Issue raised on confirmation of disallowance of depreciation amounting to Rs.2,01,68,047/- on Intangible assets

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE

BEFORE SHRI R.S. SYAL, VP AND
SHRI S.S. VISWANETHRA RAVI, JM

ITA No. 3030/PUN/2017
Assessment Year : 2014-15

Coventya India Private Limited
Gat No.520 B, Shelkewadi,
Rihe Andhale Road,
Ghotawade Mulshi,
Pune-412 115
PAN : AAECC5710A
Appellant

V/s.

The Income Tax Officer,
Ward-1(3), Pune.
Respondent

Assessee by : Shri Kishore Phadke
Revenue by : Shri Vitthal Bhosale

Date of Hearing : 29.04.2021
Date of Pronouncement : 29.04.2021

 ORDER

PER R.S. SYAL, VP :

This appeal by the assessee is directed against the order dated 29.09.2017 passed by the ld. CIT(Appeal), Pune-1 in relation to the assessment year 2014-15.

2. The assessee has filed modified grounds of appeal. The only issue raised through the original and modified grounds is the confirmation of  disallowance of depreciation amounting to Rs.2,01,68,047/- on Intangible assets.

3. Succinctly, the facts of the case are that the assessee, during the previous year relevant to the assessment year 2012-13, acquired electroplating business of Chemetall Rai India Ltd. (CRIL) vide agreement dated 15.12.2011 for a total consideration of Rs.11.80 crore including payment towards Intangible assets of Rs.11.51 crores and Tangibles assets amounting to Rs.29 lac. The assessee claimed depreciation of Rs.2,01,68,047/- for the year under consideration in respect of such Intangible assets with opening written down value as on 01.04.2013 as increased by an addition of Rs.1 crore made during the year. The Assessing Officer noticed the break-up of Rs.11.51 crore: Non compete fees of Rs.11,09,00,000/-; Goodwill of Rs.44,10,000/-; Distribution net work rights of Rs.5.50 crore; and Customer list of Rs.4.17 crore. Addition of Rs.1 crore made during the year was in Non compete fees. The Assessing Officer did not find any difficulty in allowing depreciation on Goodwill by relying upon the judgment of the Hon‟ble Supreme Court in the case of CIT Vs. Smifs Securities Ltd. (2012) 348 ITR 302 (SC). He, however, held that other items: Non compete fees, Distribution net work rights and Customer list included by the assessee under the head `Intangible assets‟ for claiming depreciation u/s.32(1)(ii) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) were not of the nature as specified in the section. He, therefore, held that no depreciation was eligible on such assets. 

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