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2019 (6) TMI 1364 - AT - Income TaxDepreciation on Goodwill - AO disallowed as assessee has not claimed depreciation on goodwill at the time of filing of return - HELD THAT -We find that the Ld. CIT(A) deleted the disallowance by relying on the decision of Hon ble Supreme Court in the case of Smifs Securities Ltd. 2012 (8) TMI 713 - SUPREME COURT , wherein it was held that Goodwill is an asset under Explanation 3(b) to section 32(1) and, thus it is eligible for depreciation. We uphold the order of the Ld. CIT(A) on the issue-in-dispute. Accordingly, ground of the Revenue is dismissed.
Issues: Disallowance of depreciation on goodwill
Analysis: The appeal was against the order of CIT(A)-9, New Delhi, for assessment year 2012-13, specifically challenging the deletion of disallowance of depreciation on goodwill amounting to ?10,29,60,726. The assessee contended that the issue was already decided in their favor by the Tribunal in a previous case for assessment year 2010-11. The Assessing Officer had disallowed the depreciation on goodwill as it was not claimed at the time of filing the return. However, the CIT(A) deleted the disallowance by relying on the decision of the Supreme Court in Smifs Securities Ltd., stating that goodwill is an asset eligible for depreciation under Explanation 3(b) to section 32(1) of the Income-tax Act, 1961. The Tribunal's order in the previous case upheld the allowance of depreciation on goodwill even if not claimed by the assessee, as per Explanation 5 to Section 32(1) of the Act. The Tribunal found that the issue had already been settled in the assessee's favor in the previous case for assessment year 2010-11. The Tribunal in that case had emphasized that as per Explanation 5 to Section 32(1) of the Income Tax Act, depreciation is allowable irrespective of whether the assessee claimed it while computing total income. Therefore, the Tribunal in the present case upheld the CIT(A)'s decision to delete the disallowance of depreciation on goodwill. The Tribunal dismissed the Revenue's appeal, citing the previous judgment and the provisions of the Income Tax Act. In conclusion, the Tribunal upheld the CIT(A)'s order, dismissing the Revenue's appeal and affirming the allowance of depreciation on goodwill as per the provisions of the Income Tax Act. The appeal of the Revenue was ultimately dismissed, and the order was pronounced on 29th January 2019.
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