ITAT Overturns AO’s Additions for deemed Rental Income, upholding Long-Term Lease Agreements

Depreciation can be calculated on intangible assets, as upheld by the Delhi High Court in a recent ruling. The court supported the depreciation claim allowed by the Commissioner of Income Tax (Appeals) (CIT(A)), affirming that intangible assets such as goodwill, patents, trademarks, and copyrights are eligible for depreciation under the Income Tax Act. The case involved a taxpayer who claimed depreciation on intangible assets, which was initially disallowed by the Assessing Officer (AO). The CIT(A) overturned the AO’s decision, and the Delhi High Court upheld this ruling, emphasizing that the Income Tax Act’s provisions clearly include intangible assets in the depreciation schedule. This decision reinforces the legal position that businesses can claim depreciation on intangible assets, providing clarity and support for taxpayers in similar situations. The ruling is significant for companies with substantial investments in intangible assets, ensuring they can benefit from depreciation deductions.