It is requested to clarify my doubts regarding income tax treatment of goodwill.
Fact of the Case: There are two partners in a Partnership Firm. One partner retires and the other partner paid him a sum of Rs. 500000 for goodwill of the firm and it is mentioned in the Partnership Deed. Now he want to claim depreciation under income tax act for Rs. 500000.
Please suggest the suitable accounting treatment and Tax treatment of the above.
Thanks
I THINK THE SITUATION DOES NOT SEEMS TO BE PURCHASE OF GOODWILL,IT IS SELF GENERATED THEN AS PER AS-26 ITS VALUE IS NIL,ALSO AS PER IT ACT FOR SELF GENERATED GOODWILL THE VALUE IS ZERO HENCE IT CANT BE AMORTIZED,ITS BETTER TO GIVE IN ANOTHER WAY.
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