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TMI Blog2012 (7) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of law: a) Whether on the facts and circumstances of the case and in law, the Tribunal was correct in confirming the order of CIT(A) in holding that the receipt of Rs.15,20,00,000/- on account of consideration for trade mark and design were not taxable? b) Whether on the facts and circumstance of the case and in law, the Tribunal was correct in confirming the order of CIT (A) in holding that the provisions for the computation of capital gains in the case of the assessee will fail, since there was no specific provision in the Act about the cost of acquisition of such self generated assets? c) Whether on the facts and circumstance of the case and in law, the Tribunal was correct in holding that the sale proceeds in respect of self gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assignment of the designs Rs.20 lakhs iv) Transfer of ownership and assignment of technical know how Rs.200 lakhs b) The respondent filed its return of income for the Assessment Year 1999-2000 (previous year ending 31/3/1999). However, the respondent did not offer to tax on the amount of Rs.15.00crores received on account of trade mark and Rs.20.00lakhs on account of sale of design on the ground that they are capital receipts not chargeable to tax. c) On 30/3/2005, the Assessing Officer by Order for the Assessment Year 1999-2000 held that the sale of trade mark as well as the sale of design aggregating to Rs.15.20crores is liable to capital gains tax. d) Being aggrieved by the order dated 30/3/2005, the respondent preferred an appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is is so, as according to him the cost of acquisition of such self generated assets is to be taken as Nil. Consequently, the entire consideration received by the Respondent-Assessee would be subject to capital gains tax. The amendment to Section 55(2) of the said Act with effect from 1/4/2002 introducing trade marks amongst the capital asset whose cost of acquisition in case of self generated being taken at nil would not make any difference as even for the period prior to 1/4/2002 the costs of acquisition of self generated assets like trademark has to be taken as Nil for the purpose of computing capital tax. 7. On the other hand, Mr. K.B. Bhujale appearing for the Respondent submits that i) that the costs of self generated assets such as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transfer of the goodwill by partnership firm can give rise to a capital gain tax under Section 45 of the said Act. The Apex Court held that where the cost of acquisition of the capital asset is nil then the computation provision fails and the transfer of goodwill not give rise to capital gains tax. Prior to the amendment made to Section 55(2) by the Finance Act, 2001 effective from 1/4/2002 by adding the words "trade mark or brand name associated with the business" self generated assets such as trademark did not have any cost of acquisition. Therefore for the period under consideration the computation provision under Section 48 of the said Act fails resulting in such transfer of trade marks not being chargeable to capital gains tax. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) of sub-section (2) to provide that the cost of acquisition in relation to trademark or brand name associated with a business shall also be taken to be the purchase price in case the asset is purchased from a previous owner and nil in any other case. 42.3- This amendment will take effect from 1st April, 2002, and will, accordingly, apply in relation to the assessment year 2002-2003 and subsequent years." 9. From the above circular, it would be clear that the amendment bringing self generated intangible assets such as trademark to capital gains tax only with effect from Assessments Year 2002-03 onwards. In this case, we are concerned with Assessment Year 1999-2000 and therefore, the amendment would not have any effect. Further as held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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