Case Law Details
Millennium Engineers & Contractors Ltd Vs DCIT (ITAT Pune)
Introduction: The Income Tax Appellate Tribunal (ITAT) Pune recently delivered a crucial judgment in the case of Millennium Engineers & Contractors Ltd vs DCIT. The tribunal ruled against allowing depreciation under Section 32(1)(ii) of the Income Tax Act, 1961, in a scenario where no goodwill was acquired by a subsidiary company.
Detailed Analysis: The assessee, an Indian company, acquired its subsidiary, Reyami Millennium Interior Pvt Ltd (RMIPL), under an approved scheme of arrangement. Despite recording a debit figure of ₹2,99,42,138/- as goodwill, the claim for depreciation at 25% under Section 32(1)(ii) was disallowed by the Assessing Officer during scrutiny assessment.
The Authorised Representative argued, citing the scheme of arrangement and relevant accounting standards, that the excess payment over net assets constituted goodwill. The Departmental Representative countered, stating that RMIPL had no goodwill, and the appellant failed to prove any excess payment.
The ITAT bench, consisting of S S Viswanethra Ravi and G.D. Padmahshali, held that no goodwill was acquired or purchased by the appellant. They emphasized that without evidence of excess payment or existing goodwill, no claim for depreciation could be sustained. The appeal was subsequently dismissed.
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