75th Founding Day Lecture Meeting on “India@2030” Know More

August 2012

Depreciation: Intangible assets: Section 32(1) (ii): A.Ys. 2002-03 and 2005-06: Know-how, business contracts, business information, etc., described as goodwill are intangible assets eligible for depreciation u/s.32(1)(ii) as ‘business or commercial rights of similar nature’ specified in section 32(1)(ii).

By K. B. Bhujle, Advocate
Reading Time 1 mins
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[Areva T&D India Ltd. v. Dy. CIT, 250 CTR 151 (Del.)]

The assessee had acquired know-how, business contracts, business information, etc., as part of the slump sale described as goodwill. The assessee’s claim for depreciation u/s.32(1)(ii) of the Income-tax Act, 1961 on such intangible assets was disallowed for the A.Ys. 2002-03 and 2005-06, for the reason that the same were described as goodwill. The Tribunal upheld the disallowance.

On appeal by the assessee, the Delhi High Court reversed the decision of the Tribunal and held as under: “Intangible assets viz., business claims, business information, business records, contracts, employees and know-how acquired by the assessee under slump sale of running business are in the nature of ‘business or commercial rights of similar nature’ specified in section 32(1)(ii) and therefore, the same are eligible for depreciation.”

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