TMI Blog2005 (8) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 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 intangi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of section 32 since the appellant has fulfilled all the requisites as mentioned in the statutes. 3. Brief facts are - The Assessing Officer during the assessment proceedings noted that the assessee was a partner in M/s. Nodule Cast along with Shri J.B. Vyas, his father and one Shri O.A Lokhandwala. The firm was dissolved and a sum of Rs. 15.15 lacs was paid as goodwill to Shri Lokhandwala. The assessee during the assessment proceedings stated that in view of the provisions of section 32 relevant from assessment year 1999-2000, depreciation can be claimed even on intangible assets being know-how, patents, copyrights, trademark, license and franchise and any other business of commercial right of similar nature. In view of this provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets have not been defined in the Act, but a sort of descriptive items have been given such as know-how, patents, copyrights, trade marks, licenses, franchises or any other business or commercial rights of similar nature being intangible assets. This can be interpreted as the intangible assets known by any name but if it can qualify under the above mentioned descriptive words, depreciation can be allowed. (b) Second important point in the above provisions is that the intangible assets must be acquired which mean that payment should have been made for acquiring or purchasing such intangible assets. (c) Third point which is important is that such intangible assets should have been acquired on or after 1st day of April 1998. (d) Fourth point i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at amount paid by partners of new firm to original partners under deed of dissolution, as a consideration for relinquishing interest in goodwill of dissolved firm, was a capital expenditure. It was contended that the amount of Rs. 15.15 lakhs paid by the assessee for the goodwill to Shri Lokhandwala was intangible asset in terms of section 32(1)(ii) and was eligible for depreciation. 6. The learned DR relied on the order of lower authorities. 7. We have heard the rival submissions and perused the material available on record. 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 asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se is of no help to the assessee, as it held that a banking establishment has goodwill and same cannot be ignored in valuing an undertaking as a going concern. This case deals with the value of going concern and is not applicable to the assessee's case. Similarly, in the case of Minoo F. Mehta and Purandas Ranchoddas Sons. Courts have held that amount paid for acquisition of business is capital expenditure, we have no dispute on this aspect. What is, the material to decide the controversy is whether the payment for goodwill simplicitor without acquiring any know-how, patents, trade-marks, copyrights etc. is eligible for depreciation in four comers of specific amendment to section 32(1)(ii)? In our considered opinion, in the facts and ci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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