Goodwill depreciation and CSR donation deduction under Chapter VI-A upheld; later-year challenge to opening WDV failed.

Depreciation on goodwill arising from an amalgamation, once accepted in the first year, could not be denied in a later year by challenging the same opening written down value; the earlier allowance had attained finality, so the Revenue's objection failed. CSR expenditure claimed as a donation was held eligible for deduction under section 80G because Chapter VI-A deduction operates separately from the business-expenditure disallowance framework under section 37, and the related claim was allowed. The Revenue's appeals failed on both grounds, and the first appellate authority's order was sustained.

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Issues: (i) Whether depreciation on goodwill arising from an amalgamation, once allowed in the first year, could be denied in a subsequent year on the ground that the goodwill was not justified; and (ii) whether CSR expenditure claimed as donation qualifies for deduction under section 80G.

Issue (i): Whether depreciation on goodwill arising from an amalgamation, once allowed in the first year, could be denied in a subsequent year on the ground that the goodwill was not justified.

Analysis: The goodwill was recorded on amalgamation and depreciation had already been claimed and accepted in the first year. The opening written down value of the block of intangible assets had thus attained finality for the following year. In the absence of any disturbance to the earlier year's allowance, the subsequent year's challenge to the same opening figure was not sustainable.

Conclusion: The issue was decided in favour of the assessee and against the Revenue; depreciation on goodwill could not be disallowed in the later year.

Issue (ii): Whether CSR expenditure claimed as donation qualifies for deduction under section 80G.

Analysis: Section 80G operates under Chapter VI-A after computation of gross total income and is distinct from the computation under section 37. The disallowance machinery relating to business expenditure did not control a deduction otherwise available under section 80G, and the coordinate bench view supported allowability of such claim.

Conclusion: The issue was decided in favour of the assessee and against the Revenue; the CSR-related claim under section 80G was allowed.

Final Conclusion: The Revenue's appeals failed on both grounds, and the common order of the first appellate authority was sustained.

Ratio Decidendi: Where depreciation on a block of intangible assets has been accepted in the first year and the opening written down value is undisturbed, the Revenue cannot reopen the same in a later year; and a deduction specifically governed by Chapter VI-A is not excluded merely because the underlying expenditure may also have business-expense implications.

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