“Section 32(2)(ii)”
The decision most relied on for Section 32(2)(ii) is CIT v. Smifs Securities Ltd. (348 ITR 302), cited in 540 judgments on BharatTax.
Leading authorities on Section 32(2)(ii)
Goodwill, whether arising from an amalgamation or a slump sale, is an intangible asset eligible for depreciation under Section 32(1) of the Income-tax Act. While the assessee must prove the existence and valuation of such goodwill, it is recognized as a depreciable asset.
A provision for doubtful debts cannot be added back while computing book profits under Section 115JB of the Income-tax Act for Minimum Alternate Tax (MAT) purposes.
The claim of depreciation under Section 32 of the Income Tax Act for assets used by charitable trusts is permissible, affirming the Bombay High Court's view that such a claim does not amount to a 'double benefit'.
Income earned during the project construction stage, which has a direct nexus or is inextricably linked to the project's setting up, constitutes a capital receipt not liable to tax and reduces the project cost.
OECD Transfer Pricing Guidelines can be referred to for resolving transfer pricing disputes in India, even though India is not an OECD member, provided they are consistent with Indian statutory regulations. Availability of exemption under Section 10A does not bar the applicability of Section 92C and 92CA.
A non-compete fee paid as part of a business acquisition or transaction constitutes an intangible asset, eligible for depreciation under Section 32(1)(ii) of the Income-tax Act.
Where an assessee has mixed funds (borrowed and interest-free) and makes interest-free advances, it is presumed that such advances are made from interest-free funds if sufficient interest-free funds are available. This principle guides the disallowance of interest on borrowed capital under Section 36(1)(iii) if funds are diverted for non-business purposes without business expediency.
Income earned during the construction phase of a project, which has a direct and inextricable nexus with the project's setting up, constitutes a capital receipt and reduces the project's cost, rather than being taxable as revenue income. This applies to incidental income like interest on funds (e.g., share capital, grants) temporarily parked before being utilized for the specific project.
