INCOME TAX ACT, 1961

Section 32(1)(ii)

Depreciation - Goodwill, i.e., extra-consideration paid over net value of assets acquired - AO doubting bona fides of creation of goodwill -

Assessee claimed extra consideration paid towards acquisition of net value of assets of Interkraft Autocity (P) Ltd. to be goodwill eligible for depreciation under section 32(1)(ii). AO denied assessee's claim alleging that assessee failed to demonstrate bona fides of creation of 'goodwill'. Held: Assessee extensively referred to agreement having been entered into for acquisition of assets and liabilities with Interkrafts Autocity (P) Ltd. with a view to acquire dealership of Mercedes-Benz embedded with said concern covering the State of West Bengal and entire North-East. Thus, there could be no quarrel that extra consideration paid for acquisition of assets and business represented cost of goodwill. The fact towards payment of extra consideration had not been disputed, therefore, cost of goodwill required amortization over a period of time as per law.That being so, assessee was entitled to claim depreciation thereon.

Relied on:DCIT v. TGB Banquets & Hotels Ltd., Tax Appeal No. 470 of 2012, dated 21-6-2016 (Guj.), CIT v. Smifs Securities Ltd. (2012) 348 ITR 302 (SC) : 2012 TaxPub(DT) 2430 (SC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14

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