Amortisation of Goodwill for Tax purpose

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Anand Solanki (Querist)

24 September 2007 A company (A Ltd.) has acquired a business unit of another company (B Ltd.). Consideration paid is more than net asset acquired. Hence there is a goodwill for A Ltd. Whether A Ltd. can claim amortisation on this goodwill amount for tax purpose.

R.V.RAO

R.V.RAO (Expert)

24 September 2007 SEC 32(1) OF INCOME TAX ACT SAYS THAT THE AGGREGATE OF DEDUCTION ALLOWABLE ON TANGIBLE OR INTANGINBLE ASSETS CANNOT EXCEED THE DEDUCTION CALCULATED AT THE RATE AS IF THE AMALGMATION OR DEMERGER AS THE CASE MAY BE HAD NOT TAKEN PLACE AND THE DEDUCTION IS APPORTIONED BETWEEN THE PREDECESSOR AND SUCCESSOR IN THE RATIO THE ASSET IS HELD BY THEM FOR THE RESPECTIVE NO. OF DAYS ,
THIS BEING THE CASE ,THERE BEING NO SUCH ASSET BEFORE THE ACQUISITION, THE INCOME TAX DEPT. MAY NOT BE ABLE TO ADMIT ANY DEDUCTION ON ACCOUNT OF DEP. ON ANY INTANGIBLE ASSETS IN CASES OF ACQUISITION .
UNDER COMPANY'S ACT YOU MAY CLAIM APPLICABLE DEP. RATE.
BUT IN IT ACT, THE DEPRECIATION IS NOT ALLOWABLE ON ABOVE GROUND.amalgamation under court route also has same effect.
C.A.R.V.RAO

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