Assessment on a non-existent entity is void, and amalgamation goodwill can qualify for depreciation as an intangible asset.

An assessment framed in the name of an entity that had ceased to exist after amalgamation and conversion into an LLP is treated as a jurisdictional defect and a nullity, and participation in the proceedings does not cure the defect under section 292B. The article also states that goodwill arising on amalgamation, where acquired for consideration and recorded in the books of the amalgamated company, falls within depreciable intangible assets under section 32 as a business or commercial right of similar nature.

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Issues: (i) Whether an assessment framed in the name of an entity that had ceased to exist after amalgamation and conversion into LLP was valid in law. (ii) Whether depreciation under section 32 was allowable on goodwill arising in amalgamation and recorded in the books of the amalgamated company.

Issue (i): Whether an assessment framed in the name of an entity that had ceased to exist after amalgamation and conversion into LLP was valid in law.

Analysis: The assessment order was passed in the name of the erstwhile company after it had ceased to exist. The amalgamation had already taken effect and the department was aware of the corporate restructuring. An assessment against a non-existent person is a jurisdictional defect and is not cured by section 292B of the Income-tax Act, 1961. Participation in proceedings does not validate a void assessment.

Conclusion: The assessment was void ab initio and liable to be quashed in favour of the assessee.

Issue (ii): Whether depreciation under section 32 was allowable on goodwill arising in amalgamation and recorded in the books of the amalgamated company.

Analysis: Goodwill arising on amalgamation constitutes an intangible asset falling within the expression "any other business or commercial rights of similar nature" in section 32(1). The assessee had paid consideration by issuing shares under a sanctioned scheme of amalgamation, and the excess over net assets was recorded as goodwill. The statutory scheme treats amalgamation as tax-neutral, but it does not deny depreciation on acquired goodwill where the assessee has incurred cost for acquiring it. The valuation dispute and allegations of colourable device did not displace the approved scheme or the valuation basis adopted in the transaction.

Conclusion: Depreciation on goodwill was allowable in favour of the assessee.

Final Conclusion: The assessment was annulled on jurisdictional grounds, and the disallowance of depreciation on goodwill was deleted, resulting in complete relief to the assessee.

Ratio Decidendi: An assessment made in the name of a company that has ceased to exist upon amalgamation is a nullity, and goodwill arising from an amalgamation and acquired for consideration is eligible for depreciation as an intangible asset under section 32.

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