Depreciation on non-compete fees arising from acquisition of a...

Depreciation on non-compete fees arising from acquisition of a proprietary business through a slump sale is unsustainable where such fees are allowable only as revenue expenditure. In contrast, goodwill created when slump-sale consideration exceeds the net value of acquired assets may qualify for depreciation where it was not an existing depreciable asset or block transferred from the predecessor. Successor-depreciation restrictions do not apply to goodwill absent from the predecessor's books, and the later statutory exclusion of business goodwill applies prospectively from 1 April 2021. Accordingly, depreciation on non-compete fees was rejected, while depreciation on the goodwill was allowed.