Assessee-company had taken over a proprietorship concern and claimed depreciation on goodwill purchased from the erstwhile proprietorship concern. Assessing Officer disallowed depreciation on goodwill on the ground that before succession to assessee-company, the amount of goodwill in the books of proprietorship concern was nil; therefore, goodwill just after taking over of its business by assessee-company had to be nil. CIT(A) upheld the order of the Assessing Officer. On appeal, the Tribunal held that goodwill is an intangible but saleable asset and it is built over years, and the value of acquired goodwill is not recognized in account books but is realised when the business is sold, and is reflected in the firm’s selling price by an amount in excess over firm’s net worth. Depreciation is an allowable deduction on purchased goodwill as it involves a cost and is recognized as an intangible asset in accounting in the successor company. Since, in instant case, assessee had made a categorical claim that erstwhile proprietorship was enjoying good business goodwill and none of the lower authorities could rebut the same by way of a categorical factual finding,  addition made by Assessing Officer by determining cost of goodwill of erstwhile proprietorship concern at nil was unjustified.  (AY. 2017-18)