ITAT Ahmedabad allows Claim for Depreciation on Goodwill without a Revised Return during Assessment Proceedings [Read Order]


In a recent ruling, the division bench of the Ahmedabad ITAT held that Depreciation on ‘goodwill’ arising on amalgamation claimed by assessee company during course of assessment proceedings vide a revised computation of income without filing revised return of income is allowable under the Income Tax Act.

The assessee, M/s Zydus Wellness Ltd, filed a revised computation of income claiming depreciation on goodwill during the assessment proceedings. The revised computation was filed on the basis of the judgment of Supreme Court in the case of CIT vs. Smifs Securities Ltd. However, the AO rejected the claim on ground that the assessee has not filed revised return of income to make rightful claim. The claim was allowed by the CIT(A) on first appeal filed by the assessee.

The bench noted that in pursuance to the scheme of arrangement approved by Hon. Gujarat High Court in Asst. Year 2008-09, the assessee acquired the Consumer Products Division of Cadila Healthcare Ltd. including the Brands ‘Sugar-free’and ‘Ever Youth’ and related intangible assets of the said business, which came to be accounted for as “Goodwill” in the books of accounts of the assessee.

Citing a catena of decisions, including the decision of the supreme Court in the case of Smifs Securities Ltd , the bench observed that the CIT(A) has rightly allowed the justifiable & correct claim of depreciation on ‘goodwill’made by the assessee through revised computation of income without filing revised return of income during the course of assessment proceedings.

Read the full text of the order below.