Johnson & Johnson Private Limited Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that no provision in the Income Tax Act mandated inclusion of trademark, acquired prior to 01/04/1998, in the block of assets thus there was no depreciation allowable on the same. Hence, provisions of section 50 has no applicability and transfer of such trademark is treatable as long-term capital gain.
Facts- During the assessment proceedings, it was observed that the assessee sold two trademarks “Coldarin” and “Raricap”. The gains accrued on the transfer of both these capital assets gave rise to income chargeable to tax under the head “Capital Gains”. Accordingly, the assessee offered an income under the head “Capital Gains” amounting to INR 3,28,00,000 and INR 20,99,39,058 on the sale of trademarks “Coldarin” and “Raricap”, respectively, as long-term capital gains.
AO held that the capital gains accrued from the transfer of both trademarks fall within the ambit of the provisions of section 50 of the Act, as the assessee has availed depreciation in respect of the cost of acquisition of these trademarks. Consequently, the capital gains accrued to the assessee amounting to INR 24,27,39,058 on the transfer of the trademarks were subjected to tax as short-term capital gains.
