Tribunal allows depreciation on goodwill and non-compete fee, settling assessment year disputes.

The Tribunal allowed the assessee's appeals, permitting depreciation on goodwill, and dismissed the Revenue's appeals. The dispute regarding depreciation claims on goodwill and non-compete fee for the relevant assessment years was settled on 15th May 2019. The Tribunal held that the difference between the cost of an asset and the amount paid constitutes goodwill, making it depreciable, and upheld the CIT(A)'s decision to allow depreciation on the non-compete fee based on a binding decision by the jurisdictional High Court.

---

---

Issues:
- Challenge to disallowance of depreciation claimed on goodwill
- Challenge to granting depreciation on non-compete fee

Analysis:
1. Depreciation on Goodwill:
- The appellant contested the decision of the CIT(A) confirming the disallowance of depreciation claimed on goodwill.
- The appellant, a company, purchased a retail business as a going concern for Rs. 18.50 crores, treating the difference as goodwill.
- The AO disallowed depreciation on goodwill, stating it was not allowable. The appellant argued part of the amount was for the trade name.
- The CIT(A) confirmed the disallowance, noting the appellant's own submission that no amount could be attributed to goodwill.
- The Supreme Court has clarified that the difference between the cost of an asset and the amount paid constitutes goodwill, making it depreciable.
- The Tribunal held that the tax authorities were unjustified in denying depreciation on the goodwill amount and directed the AO to allow depreciation on the opening WDV value of goodwill.

2. Depreciation on Non-Compete Fee:
- The Revenue challenged the CIT(A)'s decision to allow depreciation on the non-compete fee.
- The High Court of Delhi held that non-compete fee does not qualify for depreciation under Section 32 of the Income-tax Act.
- However, the CIT(A) followed a binding decision by the jurisdictional High Court, allowing depreciation on the non-compete fee.
- The Tribunal upheld the CIT(A)'s decision, stating that the jurisdictional High Court's decision is binding and does not warrant interference.

3. Conclusion:
- The Tribunal allowed the appeals of the assessee, permitting depreciation on goodwill, and dismissed the appeals of the Revenue.
- The orders were pronounced on 15th May 2019, settling the disputes regarding the depreciation claims on goodwill and non-compete fee for the relevant assessment years.

---