DCIT Vs Nirma Limited (ITAT Ahmedabad)
Summary: The Ahmedabad Bench of the Income Tax Appellate Tribunal dismissed both Revenue appeals, ITA Nos. 1569 and 1570/AHD/2026, concerning Assessment Years 2018-19 and 2020-21. The appeals challenged orders dated 09.02.2026 passed by the Commissioner of Income Tax (Appeals), Ahmedabad-13 under Section 250 of the Income-tax Act, 1961. Since the appeals involved identical issues, they were heard together and disposed of through the common order pronounced on 21.08.2026.
For AY 2018-19, the Revenue challenged deletion of an addition of Rs. 4,09,94,465/- relating to depreciation on goodwill arising from amalgamation of Saurashtra Chemicals Ltd. The Revenue contended that the amalgamating company was a sick, loss-making entity with negative net worth and that the goodwill was merely an accounting entry. The CIT(A), however, had relied upon earlier decisions of the Tribunal in the assessee’s own case for AYs 2012-13 to 2016-17. The Tribunal upheld the CIT(A)’s order and dismissed the corresponding Revenue grounds.
The Revenue also challenged deletion of Rs. 1,73,64,613/- relating to depreciation on brands and names transferred from the demerged unit. Again, the CIT(A) had relied upon the Tribunal’s earlier decisions in the assessee’s own case. The Tribunal followed the same earlier decisions and dismissed the Revenue’s grounds.
