2019 (11) TMI 1711 - HC - Income Tax

Amortization / depreciation on goodwill u/s 32 - HELD THAT - The impugned order of the Tribunal dismissed the Revenue s appeal upholding view of the Commissioner Income Tax (Appeals) that depreciation on account of goodwill is available to the Respondent. This by following the decision in the case of Commissioner of Income Tax(Appeals) Vs. Smifs Securities Ltd. 2012 (8) TMI 713 - SUPREME COURT Both the Commissioner Income tax (Appeals) and the Tribunal have come to a concurrent finding of fact on the basis of the scheme of amalgamation that the amount to be paid for taking over the assets of the transferer Company be treated as goodwill to the extent they are in excess of the assets taken over. The issue stands concluded by the decision of the Apex Court in the case of Smifs Securities (supra) the question as proposed does not give rise to any substantial question of law. Thus not entertained.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal regarding amortization/depreciation on goodwill for Assessment Year 2009-10.

Analysis:
The High Court of Bombay heard an appeal under Section 260-A of the Income Tax Act, 1961, challenging the order dated 17 August 2016 passed by the Income Tax Appellate Tribunal (the Tribunal) concerning the Assessment Year 2009-10. The primary question raised by the Revenue for consideration was whether the Tribunal was correct in allowing the assessee to claim amortization/depreciation on goodwill without any specific consideration being paid for its acquisition during an amalgamation. The impugned order of the Tribunal upheld the view of the Commissioner Income Tax (Appeals) that depreciation on goodwill is permissible, citing the decision of the Supreme Court in the case of Commissioner of Income Tax(Appeals) Vs. Smifs Securities Ltd. The High Court noted that both the Commissioner and the Tribunal had reached a concurrent finding based on the amalgamation scheme, treating the excess amount paid for taking over assets as goodwill. The Court emphasized that the issue had already been settled by the Supreme Court in the Smifs Securities case, rendering the proposed question of law insubstantial and thus not entertained.

The High Court, therefore, dismissed the appeal, citing the conclusive nature of the Supreme Court's decision and the concurrent findings of the lower authorities. No costs were awarded in the matter. The judgment highlights the importance of precedent and established legal principles in determining tax treatment, particularly in cases involving goodwill and depreciation.