Assessee’s claim for expenditure of Rs. 59,17,000/- for cost of adhesive stamp in connection with preparation of deed of transfer and assignment for acquisition of receivables was allowed by the Tribunal as the same was incurred for receivables which is a part of current asset and therefore revenue expenditure. CIT(A)’s observation that that the payment of stamp duty was in connection with acquisition of industrial steam turbine i.e. an industrial unit or a capital asset and therefore it is a capital expenditure set aside.

In respect of provision for warranty of Rs. 2,76,18,000/-. The Assessing Officer and CIT(A) denied this claim on the ground that it is an unascertained and a contingent liability and the CIT(A) restricted this disallowance only for provision made during the year. The Tribunal noted that the claim was allowed in subsequent years. It held that when an expenditure or obligation is anticipated on the basis of past experiences, provision for such expenditure cannot be held as contingent liability and allowed the claim of assesse.

In respect of claim of depreciation on customer contracts made by the Assessee by referring to the provisions of section 2(11) & 32(1)(ii). The lower authorities denied the claim and held that depreciation under section 32(1)(ii) cannot be allowed as customer contracts were not in the nature of ‘intangible assets’ as contemplated under section 2(11). Assessee raised an additional ground for depreciation on goodwill under section 32 before the Tribunal. On the basis of judicial precedents, the Tribunal observed that goodwill was an intangible asset entitled for depreciation under section 32. It noted the claim of the Assessee that goodwill arising out of slump sale agreement and customer contract which were similar to goodwill being an intangible asset were also eligible for depreciation. On the basis of judicial precedents, it concluded that goodwill and customer contracts were eligible for depreciation under section 32. Rotork Controls India P. Ltd. v. CIT (2009) 314 ITR 62)(SC)]; Techno Shares and Stocks Limited v. CIT (2010) 327 ITR 323 (SC); CIT  v. Smifs Securities Ltd.  (2012) 348 ITR 302  (SC),  Areva T&D India Ltd. v. CIT [ITA No. 315/2010]relied (I.T.A. No. 211(Mum)2008 & I.T.A. No. 2500(Mum) 2010 dt. 16-9- 2020) (AY .2004-05,  2005-06)