TaxTMI 
TaxTMI 
2026 (8) TMI 284
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....m the order of the Ld. Assistant Commissioner of Income Tax Circle 14(1)(1), Mumbai (for brevity 'Ld. AO'), order passed under Section 143(3) of the Act, date of order 25.12.2019. 2. The brief facts of the case are that the assessee filed the return by declaring total income nil. The assessee's case was selected for complete scrutiny under CASS. During the assessment, the Ld. AO found that during the previous year, the assessee company has entered into a transaction of associated enterprises within the definition of "Specified International Transaction" amounting to Rs. 46,70,63,152/-. Accordingly, the assessee was filing accountant's report u/s. 92E in Form No. 3CEB. The assessee claimed depreciation amount to Rs. 5.9Cr on good will ari....
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.... 116 (Chennai-Trib) where the assessee company got amalgamated with a company, excess consideration paid over and above fair market value of assets and liabilities of amalgamating company was towards intangible assets acquired by assessee in form of goodwill which was in nature of any business or commercial rights of the similar nature as defined/sec 32(1)(ii) and, thus, assessee was to be allowed depreciation on such goodwill acquired on amalgamation. The Ld. AR respectfully relied on the order of the Hon'ble Supreme Court in case of CIT vs Smifs Securities Ltd reported in [2012] 24 taxmnn.com 222 (SC) where it is decided that goodwill is an asset under explanation 3(b) of section 32(1) and, thus, it is eligible for depreciation. The Ld. A....
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....ursuant to an NCLT order dated 09.11.2017. For this merger, an independent valuer determined the share valuations and swap ratio after applying recognized valuation methodologies, and based on this, purchase consideration was fixed at Rs. 50,95,40,208. Upon recording the assets and liabilities taken over from the amalgamating company, goodwill of Rs. 23,60,16,520 arose, duly supported by the valuation report and the audited financials of J.J. Polyplast. The appellant submitted that this goodwill falls within the scope of "any other business or commercial rights" u/s. 32(1)(ii), and therefore depreciation of Rs. 5,90,04,130 is allowable, as upheld by the Supreme Court in CIT v. Smifs Securities Ltd. and by ITAT Chennai in Arun Excello Urban ....
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....ctioned scheme and supported by a recognized valuation framework constitutes "acquired goodwill," and therefore depreciation thereon is allowable. The Hon'ble Court further explained that where the purchase consideration is determined on the basis of an accepted valuation method and the resultant goodwill is incorporated into the books as part of an approved amalgamation scheme, such goodwill cannot be regarded as a mere notional or artificial entry. Instead, it represents a genuine commercial right that vests in the amalgamated company. Applying the ratio of Zydus Wellness to the present case, the goodwill of Rs. 23.60 crore-having arisen from a duly approved amalgamation and supported by independent valuation-assumes the character of an i....
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.... depreciation under section 32(1)(ii) of the Act. We find that the findings recorded by the Ld. CIT(A) are based on cogent evidence and are in consonance with the settled legal position. The goodwill in the present case arose pursuant to a court-approved amalgamation and the purchase consideration was determined on the basis of an independent valuation. Thus, the goodwill cannot be regarded as self-generated or fictitious. The Hon'ble Supreme Court in Smifs Securities Ltd. (supra) has held that goodwill is an asset falling within the ambit of Explanation 3(b) to section 32(1) and is eligible for depreciation. Similar view has been taken by the Coordinate Bench of the Tribunal in Arun Excello Urban Infrastructure (P.) Ltd. (supra), where....