Goodwill depreciation and mark-to-market foreign exchange loss allowed on consistency with earlier assessee ruling principles

Following the co-ordinate bench's earlier view in the assessee's own case, depreciation on goodwill was treated as allowable because goodwill can constitute an intangible asset eligible for depreciation, and the related disallowance was deleted. On the same parity of reasoning, mark-to-market foreign exchange loss on revaluation of forward exchange contracts was accepted as allowable, and that disallowance was also directed to be deleted. The Revenue's appeal therefore failed in full.

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Issues: (i) Whether depreciation on goodwill was allowable; (ii) Whether disallowance of mark-to-market foreign exchange loss was sustainable.

Issue (i): Whether depreciation on goodwill was allowable.

Analysis: The claim was held to be covered by the co-ordinate bench in the assessee's own case for an earlier assessment year. The Tribunal followed the earlier view that goodwill can constitute an intangible asset eligible for depreciation, and the matter had already been decided in favour of the assessee on similar facts.

Conclusion: The issue was decided in favour of the assessee.

Issue (ii): Whether disallowance of mark-to-market foreign exchange loss was sustainable.

Analysis: The Tribunal followed its earlier decision in the assessee's own case and accepted the loss on revaluation of forward exchange contracts as allowable. On parity of reasoning, the disallowance was directed to be deleted.

Conclusion: The issue was decided in favour of the assessee.

Final Conclusion: The Revenue's appeal failed in full, as both disputed additions were resolved against it by following the earlier decision in the assessee's own case.

Ratio Decidendi: Where a co-ordinate bench has already decided identical issues in the assessee's own case on similar facts, consistency warrants following that view, and depreciation on goodwill as well as mark-to-market foreign exchange loss may be allowed accordingly.

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