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2014 (1) TMI 540 - AT - Income TaxDepreciation on Goodwill Nature of Goodwill Tangible or intangible u/s 32(1)(ii) of the Act Held that:- The marketing network, a commercial right, acquired is an intangible asset eligible for depreciation on the reason that the assessee acquired the rights to avail the infrastructure of the networking - the meaning of business or commercial rights of similar nature mentioned in section 32 of the Act has to be understood in the context of purpose of such rights obtained as for effectively carrying on the business and commerce Relying upon Skyline Caterers (P.) Ltd. Versus Income-tax Officer, Ward-8(3) 2, Mumbai [2007 (12) TMI 308 - ITAT MUMBAI] diminution in value of the asset is not a relevant factor for allowing the depreciation u/s 32 of the Act - assessee acquired the marketing network of Jyothi Industries by which the assessee got access to the marketing network of Jyothi Industries consisting of representative, infrastructure, customer lists, marketing strategies etc. - assessees acquisition of distribution network is eligible for depreciation u/s 32 of the Act Thus, the assessee is entitled for depreciation on the distribution rights ie marketing network Decided against Revenue and in favour of Assessee. Allowability of Depreciation on Trademark rights and Intangible asset Held that:- Following B. Raveendran Pillai vs. CIT [2010 (9) TMI 434 - Kerala High Court] - Payment made towards goodwill for ensuring retention and continued business in the hospital acquired by assessee on going concern basis is comparable with trademark, franchise, copyright etc referred to in sub-clause (ii) of section 32(1) entitling the assessee for depreciation Decided against Revenue and in favour of Assessee. Allowability of deduction Held that:- Following Balmukund Acharya Vs Deputy Commissioner of Income-tax [2008 (12) TMI 88 - BOMBAY HIGH COURT] - only real income should be taxed and the AO should allow the deduction permissible under the law matter remitted back to the AO for fresh adjudication Decided partly in favour of Revenue.
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