DCIT Vs Nirma Limited (ITAT Ahmedabad)
Ahmedabad ITAT Upholds Depreciation on Goodwill and Brands; Deletes 106.56 Crore TP Adjustment-Steam Cannot Be Valued at Nil Merely Because It Is a By-product
Summary: The Revenue challenged the orders of the CIT(A) for Assessment Years 2018-19 and 2020-21, concerning depreciation on goodwill arising from amalgamation, depreciation on brands and trade names transferred pursuant to demerger, transfer-pricing adjustments relating to inter-unit electricity transfers, and valuation of steam transferred between eligible and non-eligible units.
On depreciation of goodwill and brands/trade names, the Tribunal upheld the CIT(A)’s deletion of the additions, relying upon earlier decisions of the Tribunal in the assessee’s own case for earlier assessment years. The Revenue’s contention that the earlier decisions had not attained finality because appeals were pending before the Gujarat High Court did not result in departure from those decisions.
In relation to captive electricity, the Tribunal upheld the CIT(A)’s acceptance of the assessee’s benchmarking. The CIT(A) had relied upon the jurisdictional Gujarat High Court decision in CIT vs. Gujarat Alkalies & Chemicals Ltd., 395 ITR 247, concerning valuation of electricity supplied by a captive power plant, as well as earlier decisions in the assessee’s own case. Consequently, the Revenue’s challenges to the adjustments of ₹117.72 crore for AY 2018-19 and ₹20.17 crore for AY 2020-21 were dismissed.
