Olympic Décor LLP Vs PCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that goodwill arose from the excess of consideration over the net value of tangible assets transferred in amalgamation and was therefore a valid intangible asset eligible for depreciation under section 32(1)(ii).
Facts- Post scrutiny assessment, PCIT invoked jurisdiction u/s. 263 of the Income Tax Act and observed that the AO had failed to examine the claim of depreciation on goodwill u/s. 32(1)(ii), though it had been disallowed in earlier years (A.Y. 2016–17) and was claimed again in the year under consideration despite the matter being sub judice.
The PCIT also recorded that the AO had allowed set-off of unabsorbed depreciation without verifying the availability of carry forward and its allowability u/s. 32(2). The PCIT further recorded that the claim u/s. 80IA was allowed without reconciling the difference between depreciation claimed under books and income-tax and without verification. The PCIT concluded that the AO failed to apply the provisions of section 68 in respect of loan transaction of Rs. 10.80 crore with Crown Laminates Pvt. Ltd., which was treated as business income u/s. 28 instead of unexplained cash credit u/s. 68 r.w.s. 115BBE and no inquiry was made regarding the availability and allowability of loss set-off of Rs.11.18 crore.
