Thermo Fisher Scientific India Private Limited Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that depreciation on the business/commercial rights arising from the manufacturing contracts, supply contracts and maintenance contracts as claimed by the assessee is allowable. Accordingly, appeal allowed.
Facts- The assessee is engaged in the business of manufacturing, installation and sale (including trading) of scientific/medical laboratories equipment. The case of the assessee was selected for complete scrutiny under the faceless assessment regime wherein the assessment unit had passed the assessment order dated 26.09.2022 u/s. 143(3) of the Income Tax Act, 1961, assessing the total income of the assessee company at Rs.70,57,25,800/-. The assessment unit had made certain disallowances/additions viz. (i) disallowance of deduction u/s. 80G of the Act: Rs.17,50,000/-; and (ii) disallowance of depreciation of mfg and supply contracts: Rs.73,06,263/-.
CIT(A) partly allowed the appeal. Being aggrieved, assessee has preferred the present appeal.
Conclusion- In assessee’s own case it is held that the entire exercise of determining the nature of manufacturing contracts, supply contracts and maintenance contracts acquired by the assessee from the afore-mentioned slump sale acquisitions is merely academic, as even if these contracts are not considered as separate intangible assets as per the provisions of Accounting Standard-26, even then the excess consideration paid over and above the fair value of the recognised assets and liabilities acquired by way of slump sale transactions has been held to be goodwill in nature and the assessee was allowed depreciation on the same under the provisions of the Act by the coordinate bench of the Tribunal. Accordingly, accepting the alternative plea of the assessee and respectfully following the decision of the coordinate bench of the Tribunal rendered in assessee‘s own case, we direct the AO to treat the excess of consideration paid over and above the fair value of the assets and liabilities as goodwill and allow the depreciation on same to the assessee under the provisions of the Act. On similar lines, the depreciation on goodwill amounting to INR 15,96,20,019claimed by the assessee in the year under consideration is also allowed. As a result, grounds no.2-5, raised in assessee‘ s appeal, are allowed.
