TaxTMI 
TaxTMI 
2014 (10) TMI 426
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....Ltd. From the details of assets acquired, assessing officer noticed that there was an asset of Rs. 4,75,00,000/- under the head "Technical Know-how", on which the assessee had claimed depreciation @ 25% amounting to Rs. 1,18,75,000/-. He required the assessee to furnish following details: (i) Break-up of Technical know-how; (ii) When it was acquired; and (iii) What was the business use of that asset. 2.1. The assessee's reply has been reproduced at page 2 of assessment order in which assessee primarily submitted as under: (i) The company had acquired running business of Little Kingdom Edutech Ltd.. The assessee company had acquired along with other assets technical know-how amounting to Rs. 4,75,00,000/- which also included software/ academic/ technical gadgets. The assessee company used various accounts of academic/ technical gadgets to equip and groom the child to take up the challenges of admission to reputed schools along this a proper emphasis was being put on child's mental and physical growth. (ii) In order to meet the requirements of such development, the assessee co....
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.... account of goodwill had become technical know-how in the hands of the assessee company. Considering the assessee's reply that technical know-how was nothing but a collection of innovative ideas & techniques and academic gadgets developed and conceived by the founder of the nursery school, the assessing officer pointed out that the assessee had admitted that there was no software for technical know-how. He concluded that the amount mentioned in the schedule of fixed asset was nothing but a notional one on which depreciation had been claimed by the assessee company. He further pointed out that there was no evidence on record to indicate that any software was earlier purchased by the firm or developed by the founder in earlier years. He further pointed out that good-will and software were two separate assets and could not be matched in any way with the technical know-how. Further, he pointed out that evidently assets on which depreciation @ 25% is admissible on intangible assets as per Rule 5, does not include goodwill and software. The assessing officer pointed out that during the year assessee had purchased software worth Rs. 35,100/- on which depreciation had been claimed and ....
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.... manufacture or processing of goods or in the mining, was not eligible for depreciation as per Explanation 4 of Section 32 of the Act. 3. Ld. Counsel for the assessee submitted that there is no dispute that assessee acquired these assets for Rs. 4.75 crores from M/s Little Kingdom Edutech Ltd. at book value. The assessee had duly explained the nature as to how these were in the nature of technical know-how. Ld. Counsel relied on the decision in the case of CIT Vs. Ahmad Hussain Dildar Hussain 229 ITR 169. Ld. Counsel further submitted that software is eligible for depreciation @ 25% for which relied on following decisions: - Amway India Entpp. Vs. DCIT 301 ITR (AT) 1 (Del.)(SB) - Areva T & D India Ltd. Vs. DCIT 345 ITR 421 (Del.); - CIT vs. Smifs Securities Ltd. 348 ITR 302 (SC); 3.1. As regards "Goodwill", ld. Counsel submitted that this is an intangible assets and accordingly eligible for depreciation @ 25% for which relied on following decisions: - B. Raveendran Pillai Vs. CIT 237 CTR (Ker) 80; - Hindustan Coca Cola Beverages (P) Ltd. Vs. DCIT 132 TTJ (Del) 602; &nb....
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....see and used for the purposes of the business or profession, the following deductions shall be allowed-] [(i) in the case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage on the actual cost thereof to the assessee as may be prescribed;] (ii) [in the case of any block of assets, such percentage on the written down value thereof as may be prescribed:] ....... . [Explanation 3.-For the purposes of this sub-section, the expressions "assets" and "block of assets" shall mean- (a) tangible assets, being buildings, machinery, plant or furniture; (b) intangible assets, being know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature. Explanation 4.-For the purposes of this sub-section, the expression "know-how" means any industrial information or technique likely to assist in the manufacture or processing of ....
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....y provisions of section 32. Accordingly, assessee's appeal is dismissed. 5.5. As far as the assessee's plea of allowing the entire amount as revenue expenditure is concerned, we are of the opinion that since it is only notional asset it cannot be allowed as deduction. In view of above, we see no reason to interfere in the order of CIT(A) on the issue in question. 6. In the result, assessee's appeal is dismissed. ITA no.3000/Del/2011 (quantum appeal A.Y. 2005-06): 7. The only ground raised is as under: "That the learned CIT(Appeals)-VII, has erred in law and fact by not giving relief on account of disallowance of depreciation." 8. We find that for the assessment year in question the ld. CIT(A) following his predecessor's order in assessee's own case for A.Y. 2002-03 rejected the assessee's claim for depreciation of Rs. 50,09,765/- on the technical know- how. While dealing with assessee's appeal for A.Y. 2002- 03 we have upheld the order of ld. CIT(A) on the issue in question. For the very same reasons herein also we uphold the order of ld. CIT(A), rejecting the assessee's claim for depreciation on technical know how. ....
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....annot be doubted. But, whether the same is admissible or not, is a question of interpretation of the section. Therefore, the decision in the case of Reliance Petro Products (supra) is clearly applicable, wherein it has been held as under: 7. ...... A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. However, the Learned Counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in the Section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the Return was found to be incorrect or inaccurate. It is not as....