KPIT Cummins Global Business Solutions Ltd. Vs ACIT (ITAT Pune)
The issue which arises in the present appeal is whether the payment so made by the assessee is in the category of intangible assets which is eligible for claim of depreciation under section 32(1)(ii) of the Act. The Assessing Officer had denied the said claim of assessee on the ground that the said payment did not fall in the category of know-how, patents, copyrights, trademark, license, franchise, etc. The Assessing Officer however, vide para 3.9.1 though admits that at best the payment could be called as goodwill, which had been acquired by the assessee from Cummins through the said agreement. The terms of agreement and what the assessee has acquired have been elaborately explained by the assessee before the Assessing Officer. It may be pointed out that at the time when the Assessing Officer passed the order, goodwill was not considered as eligible for claim of depreciation under the term ‘intangible asset’. The Assessing Officer denying the claim of depreciation observed that at best what was paid was goodwill. After passing of the order of Assessing Officer and DRP, the Hon’ble Supreme Court in CIT Vs. Smifs Securities Ltd. (2012) 348 ITR 302 (SC) has held that goodwill was an intangible asset under section 32(1)(ii) of the Act covered with expression ‘any other business or commercial rights of similar nature’. The Hon’ble Supreme Court also held the assessee entitled to claim the depreciation on such goodwill.
