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TMI Blog2015 (5) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... deration was a specific value but for which the network would not have been otherwise transferred. In that sense, it constituted business or commercial rights which were similar to the enumerated intangible assets. In so concluding, however, this Court does not lay down the general or particular principle that every such claim has to be necessarily allowed as was apparently understood by the ITAT. The circumstance that the declaration of law in Smifs Securities (2012 (8) TMI 713 - SUPREME COURT) envisions inclusion of goodwill as an asset and, therefore, entitled to depreciation, in other words does not necessarily mean that in every case the goodwill claim has to be allowed. In the present case, though termed as goodwill, what was actually parted with by STL was a commercial right, i.e., exclusivity to the network which would not have been otherwise available but for the terms of the arrangement. So viewed, this Court is satisfied that the conclusions arrived at by the CIT (A) and the ITAT cannot be faulted. No substantial question of law arises - Decided in favour of assessee. - ITA 496/2014 - - - Dated:- 15-4-2015 - S. Ravindra Bhat And R.K. Gauba JJ. For the Appellant : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 'goodwill' is, therefore, rejected and an amount of ₹ 53,39,356 is added back to the income. 4. The assessee‟s appeal was allowed by the Commissioner (Appeals) (hereafter referred to as CIT (A)‟) on the basis of the previous years‟ reasoning which had accepted the depreciation claims. The CIT (A) also considered the relevant statutory provisions and the decision of this Court in CIT v. Hindustan Coca Cola Beverages Pvt. Ltd., (2011) 331 ITR 192. The ITAT by the impugned order affirmed the findings of the CIT (A). 5. It is urged by Mr. Kamal Sawhney, Sr. Standing Counsel that given the nature of the definition of asset under Section 32 (1), Explanation 3 (b), only intangible assets which are akin to those enumerated, i.e., know-how, patents, copyrights, trademarks, licences, franchises etc. can claim depreciation. It was urged that this is apparent from the reading of an expression any other business or commercial rights of similar nature . 6. Learned counsel submitted, therefore, that the nature of the marketing rights were such that there was no similarity or identity with the enumerated rights set out in Explanation 3 (b) and having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ights of similar nature and put it in the compartment of intangible assets. To effectively understand what would constitute an intangible asset, certain aspects, like the nature of goodwill involved, 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 consideration paid for business and value of tangible assets. The tribunal has treated the same to be valuable commercial asset similar to other intangibles mentioned in the definition of the block of assets and, hence, eligible to depreciation. It has also bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner to exercise his power under Section 263 solely on the ground that in the books of accounts it was mentioned as goodwill and nothing else. As has been held by the Apex Court in Malabar Industrial Co. Ltd. (supra), Max India Ltd. (supra) and Commissioner of Income Tax v. Vimgi Investment P.Ltd. [2007] 290 ITR 505 (Delhi) once a plausible view is taken, it is not open to the Commissioner to exercise the power under Section 263 of the Act. 10. In Smifs (supra), the Court was pointedly answering the questions as to whether goodwill would be within the meaning of Section 32. After quoting Explanation (3) to Section 32 (1), the Supreme Court held as follows: - 10. One more aspect needs to be highlighted. In the present case, the Assessing Officer, as a matter of fact, came to the conclusion that no amount was actually paid on account of goodwill. This is a factual finding. The Commissioner of Income Tax (Appeals) [`CIT(A)', for short] has come to the conclusion that the authorised representatives had filed copies of the Orders of the High Court ordering amalgamation of the above two Companies; that the assets and liabilities of M/s. YSN Shares and Securities Private ..... X X X X Extracts X X X X X X X X Extracts X X X X
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