Depreciation on Goodwill Arising from Amalgamation Valid: ITAT Clarifies Prospective Effect of Finance Act Amendments

The Income Tax Appellate Tribunal (ITAT) clarified that depreciation on goodwill arising from amalgamation remains valid and allowable even for assessment years before AY 2021–22, despite amendments introduced by the Finance Act, 2021. The Tribunal held that such depreciation claims on goodwill generated from court-approved amalgamation schemes must be respected unless clearly excluded prospectively by amended legislation. ITAT reaffirmed prior decisions allowing depreciation on goodwill recognized as an intangible asset post-amalgamation. The ruling reinforces the principle of providing relief to corporate taxpayers for legitimate accounting treatment retrospectively, preventing retrospective denial of deductions. This judgment provides certainty and fairness to taxpayers dealing with complex merger and amalgamation transactions, confirming that Finance Act amendments apply prospectively and do not invalidate historical claims.