The ITAT held that the AO exceeded jurisdiction by expanding...

The ITAT held that the AO exceeded jurisdiction by expanding limited scrutiny-restricted to share capital increase-to disallow depreciation on purchased goodwill, without requisite approval to convert it into full scrutiny. The assessment order was quashed as unlawful, following binding Board instructions. The Tribunal found that depreciation on purchased goodwill is allowable since it is a recognized intangible asset acquired through purchase, not arising from amalgamation or merger. The lower authorities erred in applying provisions meant for amalgamation cases. The assessee's valuation of goodwill, supported by an approved valuer's report and uncontested by the AO, was accepted. The AO's failure to obtain Joint Commissioner approval before nullifying goodwill cost further invalidated the addition. Consequently, the appeal was allowed, sustaining the claim for depreciation on purchased goodwill.