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| The Tax Publishers2019 TaxPub(DT) 7623 (Visakhapatnam-Trib) INCOME TAX ACT, 1961
Section 32(1)(ii)
Where assessee acquired another company and obtained various benefits including know-how, patents, copyright, licenses and other commercial and business advantages and treated all of them as goodwill then what was seen collectively as 'goodwill' consisted of all the aforementioned rights and advantages which were mentioned in section 32 and accordingly, amortisation of goodwill had to be allowed.
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Depreciation - Allowability - Excess consideration paid as goodwill on business acquisition -
Assessee-company claimed depreciation on goodwill. AO required assesse to explain as to why the depreciation on goodwill should not be disallowed. Assessee stated that it had acquired shares of Coastal Papers Private Ltd. (CPL), consequently CPL lost its identify and merged with assessee company. The excess consideration paid was considered as goodwill and amortised over a period of time. AO not being convinced with the explanation, disallowed depreciation.Held: Due to acquisition of CPL, assessee company obtained various benefits including know-how, patents, copyright, licenses and other commercial and business advantages. What was seen collectively as 'goodwill' consisted of all the aforementioned rights and advantages which were mentioned in section 32. Accordingly, amortisation of goodwill had to be allowed.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
INCOME TAX ACT, 1961
Section 32(1)
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