Subscribe to the Bombay Chartered Accountant Journal Subscribe Now!

August 2012

Depreciation: Intangible assets: Section 32(1) (ii): A.Ys. 2002-03 and 2005-06: Know-how, business contracts, business information, etc., described as goodwill are intangible assets eligible for depreciation u/s.32(1)(ii) as ‘business or commercial rights of similar nature’ specified in section 32(1)(ii).

By K. B. Bhujle, Advocate
Reading Time 1 mins
fiogf49gjkf0d
[Areva T&D India Ltd. v. Dy. CIT, 250 CTR 151 (Del.)]

The assessee had acquired know-how, business contracts, business information, etc., as part of the slump sale described as goodwill. The assessee’s claim for depreciation u/s.32(1)(ii) of the Income-tax Act, 1961 on such intangible assets was disallowed for the A.Ys. 2002-03 and 2005-06, for the reason that the same were described as goodwill. The Tribunal upheld the disallowance.

On appeal by the assessee, the Delhi High Court reversed the decision of the Tribunal and held as under: “Intangible assets viz., business claims, business information, business records, contracts, employees and know-how acquired by the assessee under slump sale of running business are in the nature of ‘business or commercial rights of similar nature’ specified in section 32(1)(ii) and therefore, the same are eligible for depreciation.”

Download PDF

You May Also Like

Capital gains: Sections 2(47) and 48: A.Y. 2002-03: Redemption of preference shares amounts to transfer u/s.2(47): Computation: Redeemable preference shares are not bonds or debentures: At time of redemption of preference shares, assessee would be entitled to benefit of indexation u/s.48.

Income: Deemed to accrue or arise in India: Sections 5, 6 and 9 : A.Y. 2001-02: Assessee was an employee of an American company and non-resident from year 1991 to 1999: On termination of employment in 1999, he received certain amount from previous employer as retirement benefit/severance/ vacation engagement: Assessee not ordinary resident in relevant assessment year: Amount received by assessee had not accrued/ deemed to be accrued/paid in India in terms of section 6 and section 9(1)(ii): Amou<