9911796707
TMI Blog2008 (2) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation of Rs. 4,68,705, made by the assessee on goodwill of Rs. 25,00,000, which was purchased by the assessee in the previous year relevant to the assessment year under appeal. 3. The assessee had commenced its business on 1-6-2000 by acquiring goodwill and the name of an existing firm "M/s. R.G. Keswani & Engrep". The said firm was running its business since 1988 as indenting agent. According to the assessee, the said firm had developed reliable business relationship with foreign principals and had earned a goodwill and trade name in the line of business. Therefore, while acquiring the said goodwill and name of the said name M/s. R.G. Keswani & Engrep., the assessee had paid an amount of Rs. 25,00,000 in the trade name, goodwill an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her observed that section 55(2) of the Income-tax Act deals with cost of acquisition, in relation to capital assets, being goodwill of business or trademark or brand name associated with the business or right to manufacture, process, any article or things, tenancy rights etc. In case of acquisition of such assets by the assessee by purchase from previous owner, the cost of acquisition means the amount of purchase price. Thus, if the present case is the one, the future of the goodwill acquired by the assessee could be considered against the acquisition cost of Rs. 25,00,000, while computing the capital gains. On the basis of the above logic, the CIT(A) observed that no depreciation is contemplated in computing the cost of acquisition of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited our attention to clause (b) of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the decision of the ITAT Mumbai 'D' Bench in the case of Techno Shares & Stocks Ltd. v. ITO [2006] 101 TTJ (Mum.) 349 and the decision of the ITAT Cochin Bench in the case of Peninsular Capital Market Ltd. v. Asstt. CIT [2008] 19 SOT 421, in support of his arguments. In those decisions, the membership card of stock exchange has been treated as intangible assets eligible for depreciation. 10. Shri Anjaneyelu U., the learned Senior D.R. appearing for the revenue contended that the goodwill cannot be treated as an item of intangible asset as held by the ITAT Ahmedabad Bench in the case of Bharatbhai J. Vyas v. ITO [2005] 97 ITD 248 wherein the Tribunal has held that there may be enumerable number of intangible assets, which may be transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odwill", 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 considered the matter. The statutory expression of the provision granting depreciation on intangible asset is that- "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." 13. A reading of the above statutory expression brings home the point that the law has specified items of intangible assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding words. Ejusdem generis rule is the rule of generic words following more specific one. The rule is that when general words follow specific word$ 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
