Case Law Details
Johnson Matthey Chemicals India Pvt. Ltd vs. DCIT (ITAT Pune)
After going through the terms of BTA, Novation Agreement, the Toll Agreement, we find no merit in the stand of Revenue in this regard. The learned Departmental Representative for the Revenue also was of the view that no part of slump price is to be attributed to the know-how, patents and trademarks, since the same has not been acquired by the assessee. Even if we accept the said stand of learned Departmental Representative for the Revenue, ultimately after the slump price has been attributed first to the value of tangible assets, then the balance is to be attributed to intangible assets and once the same is done and whether it is under the umbrella of know-how, trademarks, patents or goodwill, it makes no difference since all these are covered under the umbrella of intangible assets, which are eligible for claim of depreciation under section 32(1)(ii) of the Act. The goodwill is also an intangible asset eligible for said depreciation as held by the Hon’ble Supreme Court in CIT Vs. Smifs Securities Ltd. (supra). In view thereof, we find no merit in the stand of learned Departmental Representative for the Revenue and the same is rejected.
The next issue is whether slump price can be bifurcated between value of tangible and intangible assets. The Hon’ble Punjab & Haryana High Court in Shreyans Industries Ltd. Vs. JCIT (2005) 277 ITR 443 (P&H) has laid down the proposition that in case slump payments have been received for all the rights transferred including the assets transferred, then consideration has to be allocated amongst the said assets.
The Hon’ble High Court thus, held that in the case of slump sale wherein both the parties had relied on Surveyor’s report in determining the consideration paid in lump sum, then depreciation was to be allowed on cost of fixed assets as per Surveyor’s report.
Further, the Hon’ble High Court of Delhi in Triune Energy Services (P.) Ltd. Vs. DCIT (supra) while considering the case of slump sale referred to the AS-10 and upheld the bifurcation of value of slump price over cost of tangibles and intangibles.
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