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2009 (8) TMI 851 - ITAT MUMBAIDepreciation on goodwill - Whether goodwill does not fall within the category of the class of assets or rights listed in the provisions of section 32(1)(ii)? - What is the meaning of business or commercial rights of similar nature?- HELD THAT:- We find that the goodwill paid by the assessee is towards the use of the name ‘Kotak’ in the name of the assessee company. The assessee company was in no way related to Shri Uday S. Kotak at the time of acquiring the ‘name’ and the ‘business’ and in order to take advantage of the reputation built up by Shri Uday S. Kotak for carrying on the business, the assessee company has agreed to pay the goodwill. The assets which are included in the definition of ‘intangible assets’ given in clause (ii) are know-how, patents, copyrights, trademarks, licenses, franchises etc., and any other business or commercial rights of similar nature are also included. Therefore, all these rights are similar to the rights under goodwill. Applying the principles of ejusdem generis, the meaning has to be extended to the phrase ‘other business or commercial rights of similar nature’. As seen from the agreement of sale between Shri Uday S. Kotak and the assessee company formerly known as Komaz Financial Services Ltd., we find that the name ‘Kotak’ has tremendous importance as the assessee company was to be benefited by the usage of the said name and it has gone as far as amending its name by including Kotak in its name. Therefore, it is of commercial value for which the assessee has paid the amount as goodwill. Once it is held that the goodwill is also an intangible asset of the similar nature referred to in clause (ii) of section 32(1), the depreciation is consequently allowable on the same. The same is fortified by the decisions relied upon by the ld. counsel for the assessee are also to this effect. The decision of the Ahmedabad Bench in the case of Bharatbhai J. Vyas [2005 (8) TMI 279 - ITAT AHMEDABAD-C] relied upon by the ld. CIT(A) is misplaced. Accordingly, we allow the appeal of the assessee.
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