2018 (2) TMI 1925 - AT - Income Tax

Depreciation on goodwill - AO has disallowed depreciation on the ground that cost of acquisition of goodwill is NIL and therefore it does not admissible to the assessee - CIT-A allowed the claim - HELD THAT - Considering judgment of ZYDUS WELLNESS LTD. 2017 (10) TMI 373 - GUJARAT HIGH COURT and order of the Tribunal in the case of assessee in different assessment years, we are of the view that the assessee is entitled for depreciation on goodwill. CIT(A) has examined all these facts, and thereafter, allowed the depreciation. CIT(A) has rightly appreciated the controversy and no interference is called for in his order. Accordingly, the appeal of the Revenue is dismissed.

Summary

Issues:
Appeal against allowing depreciation on goodwill

Analysis:
The Revenue appealed before the Tribunal challenging the order of the ld.CIT(A)-8, Ahmedabad for the Asstt.Year 2012-13, specifically contesting the allowance of depreciation amounting to ?4,04,44,578 on goodwill. The assessee initially declared total income at ?32,27,18,930 and during scrutiny assessment, claimed the mentioned depreciation on goodwill worth ?16,17,78,313. The ld.AO disallowed the depreciation citing the cost of acquisition of goodwill as NIL. However, the ld.CIT(A) allowed the depreciation, referencing the decisions of the Hon'ble Gujarat High Court and previous Tribunal orders favoring the assessee in similar cases. The Tribunal, considering the precedents and judgments, concluded that the assessee was entitled to depreciation on goodwill. The Tribunal found no reason to interfere with the ld.CIT(A)'s order, ultimately dismissing the Revenue's appeal.

In a detailed analysis, the Tribunal emphasized the importance of judicial precedents and consistency in decisions across different assessment years. The Tribunal highlighted the relevance of the Hon'ble Gujarat High Court's decision in a similar case involving the assessee, where depreciation on goodwill was upheld. Additionally, the Tribunal referred to a previous year's Tribunal order that supported the grant of depreciation on goodwill. By aligning with these established decisions, the Tribunal affirmed the correctness of the ld.CIT(A)'s assessment and the allowance of depreciation on goodwill in the present case. The Tribunal's decision was based on a thorough examination of legal principles and past judgments, ensuring a fair and consistent application of the law.

The Tribunal's detailed analysis underscored the significance of legal interpretations and precedents in tax matters, particularly concerning the allowance of depreciation on intangible assets like goodwill. By referencing the Hon'ble Gujarat High Court's ruling and previous Tribunal decisions, the Tribunal reinforced the assessee's entitlement to depreciation on goodwill. The Tribunal's decision not only upheld the ld.CIT(A)'s order but also highlighted the importance of legal consistency and adherence to established judicial interpretations in resolving tax disputes. The comprehensive analysis provided by the Tribunal demonstrated a meticulous consideration of legal principles and past judgments to arrive at a fair and just decision in the matter of allowing depreciation on goodwill.