The Tax Publishers2020 TaxPub(DT) 5540 (Karn-HC)

INCOME TAX ACT, 1961

Section 32

Where revenue sought to deny depreciation on goodwill to assessee on grounds that particulars of intangible assets were not disclosed, assessee was held to be entitled for the benefit of depreciation under section 32(1) because from perusal of the order passed by AO itself it was axiomatic that he found that the goodwill was calculated and has been allotted to intangibles.

Depreciation - Allowability - Disallowance of depreciation on goodwill to assessee on grounds that particulars of intangible assets were not disclosed -

Revenue challenged order of Tribunal holding that assessee was entitled to claim depreciation under section 32(1)(ii) in respect of intangible assets, when same was not identical, and was based on ad hoc estimate basis and not on actual cost as per section 43(1). Held: Supreme Court in Smifs Securities, held that goodwill is an asset under section 32(1) and is thus eligible for depreciation. Therefore, aforesaid issue is no longer res integra. Only contention raised by revenue was that the assessee did not disclose the particulars of intangible assets, which were acquired by it and therefore, it was not entitled for the benefit of depreciation under section 32(1). From perusal of the order passed by AO itself it was axiomatic that he has found that the goodwill was calculated and has been allotted to intangibles. For yet another reason, the order passed by the Tribunal was to be upheld.

Followed:CIT v. Smifs Securities Ltd. (2012) 24 Taxmann.com 222 (SC) : 2012 TaxPub(DT) 2430 (SC).

REFERRED : CIT v. Hindustan Coca Cola Beverages Pvt. Ltd. (2011) 198 Taxman 104 (Del) : 2011 TaxPub(DT) 837 (Del-HC) and Dy. CIT v. Hewlett Packard India Sales Pvt. Ltd. (formerly Compaq Computers India P. Ltd.) [ITA Nos. 249 & 250/Bang/2010, dt. 25-2-2011].

FAVOUR : In assessee's favour.

A.Y. : 2000-01



IN THE KARNATAKA HIGH COURT

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