TMI Blog2021 (8) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... 49/DEL/2014 - - - Dated:- 11-8-2021 - Shri N.K. Billaiya, Accountant Member, And Ms. Madhumita Roy, Judicial Member For the Assessee : Shri B.K. Anand, CA For the Revenue : Shri Bharat B. Garg, Sr. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals]- XXV, New Delhi dated 03.06.2014 pertaining to Assessment Year 2010-11. 2. The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in upholding the disallowance of depreciation claimed on tenancy rights amounting to ₹ 5,41,406/- 3. Briefly stated, the facts of the case are that during the course of scrutiny assessment proceedings an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut without any success. 7. Before us, the ld. counsel for the assessee drew our attention to the decision of the Hon'ble High Court of Delhi in the case of Hindustan Coco Cola Beverages 198 Taxmann.com 104 and pointed out that the Hon'ble High Court has allowed depreciation on intangible assets. 8. Per contra, the ld. DR strongly supported the findings of the Assessing Officer and relied upon the findings of the ld. CIT(A). 9. We have carefully considered the orders of the authorities below. At the very outset, we have to state that depreciation has been claimed on the written down value as on 01.04.2009 which means that depreciation was claimed in earlier years also. We find that this is not the initial year of claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be out of place to refer to the decision in Commissioner of Income Tax v. B.C. Srinivasa Setty, [1981] 128 ITR 294 (SC) wherein the concept of goodwill has been understood in the following terms: Goodwill denotes the benefit arising from connection and reputation. The original definition by Lord Eldon in Cruttwell v. Lye 1810 17 Ves 335 that goodwill was nothing more than the probability that the old customers would resort to the old places was expanded by Wood V.C. in Churton v. Douglas 1859 John 174 to encompass every positive advantage that has been acquired by the old firm in carrying on its business, whether connected with the premises in which the business was previously carried on or with the name of the old firm, or wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sap and life of the business. Architecturally, it has been described as the cement binding together the business and its assets as a whole and a going and developing concern. A variety of elements goes into its making, and its composition varies in different trades and in different businesses in the same trade, and while one element may preponderate in one business, another may dominate in another business. And yet, because of its intangible nature, it remains insubstantial in form and nebulous in character. Those features prompted Lord Macnaghten to remark in IRC v. Muller Co.'s Margarine Limited [1901] A.C. 217(HL) that although goodwill was easy to describe, it was nonetheless difficult to define. In a progressing busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, how the goodwill has been generated, how it has been valued, agreement under which it has been acquired, what intangible asset it represents, namely, trademark, right, patent, etc. and further whether it would come within the clause, namely, any other business or commercial rights which are of similar nature are to be borne in mind. 23. On a scrutiny of the order passed by the tribunal, it is clear as crystal that the depreciation was claimed on goodwill by the assessee on account of payment made for the marketing and trading reputation, trade style and name, marketing and distribution, territorial know-how, including information or consumption patterns and habits of consumers in the territory and the difference between the consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... likely to fall or come within the sweep of meaning of intangible asset. The dictionary clause clearly stipulates that business or commercial rights should be of similar nature as knowhow, patents, copyrights, trademarks, licences, franchises, etc. and all these assets which are not manufactured or produced overnight but are brought into existence by experience and reputation. They gain significance in the commercial world as they represent a particular benefit or advantage or reputation built over a certain span of time and the customers associate with such assets. Goodwill, when appositely understood, does convey a positive reputation built by a person / company / business concern over a period of time. Regard being had to the wider expans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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