Osram India (P) Ltd. vs Deputy Commissioner Of Income Tax*

Whether depreciation is allowable on goodwill under section 32(1)(ii) of the Income Tax Act, 1961, when the purchase consideration includes intangible assets like trademarks, licenses, and business rights? --- Held: Depreciation is not allowable on goodwill per se, but if the consideration includes specific intangible assets eligible under section 32(1)(ii) (e.g., trademarks, licenses, business rights), depreciation is allowable on the portion attributable to those assets. The matter is remanded to the AO for bifurcation and valuation. Whether the principle of consistency applies to allow depreciation on goodwill based on earlier assessments? --- Held: No, consistency cannot override the law; depreciation is only allowable on assets specified in section 32(1)(ii). Whether the Transfer Pricing adjustment for manufacturing segment is within acceptable range? --- Held: Yes, the operating profit margin is within ±5% of the ALP, so no adjustment is warranted. Whether rectification under section 154 reducing carry-forward loss is valid? --- Held: The issue is consequential to the depreciation dispute and remanded accordingly.