Goodwill qualifies for depreciation under Income Tax Act

The Tribunal allowed the appellant's appeal, overturning the disallowance of depreciation on goodwill acquired from Lee & Muirhead Pvt. Ltd. The Tribunal held that goodwill qualifies as an intangible asset eligible for depreciation under Section 32 of the Income Tax Act, citing legal precedents and previous decisions in the appellant's favor. The Tribunal emphasized that the failure to claim depreciation through a revised return did not bar consideration of the claim if relevant facts were on record. Consequently, the appellant's claim for depreciation on goodwill was upheld, and the disallowance by lower authorities was deleted.

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Issues:
Disallowance of depreciation on goodwill arising from the acquisition of a business unit of Lee & Muirhead Pvt. Ltd. in A.Y. 2008-09.

Analysis:
1. The appeal concerns the disallowance of depreciation on goodwill by the Dispute Resolution Panel and the Assessing Officer. The appellant challenges the disallowance of depreciation of &8377;9,43,34,545 claimed under Section 32 of the Income Tax Act on the written down value of intangible assets, specifically goodwill, acquired from Lee & Muirhead Pvt. Ltd. The appellant argues that the AO erred in not allowing the claimed depreciation and in rejecting the valuation report from an independent expert valuer. Additionally, the appellant contests the failure to apportion the purchase consideration towards various intangible assets and the AO's disregard of precedents allowing depreciation on similar assets.

2. The Tribunal notes that the AO disallowed the depreciation on goodwill based on the failure to make the claim through a revised return of income. However, the Tribunal refers to previous decisions in the appellant's favor, where similar claims were allowed by the ITAT and the appellate authorities. The Tribunal emphasizes that the jurisdiction of the appellate authority extends to considering claims not made through revised returns if the relevant facts are available on record. The Tribunal also cites the decision of the Hon'ble Supreme Court in Smifs Securities Ltd., establishing that goodwill qualifies as an intangible asset eligible for depreciation under Section 32 of the Act.

3. Relying on the consistent legal precedent and the decision in the appellant's previous cases, the Tribunal allows the claim for depreciation on goodwill and deletes the disallowance made by the lower authorities. The Tribunal upholds the appellant's contention that goodwill is an intangible asset eligible for depreciation under Section 32, in line with the interpretation provided by the Hon'ble Supreme Court. Consequently, the Tribunal allows the appeal of the assessee, overturning the disallowance of depreciation on goodwill.

In conclusion, the Tribunal's judgment favors the appellant by allowing the depreciation claim on goodwill, citing legal precedents and the clear eligibility of goodwill as an intangible asset for depreciation under Section 32 of the Income Tax Act.

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