Case Law Details
Issue in dispute is squarely covered by the decision of the Tribunal, Mumbai in the case of Kotak Forex Brokerage Ltd. Vs ACIT (33 SOT 237)(Mum.). In this case, the assessee paid an amount of Rs. 1.88 crore towards the use of the name ‘Kotak’ and claimed depreciation thereon terming it as depreciation on goodwill.
The Tribunal held that business or commercial rights are rights obtained for effectively carrying on the business or commerce. Commerce is a wider term, which encompasses business in its fold. Therefore, any right which is obtained for carrying on the business effectively and profitably has to fall within the meaning of intangible asset. The Tribunal held that goodwill was similar to the specified assets and accordingly the assessee was allowed depreciation. The Hon’ble Supreme Court in the case of CIT Vs. Smifts Securties Ltd. held that goodwill is an intangible asset eligible for depreciation u/s 32 of the Act. In these circumstances, we remit the issue to the file of the AO to decide the issue in the light of the said decisions to consider the allow ability of depreciation on intangible assets after getting bifurcation of payment of Rs. 75 lakhs and to allow depreciation on the goodwill @ 25%.
INCOME TAX APPELLATE TRIBUNAL, HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
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