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This is an appeal filed by the Revenue directed against the order of the learned Commissioner of Income Tax (Appeals)-3, Madurai :- 3 -:
(hereinafter called as 'CIT(A)') dated 10.03.2017 for the assessment year (AY) 2012-13.

2. The Revenue raised the following grounds of appeal:

"1. The order of the CIT(Appeals) is opposed to law on the facts and in the circumstances of the case.
2.1 The CIT(A) has erred in allowing the depreciation on Goodwill of Rs. 2,87,25,000/- even though the assessee company had only received the Goodwill as a result of succession of firm by it as per the provisions of section 47(xiii) of the I.T. Act.
The respondent-assessee company had taken over the business of the firm namely RMKV Silks as a going concern in terms of the business transfer agreement dated 08.01.2012. It is claimed by the seller firm that :- 5 -:
the transaction of take over the business falls within the ambit and scope of provisions of s. 47(xiii) of the Act as:
1. There is a transfer of entire assets and liabilities, including intangible assets from one entity to another as per the books of accounts of the seller as a going concern;

from the erstwhile firm and therefore, the depreciation on goodwill, knowhow is allowable placing reliance on the following decisions: 
 CIT v. Smifs Securities                   348 ITR 302 (SC)
      Hindustan Coca cola Beverages             331 ITR 192 (Del)
      B.Raveendran Pillai v. CIT                332 ITR 531(Ker.)
      Areva T&D                                 345 ITR 421 (Del.)
Triune Energy Services P. Ltd. v. DCIT    237 Taxman 230 (Del.)
Chowgule & Company P. Ltd. v. Addl. CIT 2016-TIOL-244HC-Mum-IT CLC & Sons Pvt. Ltd. v. ACIT (ITAT Delhi) (Spl. Bench) 3.9 It was further submitted that the explanations 1 to 8 to s. 43(1) of the Act deeming the value of cost of acquisition of assets under such circumstances are not applicable in case of acquisition of assets taken over by a transfer under the provisions of s. 47(xiii) of the Act. It is further submitted that even the provisions of s. 43(6) of the Act, which provides that WDV of depreciable assets of the transfer of the company shall be the WDV of the assets in the hands of transferee company are not applicable, as it is not a case of slump sale.

:- 21 -:

6.3 The another important point to be noted is that the assessee firm had not credited the goodwill, know-how to the capital accounts of the partner. In other words, it is a device adopted by the respondent-

assessee and as well as respondent-assessee to claim deduction in the hands of the company and benefit the partners of the erstwhile firm and who are also the Directors of the assessee firm. It is again another dubious device adopted with an intention of avoiding the payment of taxes. In fact, the segregation of the partners' accounts into capital and current account is only for operation convenience and it constitutes one account only namely capital accounts of the partners. By segregating the capital account, into capital and current account, the seller firm conveniently avoided payment of capital gains on slump sale transaction by availing the exemption conferred under the provisions of s. 47(xiii) of the Act.