Section 32(1)(ii) of the Income Tax Act

Income-tax Act, 2025: s.33

Section 32(1)(ii) falls under section 32 of the Income-tax Act, 1961, which corresponds to section 33 (Deduction for depreciation) of the Income-tax Act, 2025.

Read section 33 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 32(1)(ii) is CIT v. Smifs Securities Ltd. (348 ITR 302), cited in 540 of the 565 judgments on BharatTax that turn on this section.

Leading authorities on Section 32(1)(ii)

CIT v. Smifs Securities Ltd.
348 ITR 302 · 2012 · Supreme Court
540
citing judgments

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.

Munjal Sales Corporation v. CIT
298 ITR 298 · 2008 · Supreme Court
191
citing judgments

The Supreme Court approves the mixed fund theory, holding that no interest disallowance is warranted under section 36(1)(iii) if investments or advances are made from the assessee's own non-interest bearing funds, even when mixed funds are available. This presumption applies when non-interest bearing funds are sufficient to meet the investments.

Techno Shares and Stocks Ltd. v. CIT
327 ITR 323 · 2010 · Supreme Court
130
citing judgments

Membership rights and business contracts, as 'business or commercial rights of similar nature' to a license or franchise, qualify as intangible assets eligible for depreciation under Section 32(1)(ii) of the Income-tax Act.

Income Tax-III, Pune v. Rajasthan & Gujarati Charitable Foundation Poona
89 Taxmann.com 127 · 2018 · Supreme Court
130
citing judgments

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'.

CIT v. Karnataka Power Corporation
247 ITR 268 · 2001 · Supreme Court
124
citing judgments

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.

Areva T&D India Ltd. v. DCIT
345 ITR 421 · 2012 · High Court
97
citing judgments

Business contracts and commercial rights of similar nature qualify as intangible assets under Section 32(1)(ii) and are eligible for depreciation. The decision also affirms that goodwill is an intangible asset eligible for depreciation.

Aztec Software & Technologies Services Ltd. v. Asstt. CIT
107 ITD 141 · 2007 · ITAT
90
citing judgments

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.

ACIT v. Progressive Constructions Ltd.
92 Taxmann.com 104 · 2018 · ITAT
63
citing judgments

Rights acquired under a concession agreement for highway construction, which generate revenue through toll collections, constitute an 'intangible asset' under section 32(1)(ii) of the Income-tax Act, 1961, eligible for depreciation, typically at 25%. This includes claiming depreciation on the opening Written Down Value (WDV) for such highway projects.

Pentasoft Technologies Ltd. v. DCIT
41 Taxmann.com 120 · 2014 · High Court
58
citing judgments

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.

CIT v. Radico Khaitan Ltd.
274 ITR 354 · 2005 · High Court
56
citing judgments

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.

Judgments on Section 32(1)(ii)

East Coast Consultants and Infrastructure Ltd., Chennai vs. ACIT Company Circle II(1), Chennai

In the result, all the appeals filed by the assessee are dismissed

ITA 3108/CHNY/2018[2004-05]Status: DisposedITAT Chennai05 Jan 2022AY 2004-05

Bench: Shri V. Durga Rao & Shri G. Manjunathaआयकर अपील सं./I.T.A. Nos.3107, 3108, 3109 & 3110/Chny/2018 िनधा"रण वष"/Assessment Years: 2003-04, 04-05, 05-06 & 2008-09 M/S. East Coast Consultants The Assistant Commissioner Of & Infrastructure Ltd., Vs. Income Tax, “Bukharia Buildings”, No. 4, Company Circle Ii(1), Moores Road, Chennai 600 006. Chennai 600 034. [Pan:Aaace9097J] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri G. Baskar, Advocate & Shri I. Dinesh, Advocate ""थ" की ओर से/Respondent By : Shri R. Boopathi, Jcit सुनवाई की तारीख/ Date Of Hearing : 23.12.2021 घोषणा की तारीख /Date Of Pronouncement : 05.01.2022 आदेश /O R D E R Per V. Durga Rao: These Four Appeals Filed By The Assessee Are Directed Against Different Orders Of The Ld. Commissioner Of Income Tax (Appeals) 6, Chennai Dated 30.08.2018 Relevant To The Assessment Years 2003-04 & 2005-06, Order Dated 29.08.2018 For The Assessment Year 2004-05 & Order Dated 31.08.2018. I.T.A. No. 3107/Chny/2018 [Ay: 2003-04] 2. The Grounds Raised By The Assessee Are Extracted As Under:

For Appellant: Shri G. Baskar, Advocate &For Respondent: Shri R. Boopathi, JCIT
Section 143(3)Section 148

East Coast Consultants and Infrastructure Ltd., Chennai vs. ACIT Company Circle II(1), Chennai

In the result, all the appeals filed by the assessee are dismissed

ITA 3107/CHNY/2018[2003-04]Status: DisposedITAT Chennai05 Jan 2022AY 2003-04

Bench: Shri V. Durga Rao & Shri G. Manjunathaआयकर अपील सं./I.T.A. Nos.3107, 3108, 3109 & 3110/Chny/2018 िनधा"रण वष"/Assessment Years: 2003-04, 04-05, 05-06 & 2008-09 M/S. East Coast Consultants The Assistant Commissioner Of & Infrastructure Ltd., Vs. Income Tax, “Bukharia Buildings”, No. 4, Company Circle Ii(1), Moores Road, Chennai 600 006. Chennai 600 034. [Pan:Aaace9097J] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri G. Baskar, Advocate & Shri I. Dinesh, Advocate ""थ" की ओर से/Respondent By : Shri R. Boopathi, Jcit सुनवाई की तारीख/ Date Of Hearing : 23.12.2021 घोषणा की तारीख /Date Of Pronouncement : 05.01.2022 आदेश /O R D E R Per V. Durga Rao: These Four Appeals Filed By The Assessee Are Directed Against Different Orders Of The Ld. Commissioner Of Income Tax (Appeals) 6, Chennai Dated 30.08.2018 Relevant To The Assessment Years 2003-04 & 2005-06, Order Dated 29.08.2018 For The Assessment Year 2004-05 & Order Dated 31.08.2018. I.T.A. No. 3107/Chny/2018 [Ay: 2003-04] 2. The Grounds Raised By The Assessee Are Extracted As Under:

For Appellant: Shri G. Baskar, Advocate &For Respondent: Shri R. Boopathi, JCIT
Section 143(3)Section 148

Tcs-E-Serve Ltd ( Earlier Known As E-Sereve Internaiontal Ltd), Mumbai vs. DCIT RG 9(1), Mumbai

Appeal stand dismissed since the only issue in revenue’s appeal is deduction u/s 10A

ITA 5089/MUM/2010[2003-04]Status: DisposedITAT Mumbai15 Nov 2021AY 2003-04

Bench: Hon’Ble Shri Saktijit Dey, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am (Hearing Through Video Conferencing Mode) 1. आयकरअपील सं./ I.T.A. No.5089/Mum/2010 (धििाारण वर्ा / Assessment Year: 2003-04) & 2. आयकरअपील सं./ I.T.A. No.5090/Mum/2010 (धििाारण वर्ा / Assessment Year: 2004-05) Tata Consultancy Services Limited Dcit- 9(1) / 9(3) (Upon Merger Of Tcs E-Serve Ltd Aaykar Bhawan बिाम With Tata Consultancy Services Ltd) M.K.Road / Vs. 9Th Floor, Nirmal Building Mumbai-400 020 Nariman Point, Mumbai-400 021 स्थायीलेखासं./जीआइआरसं./Pan/Gir No. Aaacc-4480-F (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : & 3. आयकरअपील सं./ I.T.A. No.4928/Mum/2010 (धििाारण वर्ा / Assessment Year: 2003-04) & 4. आयकरअपील सं./ I.T.A. No.4929/Mum/2010 (धििाारण वर्ा / Assessment Year: 2004-05) & 5. आयकरअपील सं./ I.T.A. No.5478/Mum/2014 (धििाारण वर्ा / Assessment Year: 2010-11) & 6. आयकरअपील सं./ I.T.A. No.7446/Mum/2010 (धििाारण वर्ा / Assessment Year: 2003-04) & 7. आयकरअपील सं./ I.T.A. No.7447/Mum/2010 (धििाारण वर्ा / Assessment Year: 2004-05) Acit, Range-9(3) / Circle-9(3) Tata Consultancy Services Limited Aaykar Bhawan, M.K.Road (Upon Merger Of Tcs E-Serve Ltd बिाम Mumbai-400 020 With Tata Consultancy Services Ltd) / Vs. 9Th Floor, Nirmal Building Nariman Point, Mumbai-400 021 स्थायीलेखासं./जीआइआरसं./Pan/Gir No. Aaacc-4480-F (अपीलाथी/Appellant) (प्रत्यथी / Respondent) :

For Appellant: Shri P.J. Pardiwalla-Ld. Sr.CounselFor Respondent: Shri Vinay Sinha – Ld. CIT-DR & Shri
Section 10ASection 143(3)Section 234DSection 271(1)(c)Section 80H