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2016 (1) TMI 982 - ITAT PUNEReceipts for transfer of trademark - assessed as capital receipt or business income - Held that:- The assessee has acquired rights in trademarks/brands through family arrangement and settlement.It is a well settled law that goodwill and the trademarks are intangible assets and are shown as Assets in the balance sheet. Thus, any income generated on transfer of rights attached to capital assets is a capital receipt. The Commissioner of Income Tax (Appeals) has rightly rejected the findings of Assessing Officer in holding that the receipt of ₹ 1 crore by the assessee on transfer of trademarks is taxable u/s. 28(iv) as business income. As corollary to above findings we hold that the income generated from transfer of rights in trademarks to M/s. Thakur V. S. Bidi Works is a capital receipt. Whether the capital receipt is taxable u/s. 45 r.w.s. 55(2)(a)? - Held that:- In the case of CIT Vs. B. C. Srinivasa Setty (1981 (2) TMI 1 - SUPREME Court ) the Hon'ble Supreme Court of India has held that where goodwill is generated in a newly commenced business, it cannot be described as “asset” within the meaning of section 45 of the Act and thus, the transfer of goodwill initially generated in a business does not give rise to a capital gain for the purposes of income-tax. Thus, ratio laid down in the case of ‘goodwill’ squarely applies on ‘trademarks’ also, as both are intangible assets and are generated in similar manner over the period of time. In view of the facts of the case and the decisions referred above, we hold that the amount of ₹ 1 crore received by the assessee on transfer of rights in trademark is a ‘capital receipt’ not liable for tax u/s. 45 under the provisions of section 55(2) of the Act.
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