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2016 (4) TMI 587 - ITAT AHMEDABAD

2016 (4) TMI 587 - ITAT AHMEDABAD - TMI - Disallowance of depreciation on acquisition of trade mark - Held that:- CIT(A) has raised an issue about the trademark not being actually used by the assessee is difficult to understand, much less approve, his inference. When the business is transferred on a going concern basis and the trademark is an integral part of the business transferred, and the assessee has carried on the business as such, there is no reason to even suspect, much less infer, that .....

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e intangible asset by way of trademark. The Assessing Officer is, therefore, directed to grant the depreciation on the trademark. - Decided in favour of assessee. - I.T.A. No.2477/Ahd/2011 - Dated:- 8-3-2016 - Pramod Kumar AM and S S Godara JM For The Appellant : Saurabh N Soparkar For The Respondent : A K Pandey ORDER Per Pramod Kumar, AM: 1. This appeal is directed against the order dated 27th July, 2011, passed by the learned CIT(A), in the matter of assessment under section 143(3) of the Inc .....

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ies Pvt. Ltd., the assessee company had purchased the business of selling, installation, commissioning and repairs and maintenance of elevators with effect from 7th September 2006, with all its assets and liabilities, benefits and obligations, employees and customers, as a going concern. One of the assets which was transferred to the assessee as such was trademark which was assigned a value of ₹ 2,00,00,000 in this agreement. The assessee claimed depreciation of ₹ 50 lakhs on the ass .....

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8 (1) of the Trade Marks Act, 1999 it is only on it s registration that the proprietor of the trademark gets the exclusive right to use the trademark and to obtain relief in respect of infringement of the trademark. It was in the backdrop of these observations that the Assessing Officer declined the claim of depreciation in respect of trademark by observing, inter alia, as follows: 4.0 It is thus clear that the assessee has not followed the provisions of the Trademark Act, and is in fact not a r .....

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e the right to forbid its use by others and if it has been used by someone else, must have the right to a legal remedy. These are some of the characteristics of ownership. The primary condition for an assessee to claim depreciation is that the assessee must be the owner of that capital asset. The assessee has failed the test of ownership. 4.1 Section 28(1) of the Trade Marks Act, 1999 prescribed the rights conferred by the registration of the trade mark. It is only upon a valid registration that .....

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that the proprietor can obtain relief as and when the Trade mark has been infringed upon. These characteristics are sine qua non for ownership over any property. 4.2 In view of the facts and circumstance of the case, the Trade Marks Act, 1999 and the above discussion, the assessee cannot be held to be the owner of the Trade Mark under any law in force. The assessee therefore cannot be termed as the owner of the Trade Mark upon which it has claimed deprecation as per section 32 of the I.T. Act. 4 .....

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by observing as follows: I have carefully considered the assessment order and the submission filed by the appellant. The appellant has purchased the business of M/s. Alps Technologies Pvt. Ltd. including its assets and liabilities, benefits and obligations, employees etc. as a ongoing concern. The total value of the slump say was ₹ 7.25 crores out of which ₹ 2 crores were provided for trademark. The appellant has claimed that the depreciation on the trade mark subsequently transferre .....

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wever, the appellant has not been able to prove or show whether the trade mark was used by the appellant company during the previous year relevant to assessment year. Mere entry in the books of account showing the trade mark in the intangible assets is not sufficient to claim the depreciation. In order to avail depreciation, the appellant should satisfy the following condition: (i) The asset must be owned by the appellant. (ii It must be used for the purpose of business, (iii) It should be used .....

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the trade mark. The documents that have been filed during the course of appeal show that the trade mark TRIO has been registered in the name of the appellant but the effective date of transfer has not been mentioned. It appears that the trade mark has been transferred later somewhere around in the month of March, 2010 as the letter from the Deputy Registrar of Trade Mark allowing the transfer of trade mark shows the date of 16/03/2010. The observation made by the A. O. that as per the trade mar .....

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on will be allowable if the person was a beneficial owner which means he could establish before the authority that he was actually using it and had the control over the same. In the case of the appellant, the appellant has not been able to establish the same. Considering the above mentioned facts and circumstances, the disallowance of claim of depreciation on the trade mark by the A. O. is upheld and the ground of appeal is dismissed. 4. The assessee is not satisfied and is in further appeal bef .....

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me Court, in the case of Cadila Health Care Limited Vs. Cadila Pharmaceuticals Limited [(2001) 5 SCC 73] observed as follows:- Under Section 28 of the Trade and Merchandise Marks Act on the registration of a trade mark in Part-A or B of the register, a registered proprietor gets an exclusive right to use the trade mark in relation to the goods in respect of which trade mark is registered and to obtain relief in respect of infringement of the trade mark in the manner provided by the Act. In the c .....

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able. The passing off action depends upon the principle that nobody has a right to represent his goods as the goods of some body. In other words a man is not to sell his goods or services under the pretence that they are those of another person [Emphasis, by underlining, supplied by us] 7. Clearly, therefore, even though unless a trademark is registered in the name of a person, he does not get exclusive rights to use the trademark in respect of the goods for which the trade mark is registered bu .....

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ark in the name of the assessee company, has given an affidavit which states as follows: I, Chirag S. Patel, An Indian National, Aged 32 Years, being the Managing Director of M/s. M/S. ALPS TECHNOLOGIES PVT. LTD., (FORMERLY KNOWN AS M/S. TRIO ELEVATORS PVT. LTD.,) having its Registered Office at Plot No,824, Nr. Kothari Industrial Estate, PO Santej, Taluka-Kalol, Dist: Gandhinagar, Gujarat State, India, do hereby solemnly affirm as under. 1. I say and submit that, my company is the original adop .....

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uyangdev Cross Road, Sola Road, Ghatlodia, Ahmedabad - 380 061, Gujarat State, India by virtue of the Deed Of Assignment Dated 31st day of Aug 2007. Accordingly, all rights stated therein such as Trade Mark, Copyright and goodwill and/or other Intellectual Properties now belong to M/s. TRIO ELEVATORS COMPANY (INDIA) LTD., having its Registered Office at 404, Shivam Complex, Bhuyangdev Cross Road, Sola Road, Ghatlodia, Ahmedabad-380 061, Gujarat State, India. 3. I say that I have no objection if .....

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5. This Affidavit is therefore sworn to carryout necessary changes in the name of Registered Proprietor on record with the Trade Mark Registry. What is stated above is true to the best of my knowledge, information and belief. 8. The beneficial ownership of the trademark cannot therefore be in any dispute, inasmuch as admittedly the former owner of the registered trademark had assigned all his rights, as seen above, and the assessee was carrying on the business in that name. The entire business w .....

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s not registered in the name of the assessee did not affect assessee s valuable rights, as noted by Hon ble Supreme Court above, that none else can pass off the goods or services under the pretence that it belonged to the trademark owned by the assessee. Even in the case of the unregistered trade mark, thus, the assessee does have valuable rights which make it an intangible asset eligible for depreciation. In any event, the admissibility of depreciation on trademark is not contingent upon its re .....

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