Strategic
acquisition of a target by paying more than the company’s book net worth is
fairly common in Mergers & Acquisitions (M&A) deals. The amount of the
purchase price that exceeds the value of the identified assets acquired is
typically referred to as goodwill.
Under the Indian tax laws, as “Goodwill” does not expressly find a mention in the list of intangible assets that qualify for depreciation, a tax payer’s claim of depreciation on goodwill has been a matter of debate with the Income-tax authorities for a considerable time with
decisions on both sides of the spectrum.
The Mumbai Tribunal, in its second innings, has recently dealt with the issue of depreciation claim on goodwill arising on merger in the case of Toyo Engineering India Ltd. The Tribunal following the Apex Court’s decision in the case of Smifs Securities ruled in favour of Toyo and allowed its depreciation claim on goodwill.
Under the Indian tax laws, as “Goodwill” does not expressly find a mention in the list of intangible assets that qualify for depreciation, a tax payer’s claim of depreciation on goodwill has been a matter of debate with the Income-tax authorities for a considerable time with
decisions on both sides of the spectrum.
The Mumbai Tribunal, in its second innings, has recently dealt with the issue of depreciation claim on goodwill arising on merger in the case of Toyo Engineering India Ltd. The Tribunal following the Apex Court’s decision in the case of Smifs Securities ruled in favour of Toyo and allowed its depreciation claim on goodwill.
1 comment:
Great article. I also recommend to use secure file share , because during such operation information can be lost or stolen.
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