#depreciation

The ITAT Kolkata held that depreciation can be claimed on goodwill/brands acquired in a demerger under Section 32 of the Income Tax Act, and that a disallowance under Section 14A requires the Assessing Officer to record dissatisfaction with the taxpayer's apportionment. The decision impacts companies undertaking demergers seeking to amortise intangible assets and clarifies the procedural requirement for Section 14A disallowances.

Ahmedabad ITAT permits deduction of interest on borrowings acquired via slump sale under Section 36(1)(iii), rejecting Revenue's colourable device and res judicata challenges. Ruling clarifies allowability where assets are put to use, benefiting corporate taxpayers in asset acquisitions.

ITAT Delhi rules that CSR expenditures qualify for deduction under Section 80G, even if the claim is raised for the first time in appeal after Section 143(1) processing. The tribunal relied on the Supreme Court's Goetze (India) Ltd. precedent, reinforcing that appellate authorities must entertain additional claims not made during initial assessment.

ITAT Delhi rules that if an assessee’s own funds surpass the value of dividend-yielding investments, disallowance under Section 14A read with Rule 8D is unwarranted-even without separate books of accounts. The ruling clarifies that the Assessing Officer must demonstrate nexus between borrowed funds and investments before invoking Rule 8D, offering relief to entities with surplus liquidity.

The ITAT Mumbai has ruled that the right to receive annuity payments under a DBFOT highway contract constitutes an intangible asset under Section 32(1)(ii) of the Income Tax Act, enabling depreciation claims. This sets a critical precedent for infrastructure financiers and SPVs structured under public-private partnerships, clarifying the tax treatment of future revenue streams as depreciable capital assets.

Madras High Court ruled that construction firms can adopt hybrid accounting methods and validated sale-and-leaseback transactions for cinematograph films, holding that tax-saving motives alone cannot invalidate lawful, documented transactions. The judgment reinforces the principle that the mercantile system allows flexibility in matching income and expenses, provided the transactions are genuine and properly recorded.

Madras High Court ruled that expenditure on replacing independent machinery-even if labeled as 'repairs'-constitutes capital expenditure under Section 37 of the Income Tax Act, 1961. The court set aside the ITAT’s order, emphasizing that such replacements enhance asset value and cannot be deducted as revenue expenses. Taxpayers and advisors must now reassess similar claims to avoid disallowance risks.

ITAT Mumbai rules that inadvertent computational errors in depreciation claims can be rectified during assessment proceedings under Section 32 of the Income Tax Act, even if no revised return was filed. The decision underscores the appellate authority's jurisdiction to entertain such corrections, providing relief to taxpayers facing similar procedural hurdles.