Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2005 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2005 (8) TMI 279 - AT - Income TaxAllowance of depreciation claimed on goodwill - misinterpretation of provision of section 32 - HELD THAT:- Intangible asset, other than specified one shall be of similar nature i.e., the prescribed assets. It shall be pertinent here to mention that the legislature has inserted a fiction, by which, specified intangible assets, are held to depreciate and allowance is given therefor. Know-how, patents, copyrights, trademarks etc. are sometimes assigned different names, therefore, by using the word 'similar nature', the legislature has restricted the scope of intangible assets similar to the specified one. The assessee has nowhere established that it has acquired any know-how, patents, copyrights, trademarks etc. What it has paid for, simplicitor is an amount as a consideration for retirement of one partner, Shri Oni Ahesan Husein Lokhandwala, as goodwill, which amounts to giving compensation to a retiring partner and the term has been used as goodwill. This does not signify acquisition of any know-how, patents, copyrights, trademarks etc. or any business or commercial right of similar nature. In these circumstances, the amount of so-called goodwill is consideration paid for retirement of a partner without any acquisition of any intangible assets as contemplated in section 32(1)(ii). As, we have already observed that there may be innumerable number of intangible assets, which may be transacted in business realities. We have to deal with intangible assets as specified by the amended Act i.e., amendment to section 32(1)(ii). There cannot be a dispute about the terming such compensation as a 'goodwill', but while deciding the allow ability of depreciation, one has to recourse to specific provisions. Thus, the amount paid by the assessee's goodwill does not result into acquisition of any know-how, patents, copyrights, trade-marks etc. as prescribed in this behalf. Consequently, the assessee is not entitled to claim of depreciation. This Ground No. 1 of the assessee is dismissed. In the result assessee's appeal is dismissed.
|