Gati Kintetsu Express Pvt. Ltd Vs Ass./DCIT (ITAT Mumbai)
Summary: The Income Tax Appellate Tribunal, Mumbai Bench “G”, disposed of the assessee’s consolidated appeals for AYs 2013-14 to 2017-18 arising from NFAC orders. The principal dispute concerned depreciation claimed on intangibles and goodwill arising from the Business Transfer Agreement dated 13.02.2012 under which the assessee acquired Gati Ltd.’s Express Distribution and Supply Chain business as a going concern. For AY 2013-14, the assessee had treated the excess of liabilities taken over over the value of assets as intangibles and goodwill and claimed depreciation of Rs. 31,26,46,956.
The lower authorities had rejected the claim principally on the grounds that no monetary consideration was paid, no goodwill was purchased, the transferor had treated the surplus differently in its books, and the fifth proviso to section 32(1) restricted the depreciation claim. The assessee relied on the terms of the BTA, which expressly transferred the business division together with properties, assets, resources, rights, privileges, licences, goodwill and intellectual property, as well as on an independent valuer’s report identifying distribution network, customer relations and marketing/trading reputation as intangible components.
The Tribunal held that the objection that no intangible asset or goodwill had been transferred was without basis in view of the BTA. It also accepted the assessee’s submission that the liabilities assumed in excess of tangible assets constituted consideration in substance, relying on the decision in DCIT v. Summit Securities Ltd. and other authorities concerning slump-sale transactions. The Tribunal relied on CIT v. Smifs Securities Ltd. and the decisions in I & B Seeds P. Ltd., Areva T & D Ltd. and ACIT v. Dorma India (P.) Ltd. in considering depreciation eligibility and the fifth proviso to section 32(1), and rejected the contrary authorities cited by the Revenue as decisions rendered before Smifs Securities.
