Income Tax, Issue Update

Depreciation on goodwill

Case: Dy. CIT vs Infrasoft Technologies Ltd, Delhi ITAT

Outcome: Assessee


  • During the course of the assessment proceedings, the Assessing Officer had disallowed depreciation claimed by the Assessee on goodwill considering the same as self valued, unsubstantial intangibles declared as ‘customers contract’ & ‘goodwill’.

Key points

  • Reliance was placed on the decision of the Hon’ble Supreme Court in the case of CIT vs. Smifs Securities Ltd., wherein it was concluded that goodwill was an intangible asset as defined under section 32(1)(ii) of the Act, hence, eligible for depreciation.
  • Hence, it was inferred that depreciation was allowable on goodwill.

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