2012 (4) TMI 79 - HC - Income Tax

Depreciation on intangible assets being “business and commercial rights” - assessee, vide slump sale agreement, acquired power transmission and distribution business as a going concern for a total sale consideration of ₹ 44.7 crores out of which ₹ 16.58 crores were paid for acquisition of “business and commercial rights” being business claims; business information; business records; contracts; skilled employees; know-how described as “goodwill” –dis-allowance of depreciation on the amount described as goodwill by Revenue – Held that:- Addition of the words “business or commercial rights of similar nature” after the specified intangible assets clearly demonstrates intention of Legislature to provide depreciation to other categories of intangible assets which are not exhaustively enumerated. It is observed that in case of the assessee, intangible assets being Business claims; business information; business records; contracts; skilled employees; knowhow were invaluable and resulted in carrying on the transmission and distribution business by the assessee, without any interruption.

Therefore, specified intangible assets acquired under slump sale agreement were in the nature of “business or commercial rights of similar nature” specified in Section 32(1)(ii) and were accordingly eligible for depreciation. It is not necessary to decide the alternative submission made on behalf of the assessee that goodwill per se is eligible for depreciation u/s 32(1)(ii) – Decided in favor of assessee.