Case Law Details
Apna Incable Broad Band Services Pvt. Ltd. Vs DCIT (ITAT Hyderabad)
The AO was of the opinion that the network rights are not intangible assets and therefore, depreciation is not allowable thereon. The AO treated the network rights as “goodwill” and observing that no depreciation is allowable on goodwill u/s 32(1)(ii) of the Act, he disallowed the claim of depreciation and brought it to tax.
The learned Counsel for the assessee Shri A. Srinivas, while reiterating the submissions made by the assessee before the authorities below submitted that the findings of the AO that the Network Rights is not an intangible asset but is a “goodwill” has not been disturbed by the CIT (A). Therefore, he submitted that the assessee accepts the said network rights to be “goodwill” and as per the judgment of the Hon’ble Supreme Court in the case of CIT Kolkata vs. Smifs Securities Ltd reported in 348 ITR 302 (S.C), “goodwill” is an intangible asset and depreciation is allowable thereon. Thus, he prayed for allowance of depreciation. The learned DR, on the other hand, supported the orders of the authorities below.
Having regard to the rival contentions, we find that the findings of the AO that “Network Rights” is “goodwill” has not been disturbed by the CIT (A) and as held by the Hon’ble Supreme Court in the case of CIT vs. Smifs Securities Ltd (Supra), depreciation is allowable on “goodwill”. Respectfully following the judgment of the Hon’ble Apex Court, we direct the AO to allow depreciation on “network Rights”.
FULL TEXT OF THE ITAT JUDGMENT
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