The Tax PublishersIT(TP)A No. 2511/Bang/2019 2022 TaxPub(DT) 3412 (Bang-Trib) : (2022) 194 ITD 0124INCOME TAX ACT, 1961
Section 32
Consideration paid by amalgamated company over and above the net assets of amalgamating company should be considered as goodwill arising on amalgamation and such goodwill arising on amalgamation is considered to be a capital asset eligible for depreciation.
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Depreciation - Allowability - Goodwill arising on amalgamation -
Assessee-company was engaged in rendition of Software Development Services. AO noted that a company 'S' was amalgamated with the assessee. In year of merger, the assessee recorded goodwill on account of amalgamation. On the goodwill recorded on amalgamation, the assessee claimed depreciation. AO disallowed the depreciation claimed by relying on as per proviso to section 32(1)(ii). It was contended on behalf of the assessee that said proviso to section 32 would not apply, as it was not a case where the amalgamating company 'S' had goodwill as an asset and the goodwill arose in the hands of the assessee for the first time on account of amalgamation. Held: Consideration paid by amalgamated company over and above the net assets of amalgamating company should be considered as goodwill arising on amalgamation and such goodwill arising on amalgamation is considered to be a capital asset eligible for depreciation. Accordingly, the depreciation claimed by assessee on goodwill acquired, would be allowable in accordance with law.
Followed:CIT v. Smifs Securities Ltd. (2012) 348 ITR 302 (SC) : 2012 TaxPub(DT) 2430 (SC)Distingusihed:United Breweries Ltd. v. Addl. CIT & Vice-Versa [722/Bang/2014, 801/Bang/2014, 1065/Bang/2014, 1066/Bang/2014, dt. 30-9-2016]
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
IN THE ITAT, BANGALORE BENCH
CHANDRA POOJARI, A.M. & BEENA PILLAI, J.M.
Altimetrik India (P). Ltd. v. Dy. CIT
IT(TP)A No. 2511/Bang/2019
3 February, 2022
Assessee by : Sharath Rao, Advocate
Revenue by : Pradeep Kumar, CIT-DR
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