TaxTMI 
TaxTMI 
2010 (9) TMI 434
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.... one sale deed, movables covering trade mark, goodwill etc. are covered by another sale deed. Schedule B of the sale deed second abovereferred produced in this appeal describe the trade name transferred as "Upasana Hospital". In schedule B besides the name and get up, the parties have given the emblem or trade mark of the hospital purchased by the appellant. Under the sale deed, the value of the goodwill which includes the name of the hospital and its logo and trade mark is declared as Rs. 2 crores. In the income-tax returns filed subsequent to purchase of the hospital, the assessee claimed depreciation on goodwill on the value shown in the sale deed. In subsequent years depreciation on goodwill was claimed on the written down value. It see....
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....be the basis for granting relief for this year. On this question we do not think there can be any dispute because if the assessee is not entitled to depreciation on an item under the statute, then it cannot be granted merely because for earlier years depreciation on the same item happened to be allowed in the course of acceptance of returns without scrutiny. Therefore, we proceed to consider the question of the assessee's eligibility for depreciation on goodwill with reference to the statutory provision applicable to the case in hand. 3. Goodwill is not specifically mentioned in section 32(1)(ii) of the Act. Therefore, the question to be considered is whether goodwill falls within the ambit of the residuary item referred to in section 32....
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.... of the hospital, the patients under care of the hospital continued to be patients of the hospital taken over by the appellant-assessee. Therefore, whatever goodwill the hospital had is admittedly acquired by the assessee under the sale deed. In assessment or in appeals before the lower authorities the Department does not have a case that the sale deed on movables covering goodwill is not genuine or the value shown for goodwill is not correct. Therefore, in the appeal we have to only consider whether goodwill is covered by section 32(1)(ii) entitling assessee for the depreciation as claimed by him. In support of his contentions counsel for the assessee has relied on the decision of the Delhi High Court in Rajesh Brothers v. CIT reported in ....
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....t on the tangible or intangible assets referred to therein. Depreciation though is an allowance to take care of loss or erosion in value of the asset in the course of time on account of use, such consequence need not actually take place for the purpose of entitling the assessee for the relief in terms of the statutory provision. In fact, it is common knowledge that on account of the inflation even tangible assets such as building, machinery, plant or furniture will fetch higher price in later years, though in the assessee's books the value got eroded on account of depreciation written off. The Income-tax Act also takes into account the possibility of appreciation or at least retention of value of depreciable assets on which depreciation is ....
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....age of the good name, reputation and connection of a business. It is the attractive force which brings in customers. It is the magnetic quality of a particular trade or business which attracts customers to it as a matter of course. This quality springs from and is developed by various contributing factors that earn a reputation for honest dealing, quality and standard. It is an intangible asset being the whole advantage of the reputation and connections formed with the customers together with the circumstances which make the connection durable. It is the component of the total value of the undertaking which is attributable to the ability of the concern to earn profits over a course of years because of its reputation, location and other feat....
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....purchase by the assessee continued to be run in the very same building, in the very same premises, in the very same town and with the same name. So much so, the purpose of paying a very huge amount for goodwill is for maintenance of the continued reputation of the hospital which was run in the same name for several years. The assessee's intention is only to earn good business in the hospital and so much so, purchase of hospital as a going concern with its name and trade mark is nothing but acquisition of goodwill earned by the hospital and it cannot be termed anything other than a commercial or business right. In fact, if the previous owner of the hospital wanted to retain the name, logo or trade mark of the hospital even after sale of buil....