![]() ![]() Putting a rest to the controversy, the government of India, in the Finance Act, 2021, has excluded 'goodwill of a business or profession' from the definition of block of asset. However, the issue of whether goodwill is eligible for tax depreciation or not was a subject of litigation, and there are divergent views of courts on this. The deduction will be apportioned between the amalgamating/demerging company and the amalgamated/demerged company in the ratio of the number of days for which the assets were used by them during any tax year. The amalgamated/demerged company and the resulting company will not be entitled to claim deduction for depreciation exceeding the amount calculated in any previous year. Until FY 2019/20, goodwill and commercial brand equity that are acquired in the course of amalgamation are intangible assets entitled to depreciation. Hence, the depreciation rate available in case of different blocks of assets ranges from 0% to 45%, depending upon the classification. However, a higher depreciation rate of 45% is allowed for certain assets under the 'plant and machinery' block on satisfaction of certain conditions. The Indian Revenue Department clarified that with effect from 1 April 2017 the block of assets that are entitled to more than 40% depreciation will now be restricted to 40%. ![]() ![]() not in the nature of a capital expense.ĭepreciable assets are grouped in blocks, and each block is eligible for depreciation at a prescribed rate.not in the nature of a personal expense, and.incurred wholly and exclusively for the purpose of the business or profession.Expenses that are revenue in nature are, by and large, allowed as a deduction to businesses and professionals if they are: ![]()
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