ITAT restores issue of eligibility of Assessee to claim Depreciation on Goodwill to AO after affording adequate opportunity of Hearing

The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) restored the issue of eligibility of assessee to claim depreciation on Goodwill to AO after affording adequate opportunity of hearing.

The assessee, TUV Rheinland NIFE Academy Private Limited is a subsidiary of TUV Rheinland (India) Pvt. Ltd. The ultimate parent company is TUV SUD Group, Germany. This group is providing technical services worldwide.The assessee company is engaged in the business of providing Vocational training to the students in the fields of fire safety, lift technology, fiber optics, etc.

The assessee submitted that it is a settled principle that the consideration paid in excess of value tangible assets while acquiring a going concern on slump sale basis is to be classified as goodwill.

The tax authorities have pointed out that the assessee has shown the entire consideration paid by it as goodwill, while M/s. NIFE Academy had fixed assets for Rs.96.84 lakhs. It is not clear from the submissions made by the assessee as to what was the net asset value of NIFE Academy. We have noticed that the amount paid in excess of the net asset value shall constitute goodwill. Hence, there is some obscurity on this aspect.

The coram of Judicial Member, Beena Pillai and Accountant Member, B.R. Baskaran ruled that as the facts are not clear in the instant case. Accordingly, in the interest of natural justice, we are of the view that the assessee should be provided with an opportunity to present the relevant facts. Accordingly, the order passed by CIT(A) on this issue is  set aside and restored the same to the file of the A.O. for examining afresh. After considering the information and explanations furnished by the assessee and also after affording adequate opportunity of being heard, the AO may take appropriate decisions in accordance with law.

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TUV Rheinland NIFE Academy Private Limited vs ACIT , 2021 TAXSCAN (ITAT) 156 , Smt. Kavita Paramesh , Advocates - Shri Muzaffar Hussain,Shri Priyadarshi Mishra