2026 (5) TMI 606

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....ard of cost of goodwill 18. That on facts and circumstances of the case and in law, the learned CIT(A) has erred in restricting the cost of goodwill to Rs. Nil instead of Rs. 80,000,000/- on the basis that no goodwill exists in the business acquired. Allowability of depreciation on goodwill 19. That on facts and circumstances of the case and in law, the learned CIT(A) has erred in not appreciating the fact that goodwill purchased for the purpose of business should be considered as "intangible assets" and accordingly depreciation should be allowed as per section 32 of the Act. 2. This appeal of the assessee was allowed for statistical purposes by order dated 30-11-2023. After that the assessee has moved miscella....

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....ng before us, the AR pointed out that the issue was impugned in the assessment year and the issue of valuation of goodwill travelled up to the ITAT, Mumbai and the co-ordinate Bench in the original order held that the valuation of Goodwill was correct and held that entire payment of Rs. 12 crores was towards acquired business thereby allowing a claim. 4. Respectfully following the order of the ITAT in assessee's own case, we hold that the assessee acquired the business along with goodwill and also that the valuation thereof was correct. 5. We now come to the issue of allowance of depreciation of goodwill acquired the assessee. The AO disallowed the claim of deprecation on goodwill, because goodwill did not feature as a dep....

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....fies for depreciation under section 32(1)(ii). The Assessing Officer has, in our view correctly appreciated the legal position and allowed depreciation accordingly. 9.5 Further an amendment brought by the Finance Act, 2021 curtailing depreciation of goodwill is prospective and does not apply in the year under consideration. Thus, the assessing Officer has allowed the depreciation of the goodwill consciously and following the settled legal position. We find no infirmity in the order of the Assessing Officer. The action of the PCIT in seeking to substitute his own interpretation for a legally tenable view adopted by the Assessing Officer is unsustainable. The assessee succeeds on this ground. 7.The Ld. DR submitted that this issue....