Depreciation on Goodwill Acquired from Subsidiary Company by Demerger Allowed if Not Previously Claimed or Allowed u/s 32 of Income Tax Act: ITAT

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) ruled in favor of SPN India, allowing depreciation on the goodwill acquired from MSM Singapore through a demerger under Section 32 of the Income Tax Act. MSM Singapore had initially accounted for goodwill at Rs. 61.14 crores upon acquiring "SAB TV." \r

The demerger, effective from April 1, 2014, transferred the broadcasting division's assets, including goodwill, to SPN India. Despite objections from the Assessing Officer and the Dispute Resolution Panel (DRP) regarding depreciation eligibility on the original goodwill value, ITAT affirmed that since MSM Singapore had not previously claimed depreciation under Section 32, SPN India could claim it upon acquisition through demerger. \r

The tribunal, consisting of C V Bhadang and B.R. Baskaran, thus concluded that the assessee was entitled to depreciation on the cost of goodwill acquired, resolving the matter accordingly.