Depreciation on Goodwill Allowed, Expenses Apportionment Upheld in Favorable Tribunal Ruling

The Tribunal allowed the assessee's appeal, permitting depreciation on goodwill based on precedents from Kerala High Court and Delhi High Court. Additionally, the Tribunal upheld the provision for leave encashment and the method of apportionment of expenses, referencing favorable decisions and judgments from Calcutta High Court and Madras High Court. As a result, the Tribunal set aside the CIT(A)'s order and ruled in favor of the assessee on all issues.

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Issues Involved:
Depreciation on goodwill, Provision for leave encashment, Apportionment of expenses.

Depreciation on Goodwill:
The assessee appealed against the order passed by the CIT(A) disallowing depreciation on goodwill. The counsel for the assessee argued that the assessee is entitled to depreciation on goodwill as it is a valuable commercial asset. The Tribunal referred to judgments of the Kerala High Court and Delhi High Court, which held that goodwill is an intangible asset eligible for depreciation under the Income Tax Act. The Tribunal, following the precedents, allowed the appeal, stating that the assessee is entitled to depreciation on goodwill.

Provision for Leave Encashment:
The issue of provision for leave encashment was raised by the assessee, contending that the authorities erred in disallowing the provision. The Tribunal referred to a previous decision in favor of the assessee and a judgment of the Calcutta High Court, which supported the allowance of the provision for leave encashment. Citing these precedents, the Tribunal allowed the ground of appeal related to provision for leave encashment for the current assessment year.

Apportionment of Expenses:
The third issue pertained to the apportionment of expenses, with the counsel for the assessee arguing that the method adopted by the Assessing Officer was arbitrary and not supported by evidence. The Tribunal mentioned a previous decision in favor of the assessee and a judgment of the Madras High Court, which upheld the method of apportionment adopted by the assessee. The Tribunal, finding no contrary evidence presented by the Departmental Representative, allowed the ground of appeal related to the apportionment of expenses. Consequently, the Tribunal set aside the order of the CIT(A) and allowed the appeal of the assessee based on the above analysis.

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