PR.COMMISSIONER OF INCOME TAX-6versusFRANKLIN TEMPLETON ASSET MANAGEMENT(INDIA) PVT LTD

                                                                      19-ITXA-2657-2018.DOC




                                                                                   Rekha Patil


                             IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                 ORDINARY ORIGINAL CIVIL JURISDICTION
                                  INCOME TAX APPEAL NO. 2657 OF 2018

                      Pr. Commissioner Of Income Tax-6           …Appellant
                            Versus
                      Franklin Templeton Asset Management(India) …Respondent
                      Pvt Ltd.

                      Mr. Akhilesh Kumar Sharma, for the Appellant-Revenue.
                      Mr. Nishant Thakkar with Mr. Hiten Thakkar, A. Hasan i/b Mint &
                           Confers, for the Respondent.

                                           CORAM:         SUMAN SHYAM &
                                                          GAUTAM A. ANKHAD, JJ.
                                           DATED:         1st OCTOBER, 2026.
                      PC:-
                      1.      Heard Mr. Akhilesh Kumar Sharma, learned Counsel

                      appearing for the Appellant-Revenue. Also heard Mr. Nishant

                      Thakkar, learned Counsel for the Respondent.


                      2.     This Appeal filed by the Revenue under Section 260-A of the

                      Income Tax Act, 1961 ( for short ‘Act of 1961’) is directed against

                      the Judgment and Order dated 13th December, 2017, passed by the

                      learned Income Tax Appellate Tribunal (‘ITAT’) Mumbai, in Income

                      Tax Appeal No.90/Mum/2016 (A.Y.2010-11), dismissing the

                      Appeal filed by the Revenue.
REKHA
PRAKASH
PATIL
Digitally signed by
REKHA PRAKASH
PATIL
Date: 2026.10.01
17:18:41 +0530
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3.      The core controversy involved in this proceeding was

pertaining to the question, as to whether, goodwill is an intangible

asset eligible for depreciation?             The said question has been

answered by the learned Tribunal in the following manner.-


        “8. We have heard rival contentions and perused the material
        available on record. As far as the issue whether goodwill is an
        intangible asset eligible for depreciation is concerned, it is no
        more res integra in view of the decisions of Hon'ble Supreme
        Court in Smifs Securities Ltd. (supra) and catena of decisions
        of different High Courts including the Hon'ble Jurisdictional
        High Court as well as different Benches of the Tribunal. In fact,
        in assessee's own case for assessment year 2005-06, the
        Tribunal has upheld the entitlement of the assessee to claim
        depreciation on goodwill. In view of the aforesaid, we uphold
        the order of the learned Commissioner (Appeals) in allowing
        assessee's claim of depreciation. However, as could be seen, in
        assessment year 2005-06 the Tribunal has restored the issue of
        quantification of depreciation on goodwill to the file of the
        Assessing Officer for computation. Therefore, we direct the
        Assessing Officer to allow depreciation on goodwill in the
        impugned      assessment   year   after   the   quantification   of
        depreciation on goodwill is made in assessment year 2005-06
        as per the direction of the Tribunal. Grounds raised are
        dismissed.”


4.      Notwithstanding the same, the Department has preferred

this Appeal by projecting the following substantial question of

law:-




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      “Whether    depreciation    on   goodwill,   arising   out   of

      amalgamation, without placing a restriction on such deduction

      as provided in the fifth proviso of Section 32(1) of the Income-

      tax Act, 1961 is allowable?”

5.    Questioning the maintainability of this Appeal, Mr. Thakkar,

learned Counsel appearing for the Respondent has argued that the

core legal issue involved in this proceeding is settled in view of the

previous decision of the Hon’ble Supreme Court rendered in the

case of Commissioner of Income-ax, Kolkata vs. Smifs Securities

Ltd. 1, whereby, the question has been unambiguously answered in

the ‘Affirmative’ and in favour of the assessee. Not only that, Mr.

Thakkar, by pointing out the observations made by the learned

Tribunal submits that similar view expressed for the assessment

year 2005-2006, in the case of the same assessee, has been

accepted by the Department. Under such circumstances, submits

Mr. Thakkar, the projected substantial question of law does not

arise for consideration before this Court.


6.    We have examined the material on record and have also

carefully considered the arguments addressed by both the sides. In

the first place, as has been noted above, the issue which was


1     (2012)24 taxmann.com 222




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relevant before the learned Tribunal was, as to whether, goodwill is

an intangible asset which is eligible for depreciation? The said

issue was considered by the Hon’ble Supreme Court in the case of

Smifs Securities Ltd (supra), as Question No.[b], which reads as

follows:-

      “Question No.[b]: “Whether goodwill is an asset within the
      meaning of Section 32 of the Income Tax Act, 1961, and
      whether depreciation on ‘goodwill’ is allowable under the said
      Section?”

      The question was answered in the following manner:-

      “ In the circumstances, we are of the view that ‘Goodwill’ is an
      asset under Explanation 3(b) to Section 32(1)of the Act.”


7.    In view of the above, the substantial question of law

projected by the Appellant does not survive for consideration by

this Court.


8.    The substantial questions of law formulated by the learned

Departmental Counsel, has apparently been couched in a slightly

different form so as to give it the shape of an independent and

different substantial question of law which was not involved in the

case of Smifs Securities Ltd (supra).            However, on a careful

examination of the same, we find that the question as to whether,

depreciation of goodwill arising out of amalgamation without




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placing a restriction on such deduction, as provided in the fifth

proviso of Section 32(1) of the Act of 1961, was neither

categorically raised by the Department nor was the said issue

considered by the learned Tribunal. The core issue appears to be

the same as has been considered by the Hon’ble Supreme Court in

Smifs Securities Ltd (supra).


9.    Under such circumstances, the Department cannot be

permitted to raise an issue for the first time, before this Court,

which was never raised before the Tribunal or the CIT(A).


10.   For the reasons stated herein-above, we are of the view that

there is no substantial question of law arising in this case for

consideration by this Court in exercise of Powers conferred under

Section 260-A of the Act of 1961.


11.   The Appeal is accordingly dismissed.




(GAUTAM A. ANKHAD, J.)                        (SUMAN SHYAM, J.)
                                                                   {




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