In a recent ruling, the Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) allowed claims for goodwill depreciation from the amalgamation for the assessment years ( AY ) 2016-18 despite the 2021 finance bill exclusion.
In this case, the assessee company, Suzlon Energy Ltd., is engaged in the manufacturing of wind turbine generators [WTG], rotor blades, etc.
One of the main issues involved in this case is the claim of “depreciation on goodwill”.
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The assessee company claimed depreciation of Rs. 132.48 crores on goodwill of Rs. 1059.80 crores for half-year only, since the appointed date was 01.01.2016, and claimed depreciation at 12.5%.
But the assessment officer ( AO ) denied depreciation on goodwill as claimed by the assessee.
The Commissioner of Income Tax ( Appeals ) [ CIT( A ) ] upheld the action of the AO and denied the claim of depreciation on goodwill.
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Mr. Soumitra Choudhury, Ld. Counsel for the assessee, argued that once the NCLT approves a scheme of amalgamation, the revenue cannot question its terms or deny depreciation on goodwill under Sec. 32 of the Act. He submitted that the Income Tax Department, despite being served notice during NCLT proceedings, did not raise any objections.
The tribunal observed that the Finance Bill 2021 excludes ‘goodwill’ from the scope of intangible assets, as its depreciation depends on various provisions of the Income Tax Act.
The ITAT, comprising T.R. Senthil Kumar ( Judicial Member ) and Vasat Mahadeokar ( Accountant Member), The above mentioned amendments are to take effect from 01st April 2021 and will only apply to the assessment years 2021-22 and subsequent assessment years.
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The ITAT allowed good will depreciation claims made by the assessee.
The assessee was represented by Shri Soumitra Choudhary, and the revenue was represented by Shri Prithviraj Meena.
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