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In view of the specific 5th proviso to section 32, the succeeding entity cannot take advantage of the figure of revaluation which was done in the books of predecessor. Since the predecessor could not have claimed depreciation on the revaluation figure, this proviso specifically debars successor also to that effect.

Shanti Prime Publication Pvt. Ltd.

Sec. 32 of Income Tax Act, 1961 – Depreciation – Matter remanded to CIT(A) regarding claim of depreciation on the trademark with a direction to examine the applicability of the 5th proviso to section 32(1) and give reasons in writing on how the amended provisions apply to the facts of the present case.

Facts: The core issue raised in the appeal related to the allowability of depreciation on the actual cost of the assets arrived at by virtue of revaluation of the trade mark.

Held, that the CIT (A) did not consider the fact whether the provisions of Explanation-3 to section 43(1) actually apply to the facts of the present case; whether AO merely ignored the claim of depreciation on the revalued cost of the trademark. Further, CIT (A) has also not considered whether there is any substitution of valuation at all when the AO considered the value of the trademark at “zero”. CIT (A) should examine the applicability of the 5th proviso to section 32(1) and give reasons in writing on how the amended provisions apply to the facts of the present case. Thus, we remand the whole of the issue relating to the claim of depreciation on the trademark to the file of the CIT (A) – PIK STUDIOS P. LTD. Vs. DEPUTY CIT [2020] 79 ITR (TRIB) 533 (ITAT-MUMBAI)

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