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TMI Blog2006 (11) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... JUDGMENT The judgment of the court was delivered by MARKANDEY KATJU J .-Leave granted. This appeal by special leave has been filed against the impugned judgment of the Calcutta High Court dated June 26, 2003 in I. T. A. No. 404 of 2000. Heard learned counsel for the parties and perused the record. The respondent, M/s. Hooghly Mills Co. Ltd. had by an agreement dated March 24, 1988, with the vendor, purchased an undertaking and by the same agreement had also taken over the accrued and future gratuity liability of the vendor, which amounted to Rs. 3.5 crores. The respondent-assessee claimed that since this amount of Rs. 3.5 crores towards gratuity is capital expenditure hence it is entitled to depreciation on the sum under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustrial undertaking with effect from March 26, 1988, as a going concern for a price of Rs. 2 crares and shall also take over the gratuity liability. In clause 1(C) of the said agreement it is stated: "(C) The amount of consideration agreed to be paid by the purchaser to the vendor shall be apportioned amongst the following heads: (Rs. in lakhs) (A) Land 5 (B) Buildings, structures, godowns sheds and all other constructions and properties of immovable nature at the said premises 35 (C) Plant, machinery and other movables 160 200 In the same agreement it was also stated: "In addition to the consideration as mentioned in l(A), the accrued and futu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of buildings, machinery, plant or furniture, being tangible assets, and know-how patents, copyrights, trade marks, licences, franchises or other business or commercial rights of similar nature being intangible assets. The gratuity liability taken over by the respondent does not fall under any of those categories specified in section 32. Hence, in our opinion, no depreciation can be claimed in respect of the gratuity liability even if it is regarded as capital expenditure. The gratuity liability is neither a building, machinery, plant or furniture nor is it an intangible asset of the kind mentioned in section 32(1)(ii). Hence, we fail to see how depreciation can be allowed on the same. In fact, depreciation cannot even be allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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