High Court upholds allowance of depreciation on goodwill acquired in amalgamation, citing Supreme Court precedent.

The High Court of Bombay dismissed the appeal challenging the order of the Income Tax Appellate Tribunal for Assessment Year 2009-10 regarding amortization/depreciation on goodwill. The Court upheld the Tribunal's decision allowing the assessee to claim depreciation on goodwill acquired during an amalgamation, citing precedent from the Supreme Court. The Court emphasized the settled nature of the issue based on previous decisions and concurred with the lower authorities' findings, leading to the dismissal of the appeal without costs. The judgment underscores the significance of established legal principles and precedent in tax treatment matters involving goodwill and depreciation.

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Issues:
Challenge to order of Income Tax Appellate Tribunal regarding amortization/depreciation on goodwill for Assessment Year 2009-10.

Analysis:
The High Court of Bombay heard an appeal under Section 260-A of the Income Tax Act, 1961, challenging the order dated 17 August 2016 passed by the Income Tax Appellate Tribunal (the Tribunal) concerning the Assessment Year 2009-10. The primary question raised by the Revenue for consideration was whether the Tribunal was correct in allowing the assessee to claim amortization/depreciation on goodwill without any specific consideration being paid for its acquisition during an amalgamation. The impugned order of the Tribunal upheld the view of the Commissioner Income Tax (Appeals) that depreciation on goodwill is permissible, citing the decision of the Supreme Court in the case of Commissioner of Income Tax(Appeals) Vs. Smifs Securities Ltd. The High Court noted that both the Commissioner and the Tribunal had reached a concurrent finding based on the amalgamation scheme, treating the excess amount paid for taking over assets as goodwill. The Court emphasized that the issue had already been settled by the Supreme Court in the Smifs Securities case, rendering the proposed question of law insubstantial and thus not entertained.

The High Court, therefore, dismissed the appeal, citing the conclusive nature of the Supreme Court's decision and the concurrent findings of the lower authorities. No costs were awarded in the matter. The judgment highlights the importance of precedent and established legal principles in determining tax treatment, particularly in cases involving goodwill and depreciation.

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