TMI Blog2010 (12) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... r his personal purposes but allow use of the name in the company as per the correspondence between them, although there is a rider the assessee can withdraw this benefit when, in future, in our opinion, the transfer of partial right is exigible to capital gains - Decided in favour of the assessee - ITA No. 101/Mds/2007, - - - Dated:- 15-12-2010 - O.K. Narayanan, Hari Om Maratha, JJ. Shaji P. Jacob for the Appellant G. Baskar for the Respondent ORDER Hari Om Maratha:- 1. This is a recalled matter. The appeal is directed against the order of ld. Commissioner of Income Tax (Appeals), Salem, dated 31.10.2006 pertaining to assessment year 2003-04 through which the Revenue has assailed the only finding of appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Board has taken a decision to pay a consideration for using his name, as such for a consideration of Rs.1,35,45,000/-, the assessee accepted this request and received the entire consideration. As per the assessee, this receipt is in the nature of capital receipt being consideration for the use of his name which has assumed importance and almost has become trade name in the market. The assessee has taken a shelter under the Explanation 3 appended to section 32(1)(ii) of the Income-tax Act, 1961 (hereinafter called as "the Act") whereby a trade name/commercial right comes under the definition of "intangible assets". Thus, the case of the assessee is that in lieu of relinquishment of his rights, interest he had in the company from ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The goodwill was reflected neither in the statement of accounts of the company relevant for the year 1992 nor in any of the subsequent years till 2002. 5. As the company follows "Mercantile System" of accounting, if at all any "Goodwill" arises, it should have been properly accounted in that year itself. The company cannot claim the same after the lapse of 10 years. 6. As per accounting standard 26 "Internally generated goodwill is not recognized as an asset because it is not an identifiable resource controlled by the enterprise that can be measured reliably at cost". 7. As per accounting standard prescribed, the situation to evaluate the goodwill of the company never arose. 8. To by pass Central Government restriction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, section 45 of the Act is not applicable. 4. On the other hand, learned A.R. has heavily relied on the appellate finding and further submitted that the name "Sambandam" has assumed ominous importance in the commercial sense as the correspondence between the parties which has been referred above clearly shows that this name has assumed the status of an "intangible asset". According to learned A.R., if one customer goes into market and asks the shopkeeper that he wants "Sambandam", he would immediately understand he wants yarn with the name "Sambandam". Thus, in a way, this has become a trade name and has assumed greater importance in commercial sense. This being intangible asset and when the assessee allowed to retain the name ..... X X X X Extracts X X X X X X X X Extracts X X X X
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