TMI Blog2008 (2) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... words of same nature, the general words must be confined to the things of the same kind as those specified. This rule of interpretation makes an attempt to reconcile incompatibility between the specific and general words. The first category of words like know-how, patents, copyrights, etc., form a distinct genesis or category inasmuch as all those items are specific and elucidated rights of business or commercial nature. In such circumstances, the expression any other business or commercial rights of similar nature also must be in the same genesis or category with specific and elucidated identity of commercial or business nature. Therefore, in the light of the statutory provisions contained in section 32(1)(ii), the goodwill acquired by the assessee does not come under the expression of any other business or commercial rights of the nature similar to know-how, patents, copyrights, etc. The expression all business and commercial rights used in the agreement is too a generic expression which does not find similarity with the specific expressions like know-how, patents, licences, etc. Therefore, such a very general expression of business and commercial rights cannot be equate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation under the provisions of section 32(1)(ii). The assessee had explained that as the goodwill was utilized by the assessee for carrying on the business, its business increased manifold and the goodwill and the name of the old firm have been extensively used for the performance of the assessee-company. In the assessment order, this contention was not accepted by the Assessing Authority for the reason that the goodwill cannot be treated as intangible asset and, therefore, not depreciable. The Assessing Officer also observed that goodwill would not fall under "any other business or commercial rights of similar nature". In first appeal, the CIT(A) held that the only issue to be considered is whether the goodwill acquired by the assessee would be covered by the expression "any other business or commercial rights of similar nature", being intangible asset in nature. He held that the consideration was in the nature of a capital payment. In the table of rates prescribed for depreciation, the goodwill is not separately dealt with. The intangible assets explained in law including know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation (3) provided in section 32(1). So also clause (ii) of section 32(1). He explained that section 32(1)(ii) provides for depreciation on intangible assets like know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after 1-4-1998. As per clause (b) to Explanation (3), the expression "assets" and "other assets" shall mean intangible assets, being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature. 7. The learned Chartered Accountant, in the light of the above statutory provisions, submitted that what was acquired by the assessee was not the goodwill per se, as considered in common parlance. He, therefore, submitted that in the agreement, the expression "goodwill" has been used as a generic term but if the agreement entered into by the assessee is perused in an objective manner, the payment was made for transferring the existing trade name of the erstwhile firm along with the goodwill and including of business and commercial rights. He explained that the statutory provisions relating to the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruji Entertainment Network Ltd. v. Asstt. CIT [2007] 14 SOT 556 wherein the Tribunal has held that the assessee was not eligible for depreciation on goodwill and depreciation is available only in respect of intangible assets such as copyrights, telecast rights, etc. He has also relied on the decision of the Karnataka High Court in the case of CIT v. Mangalore Ganesh Beedi Works [2003] 264 ITR 142. 11. In reply, Shri R.R. Vora, on the other hand, submitted that the decision of the ITAT Ahmedabad Bench in the case of Bharatbhai J. Vyas relied on by the revenue does not rule out the grant of depreciation on goodwill, as such. The Tribunal has held that goodwill could be granted if the assessee had acquired any know-how, patents, copyrights, trademarks, etc. Therefore, it depends on the facts of the case. In the present case, by making of Rs. 25,00,000 as "goodwill", the assessee has acquired invaluable business and commercial rights, which have been specifically defined as an intangible asset under section 32(1)(ii). Therefore, he submitted that in the facts of the present case; the said decision must be to the advantage of the assessee. 12. We heard both sides in detail and consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y inasmuch as all those items are specific and elucidated rights of business or commercial nature. In such circumstances, the expression "any other business or commercial rights of similar nature" also must be in the same genesis or category with specific and elucidated identity of commercial or business nature. Therefore, in the light of the statutory provisions contained in section 32(1)(ii), the goodwill acquired by the assessee does not come under the expression of any other business or commercial rights of the nature similar to know-how, patents, copyrights, etc. 17. Another argument advanced by the learned Chartered Accountant on this juncture is that even though the consideration was stated to be paid for acquiring the goodwill, the assessee has specified the rights acquired by the assessee, more particularly, in the agreement which included "all business and commercial rights". The expression "all business and commercial rights" used in the agreement is too a generic expression which does not find similarity with the specific expressions like know-how, patents, licences, etc. Therefore, such a very general expression of business and commercial rights cannot be equated wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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