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goodwill treatment help me

SUDHIR & PRADEEP JI (CA FINAL+LLB + DISA) (2299 Points)

19 September 2010

Goodwill is created at the time of amalgamation in books of Transferee Company under pooling of Accounts method as per AS14. This goodwill is to be written off in 5 years i.e. 20% every year. Is this written off portion or entire goodwill admissible as deduction in computing taxable income for the company? Under section 32 (as intengible asset)? Any settled case law?

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C.A. LINESH PATIL (CA) (910 Points)
Replied 28 September 2010

Hii dear there is no provision under income tax Act for written off of goodwill even section 32 which speaks of depreciation on tangible and intangible assets does not have any provision for written off of goodwill under income Tax .as section 32 when speaks about depreciation on intangible assets starts with know-how.

so there is no depreciation on goodwill under income Tax Act .

Further as per AS 22 its a permanent difference under two sets off book which will require only disclosure.