27 ITA No. 769/Mum/2023 corresponding units under slump sale. Therefore, the said provision is also not applicable of the facts of the instant case. The ratio is in the case of United Breweries (supra) is also not as in the said case there was amalgamation of the three wholly owned subsidiaries whereas in the instant case there is a acquisition of units of third parties by that allocation of values to the fixed asset acquired has been on lower side for creating goodwill as intangible asset. But in our opinion, if the quantum of goodwill is reduced, the valuation of the fixed asset will increase, depreciation and thus in the exercise of reallocation of values among the goodwill and other fixed asset ,will In view of the above discussion, we concur with the arguments goodwill arising from transactions of acquisition of units of GSK and CTPL, is eligible for depreciation under the provisions of the Act. As far as claim of the assessee for allowing depreciation on said goodwill corresponding to we are of the opinion that claim with respect to depreciation for assessment years 2008-09, cannot be 10. It is for the assessee to explore necessary remedy under the provisions of the Act or any other legal r the appeal of the assessee is accordingly allowed. Ground 3 - Depreciation on purchase of software 6. The ground No. 3 relates to 1,04,938 on purchase of software based on the direct AY 2007-08. 6.1 The ld counsel of the assessee submitted that i proceedings of AY 2007 Rs.10,93,104 that were claimed by the expenditure, which have been held expenditure and depreciation thereon was allowed at the rate of 60% while computing taxable income of that year. Due to the smallness of the amount, the the CIT(A) and did not file further appeal to t same. Accordingly, the consequential depreciation for AY 2008 However, since the assessment for AY 2008 for scrutiny, consequential depreciation was not allowed 2008-09. This was the subject matter of additional ground before ITAT, which have been restored to the AO by order dated 24 August 2022 as above. 6.2 In so far as claim for depreciation for AY 2009 matter of the present appeal) is conce Thermo Fisher Scientific India Pvt. Ltd. or any other legal remedy as advised. The ground No.2 (two) of the appeal of the assessee is accordingly allowed. Depreciation on purchase of software The ground No. 3 relates to depreciation amounting to Rs. on purchase of software based on the direct 6.1 The ld counsel of the assessee submitted that in the assessment proceedings of AY 2007-08, software expenses amounting to 10,93,104 that were claimed by the assessee , which have been held by the CIT(A) as capital expenditure and depreciation thereon was allowed at the rate of 60% while computing taxable income of that year. Due to the smallness of the amount, the assessee accepted the said decision of the CIT(A) and did not file further appeal to the ITAT against the same. Accordingly, the assessee ought to have consequential depreciation for AY 2008-09 and AY 2009 However, since the assessment for AY 2008-09 was not picked up for scrutiny, consequential depreciation was not allowed 09. This was the subject matter of additional ground before ITAT, which have been restored to the AO by order dated 24 August as claim for depreciation for AY 2009 matter of the present appeal) is concerned, DRP directed as under: Thermo Fisher Scientific India Pvt. Ltd. 28 ITA No. 769/Mum/2023 . The ground No.2 (two) of amounting to Rs. on purchase of software based on the directions of DRP for n the assessment tware expenses amounting to assessee as a revenue IT(A) as capital expenditure and depreciation thereon was allowed at the rate of 60% while computing taxable income of that year. Due to the accepted the said decision of he ITAT against the ought to have been allowed 09 and AY 2009-10. 09 was not picked up for scrutiny, consequential depreciation was not allowed for AY 09. This was the subject matter of additional ground before ITAT, which have been restored to the AO by order dated 24 August as claim for depreciation for AY 2009-10 (subject DRP directed as under: ...We also note that the matter pertains to verification and admissibility of certain facts pertaining to AY 2007 Therefore, considering the above facts, we are unable to adjudicate this particular objection as it is to be the assessing officer. We request the assessing officer to do the needful and pass an appropriate order in this regard. The ground of objection no. 2 is dismissed. 6.3 The ld counsel submitted that followed the above directions in the final assessment order and not given any relief. 6.4 The computation of depreciation at the rate of 60% on the opening written down value for the year under consideration is as under: Particulars Software expenses disallowed as per the assessment order of 2007-08 Less: Depreciation allowed in assessment order of AY 2007-08 Written down value as on 1 April 2007 Less: Depreciation @ 60% for AY 2008 08) Written down value as on 1 April 2008 Depreciation @ 60% for the current year AY 2009 (FY 2008-09) 6.5 The ld counsel submitted that c submission, the AO may be directed to grant consequential depreciation of Rs.1,04,938 on purchase of software. 6.6 We have heard rival submission on the issue in dispute. The only request made in this ground is for allowing depreciation in respect of expenditure on computer software, which was claimed as Thermo Fisher Scientific India Pvt. Ltd. We also note that the matter pertains to verification and admissibility of certain facts pertaining to AY 2007 Therefore, considering the above facts, we are unable to adjudicate this particular objection as it is to be decided by the assessing officer. We request the assessing officer to do the needful and pass an appropriate order in this regard. The ground of objection no. 2 is dismissed. The ld counsel submitted that the AO however followed the above directions in the final assessment order and not The computation of depreciation at the rate of 60% on the opening written down value for the year under consideration is as Amount (Rs.) Software expenses disallowed as per the assessment 10,93,104 Less: Depreciation allowed in assessment order of AY 6,55,862 Written down value as on 1 April 2007 4,37,242 Less: Depreciation @ 60% for AY 2008-09 (FY 2007-2,62, Written down value as on 1 April 2008 1,74,897 Depreciation @ 60% for the current year AY 2009-10 1,04,938 The ld counsel submitted that considering the above submission, the AO may be directed to grant consequential Rs.1,04,938 on purchase of software. 6.6 We have heard rival submission on the issue in dispute. The only request made in this ground is for allowing depreciation in respect of expenditure on computer software, which was claimed as Thermo Fisher Scientific India Pvt. Ltd. 29 ITA No. 769/Mum/2023 We also note that the matter pertains to verification and admissibility of certain facts pertaining to AY 2007-08. Therefore, considering the above facts, we are unable to decided by the assessing officer. We request the assessing officer to do the needful and pass an appropriate order in this regard. however, has not followed the above directions in the final assessment order and not The computation of depreciation at the rate of 60% on the opening written down value for the year under consideration is as Amount (Rs.) 10,93,104 6,55,862 4,37,242 2,62,345 1,74,897 1,04,938 onsidering the above submission, the AO may be directed to grant consequential Rs.1,04,938 on purchase of software. 6.6 We have heard rival submission on the issue in dispute. The only request made in this ground is for allowing depreciation in respect of expenditure on computer software, which was claimed as revenue expenditure in CIT(A) and held as capital expenditure. Since the said decision has been claimed as finally accepted by the assessee, the assessee deserve depreciation in subsequent years including in year under consideration. In principle, we agree with the claim of the assessee, however, we restore the matter for verifying that decision of ld CIT(A) in earlier AY 2007 appellate authorities, and then after verification directed above. The ground is allowed for statistical Ground 4 - Deletion of erroneous demand of Rs. 80,79,043 7. In ground No. 4 , the assessee is aggrieved demand of Rs. 80,79,043 as payable by the final assessment order) as a d Rs.4,48,30,280 issued to the determined as payable to the 7.1 The ld counsel submitted that t consider that the assessee under Section 244A of and accordingly, has (Rs.3,67,51,237 plus Rs. 244A of the IT Act and the erroneous demand of Rs. 80,79,043 determined is on account of non Thermo Fisher Scientific India Pvt. Ltd. revenue expenditure in earlier by the assessee but rejected by the ld CIT(A) and held as capital expenditure. Since the said decision has been claimed as finally accepted by the assessee, the assessee deserve depreciation in subsequent years including in year under . In principle, we agree with the claim of the assessee, we restore the matter for verifying that decision of ld CIT(A) in earlier AY 2007-08 has not been reversed by higher appellate authorities, and then after verification, allow the claim as irected above. The ground is allowed for statistical purpose Deletion of erroneous demand of Rs. 80,79,043 In ground No. 4 , the assessee is aggrieved by way of demand of Rs. 80,79,043 as payable by the assessing Officer final assessment order) as a difference between refund of 4,48,30,280 issued to the assessee and refund of Rs.3,67,51,237 determined as payable to the assessee. 7.1 The ld counsel submitted that the learned DCIT has failed to assessee has received interest of Rs.80,79,043 under Section 244A of the IT Act on the refund of Rs. and accordingly, has received a total refund of Rs. (Rs.3,67,51,237 plus Rs.80,79,043) including interest under section T Act and the erroneous demand of Rs. 80,79,043 determined is on account of non-grant of interest under section Thermo Fisher Scientific India Pvt. Ltd. 30 ITA No. 769/Mum/2023 earlier by the assessee but rejected by the ld CIT(A) and held as capital expenditure. Since the said decision has been claimed as finally accepted by the assessee, the assessee deserve depreciation in subsequent years including in year under . In principle, we agree with the claim of the assessee, we restore the matter for verifying that decision of ld 08 has not been reversed by higher allow the claim as purpose. Deletion of erroneous demand of Rs. 80,79,043 by way of determining assessing Officer (in its ifference between refund of and refund of Rs.3,67,51,237 he learned DCIT has failed to has received interest of Rs.80,79,043 the IT Act on the refund of Rs.3,67,51,237 received a total refund of Rs.4,48,30,280 ing interest under section T Act and the erroneous demand of Rs. 80,79,043 t of interest under section 244A of the IT Act in the computation sheet of the final assessment order. 7.3 The ld counsel submitted that consider interest under section 244A of the Act in the computation sheet and delete the erroneous demand of Rs. 80,79,043. 7.4 We have heard rival submission on the issue in dispute. This issue is consequential to the computation of tax liability while giving effect of this order. We direct the Assessing Officer to verify the claim while giving effect of this order of Tribunal. The ground of the appeal is accordingly allowed for statistical purpose. Ground 5 - Penalty proceeding 8. The ground no. 5 section 274 r. w.s. 271(1)(c) of the IT Act stating that the Appellant has furnished inaccurate particulars of income. 8.1 The ground raised being premature at this stage, as no penalty has been levied by the impugned a ground raised is dismissed as infructuous. 9. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on Sd/ (KAVITHA RAJAGOPAL JUDICIAL MEMBER Thermo Fisher Scientific India Pvt. Ltd. of the IT Act in the computation sheet of the final assessment ld counsel submitted that that the AO be directed to interest under section 244A of the Act in the computation sheet and delete the erroneous demand of Rs. 80,79,043. 7.4 We have heard rival submission on the issue in dispute. This issue is consequential to the computation of tax liability while ct of this order. We direct the Assessing Officer to verify the claim while giving effect of this order of Tribunal. The ground of the appeal is accordingly allowed for statistical purpose. Penalty proceeding he ground no. 5 relates to initiating penalty proceedings under section 274 r. w.s. 271(1)(c) of the IT Act stating that the Appellant has furnished inaccurate particulars of income. 8.1 The ground raised being premature at this stage, as no penalty has been levied by the impugned assessment order, therefore the ground raised is dismissed as infructuous. In the result, the appeal of the assessee is allowed for ed in the open Court on 31/07/2023. Sd/- Sd/ KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Thermo Fisher Scientific India Pvt. Ltd. 31 ITA No. 769/Mum/2023 of the IT Act in the computation sheet of the final assessment that the AO be directed to interest under section 244A of the Act in the computation sheet and delete the erroneous demand of Rs. 80,79,043. 7.4 We have heard rival submission on the issue in dispute. This issue is consequential to the computation of tax liability while ct of this order. We direct the Assessing Officer to verify the claim while giving effect of this order of Tribunal. The ground of the appeal is accordingly allowed for statistical purpose. initiating penalty proceedings under section 274 r. w.s. 271(1)(c) of the IT Act stating that the Appellant 8.1 The ground raised being premature at this stage, as no penalty ssessment order, therefore the In the result, the appeal of the assessee is allowed for /07/2023. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Mumbai; Dated: 31/07/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Thermo Fisher Scientific India Pvt. Ltd. Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Thermo Fisher Scientific India Pvt. Ltd. 32 ITA No. 769/Mum/2023 BY ORDER, (Assistant Registrar) ITAT, Mumbai