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2016 (4) TMI 169 - GUJARAT HIGH COURTPayments made to retiring partners - whether in the nature of compensation can be termed as goodwill and subsequently eligible for depreciation? - Held that:- The Supreme Court in the case of Commissioner of Income Tax v. SMIFS Securities Ltd. (2012 (8) TMI 713 - SUPREME COURT ) was dealing with the question as to whether 'goodwill' is an asset within the meaning of section 32 of the Income-tax Act, 1961, and whether depreciation on 'goodwill' is allowable under the said section. The Assessing Officer had held that 'goodwill' is not an asset falling under Explanation 3 to section 32(1) of the Act. The Supreme Court held that Explanation 3 states that the expression "asset" shall mean intangible assets, being knowhow, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature. A reading of the words "any other business or commercial rights of similar nature" in clause (b) of Explanation 3 indicates that goodwill would fall under the expression "any other business or commercial rights of similar nature". The principle of ejusdem generis would strictly apply while interpreting the said expression which finds place in Explanation 3(b). The court was, accordingly, of the view that "goodwill" is an asset under Explanation 3(b) to section 32(1) of the Act, and accordingly, answered the question in favour of the assessee. In the present case, from the findings recorded by the Assessing Officer, the Commissioner (Appeals) as well as the Tribunal, it is an undisputed fact that the payment made to the retiring partners has been considered to be goodwill. The Supreme Court in the above decision has held that goodwill is an asset under Explanation 3(b) to section 32(1) of the Act. Thus, the Tribunal has merely applied the above decision of the Supreme Court to the facts of the present case. Under the circumstances, it is not possible to state that there is any infirmity in the impugned order passed by the Tribunal so as to give rise to a question of law, much less, a substantial question of law, warranting interference. - Decided against revenue
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