TaxTMI 
TaxTMI 
2009 (8) TMI 851
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....hat goodwill does not fall within the category of the class of assets or rights listed in the provisions of section 32(1)(ii). 3. Brief facts of the case are that the assessee is a company which filed its return of income on 31-10-2001 declaring total income of Rs. 86,106. The return was revised subsequently on 26-7-2002. During the assessment proceedings under section 143(3), Assessing Officer observed that the assessee has acquired the foreign exchange broking business from M/s. Uday S. Kotak for a sum of Rs. 5.90 crores, out of which Rs. 1.88 crores was towards goodwill and Rs. 3.83 crores was towards forex broking rights and balance towards net current assets. The agreement for purchase of the business was submitted during the course....
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....odwill" as one of the intangible assets and if the Legislature wanted to grant depreciation on goodwill, then after enumerating other components of goodwill such as patents, trademarks etc., it would have added one more item as goodwill and in the absence of same, it cannot be said that the intangible asset which qualifies for depreciation is goodwill. He, therefore, disallowed the claim of the assessee of depreciation of Rs. 23,55,000 on the goodwill of Rs. 1,88,40,000. Aggrieved, assessee filed an appeal before the CIT(A) who confirmed the order of the Assessing Officer and the assessee is in second appeal before us. 4. The ld. counsel for the assessee Shri F.V. Irani while reiterating the submissions made by the assessee before the au....
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....company was also to be renamed as 'Kotak Forex Broking Ltd.' Thus, when the right to use the name 'Kotak' is granted to the assessee company, the consideration paid for such usage is akin to the consideration paid for a trademark. He submitted that had the name 'Kotak' been the registered trademark of Shri Uday S. Kotak, the consideration paid for the usage of the said name would have undisputedly been eligible for the claim of depreciation under section 32. Merely because the said name is not a registered trademark it cannot assume any other nature of asset. He submitted that the usage of the same being of commercial value to the assessee, it falls within the meaning of the term 'business or commercial rights of similar nature' used in sec....
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....copyright, trademark, license and franchise fulfils all the conditions of the intangible asset, then surely the impugned business/commercial right of carrying on the export business acquired by the assessee also fulfils the condition by way of a logical corollary. 5. The Ld. DR, on the other hand, placed reliance upon the orders of the authorities below and reiterated the findings therein. 6. Having heard both the parties and having considered their rival contentions, we find that the goodwill paid by the assessee is towards the use of the name 'Kotak' in the name of the assessee company. The assessee company was in no way related to Shri Uday S. Kotak at the time of acquiring the 'name' and the 'business' and in order to take advanta....
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....ll these are the assets which are not manufactured or produced overnight but are brought into existence by experience and reputation. They assume importance in the commercial world as they represent a particular benefit or advantage or reputation built over a period of time and customers associate with such assets. Similarly, goodwill is nothing but positive reputation built by a person/company/business-house over a period of time. Thus, goodwill is a 'business or commercial right of similar nature.' As seen from the agreement of sale between Shri Uday S. Kotak and the assessee company formerly known as Komaz Financial Services Ltd., we find that the name 'Kotak' has tremendous importance as the assessee company was to be benefited by the u....