DCIT Vs Transworld Furtichem Private Limited (ITAT Mumbai)
The Mumbai ITAT held that once depreciation on an intangible asset such as a trademark has been allowed in the first year after due scrutiny, the Assessing Officer cannot disallow the same in subsequent years without any change in facts.
In this case, the assessee acquired a trademark pursuant to an amalgamation approved by the NCLT and claimed depreciation under Section 32. The claim was examined and accepted in the first year (AY 2016–17). However, in subsequent years, the AO disallowed depreciation alleging that the trademark was fictitious and improperly valued.
The Tribunal rejected this approach, emphasizing the principle of consistency laid down by the Supreme Court in Radhasoami Satsang. It held that once the opening Written Down Value (WDV) is accepted in the earlier year, the AO cannot re-examine the very existence or valuation of the asset in later years.
It was also noted that the trademark was genuine, supported by registration and business usage, and formed part of assets transferred under an approved amalgamation scheme.
Accordingly, the ITAT directed that depreciation be allowed on the opening WDV, dismissed the Revenue’s appeals for multiple years, and allowed the assessee’s cross-objections.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
