ITAT upholds CIT(A)'s decision on goodwill depreciation for AY 2009-10, stresses precedent consistency.

The ITAT affirmed the CIT(A)'s decision regarding the allowability of depreciation on goodwill for AY 2009-10. The judgment emphasized the importance of precedent and consistency in tax assessments, noting the relevance of past decisions and legal interpretations in determining current tax liabilities. The ITAT upheld the CIT(A)'s order, dismissing the revenue's appeal, as the assessee correctly claimed depreciation on goodwill as intangible assets, supported by a precedent set in a previous case and in line with the Apex Court's decision in the Smifs Securities Ltd case.

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Issues:
Appeal against CIT(A)'s order for AY 2009-10 - Allowability of depreciation on goodwill - Interpretation of CBDT circular No.549 dated 31.10.1989.

Analysis:
The appeal pertains to the allowability of depreciation on goodwill for AY 2009-10. The assessee initially declared total income of &8377; 63,71,94,610/-, later revised to &8377; 33,90,50,860/- by claiming depreciation of &8377; 29.81 crores on intangible assets. The AO disallowed the depreciation, resulting in a revised assessment of &8377; 63,71,94,610/- under normal provisions and &8377; 42,00,26,450/- under section 115JB. The CIT(A) allowed the appeal, directing the AO to permit depreciation on intangible assets as per audited books. The revenue contended that the CIT(A) erred by following a decision on goodwill from a different case and by ignoring the CBDT circular.

Upon review, the ITAT found that the assessee correctly claimed depreciation on goodwill as intangible assets. Notably, a similar issue was decided in favor of the assessee for AY 2008-09, establishing a precedent. The ITAT observed that the CIT(A)'s decision was consistent with the earlier ruling and the Apex Court's decision in the Smifs Securities Ltd case. Consequently, the ITAT upheld the CIT(A)'s order, dismissing the revenue's appeal.

In conclusion, the ITAT affirmed the CIT(A)'s decision regarding the allowability of depreciation on goodwill for AY 2009-10. The judgment highlighted the importance of precedent and consistency in tax assessments, emphasizing the relevance of past decisions and legal interpretations in determining current tax liabilities.

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