Trademark depreciation allowed where beneficial ownership and business use passed in a slump sale, despite no registration in assessee's name.

Depreciation on an acquired trademark was allowable where the mark was assigned with the business as a going concern and the assessee obtained beneficial ownership and commercial use rights. Registration in the assessee's name was not the test for depreciation, because an unregistered trademark can still have enforceable commercial value and qualifies as an intangible asset under the depreciation rules. The objection based on alleged non-use also failed since the business continued under the same mark and there was no material to doubt its use.

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Issues: Whether depreciation under section 32 of the Income-tax Act, 1961 was allowable on a trademark acquired as part of a slump sale despite the trademark not being registered in the assessee's name during the relevant year.

Analysis: The disallowance proceeded on the premise that only a registered proprietor could claim ownership and use of the trademark. The Tribunal rejected that approach, holding that registration was not the test for depreciation where the trademark had been assigned along with the business as a going concern, the assessee had acquired beneficial rights in the mark, and the trademark formed an integral part of the business transferred. The Tribunal further noted that an unregistered trademark still carries enforceable commercial value and that the depreciation schedule covers trademarks as intangible assets. The objection regarding non-use was found unsustainable because the business was being carried on under the same mark and there was no material basis to doubt its use.

Conclusion: Depreciation on the trademark was allowable, and the disallowance was set aside in favour of the assessee.

Final Conclusion: The assessee was entitled to depreciation on the acquired trademark as an intangible asset, and the addition/disallowance made by the lower authorities could not be sustained.

Ratio Decidendi: For depreciation purposes, a trademark need not be registered in the assessee's name if the assessee has acquired beneficial ownership and commercial use rights in the mark as part of a business transfer, and the mark qualifies as an intangible asset under the depreciation provisions.

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