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2011 (1) TMI 138 - HC - Income TaxRevision – Depreciation on goodwill – Held that: - the depreciation was claimed on goodwill by the assessee on account of payment made for the marketing and trading reputation, trade style and name, marketing and distribution, territorial know-how, including information or consumption patterns and habits of consumers in the territory and the difference between the consideration paid for business and value of tangible assets. The Tribunal has treated the same to be valuable com- mercial asset similar to other intangibles mentioned in the definition of the block of assets and, hence, eligible to depreciation. The meaning of business or commercial rights of similar nature has to be understood in the backdrop of section 32(1)(ii) of the Act. - Commercial rights are such rights which are obtained for effectively carrying on the business and commerce, and commerce, as is understood, is a wider term which encompasses in its fold many a facet. Studied in this background, any right which is obtained for carrying on the business with effectiveness is likely to fall or come within the sweep of meaning of intangible asset. The dictionary clause clearly stipulates that business or commercial rights should be of similar nature as know-how, patents, copy-rights, trademarks, licences, franchises, etc. and all these assets which are not manufactured or produced overnight but are brought into existence by experience and reputation. Revision u/s 263 - it was not appropriate on the part of the Commissioner to exercise his power under section 263 solely on the ground that in the books of account it was mentioned as "goodwill" and nothing else. As has been held by the apex court in Malabar Industrial Co. Ltd. (2000 -TMI - 5786 - SUPREME Court), Max India Ltd. (2007 -TMI - 2388 - Supreme Court of India) and CIT v. Vimgi Investment P. Ltd. (2007 -TMI - 13309 - DELHI High Court) once a plausible view is taken, it is not open to the Commissioner to exercise the power under section 263 of the Act.
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