The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that Goodwill acquired on Amalgamation is eligible for depreciation under Section 32 of Income Tax Act,1961.Therefore the bench deleted the disallowance.
The assessee GBT India Private Limited, is a wholly owned subsidiary of GBT III BV, Netherlands and is engaged in the business of arranging travel for domestic customers within and outside India by facilitating services entailing booking of air tickets, accommodation, cab, conference rooms, catering services, management of corporate events, public relation services etc.
During the assessment proceedings, the AO disallowed the depreciation on goodwill acquired on amalgamation with business transfer agreement between American Express India Pvt Ltd (AEIPL).
Aggrieved by the order, the assessee filed an appeal before the Dispute Resolution Panel, who upheld the order .Thus assessee filed a second appeal before the tribunal.
Himanshu S. Sinha , the counsel for the assessee submitted that this issue is covered in favour of the assessee in its own case for preceding 2 years (A Y 2015-16 and 2016-17).
Further, goodwill acquired on amalgamation is a capital right and thus eligible for depreciation under Section 32 of Income Tax Act.
Jitender Kumar, Counsel for Revenue, supported the decision of the lower authorities.
After reviewing the facts and submissions of the both parties, the two member bench of Shamim Yahya (account member) and Challa Nagendra Prasad (Judicial Member) allowed the appeal filed by the assessee and observed that the previous year the tribunal decided the issue in favour of assesee.
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