TaxTMI 
TaxTMI 
2017 (5) TMI 1539
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....of the six paper brands of ABCL by the assessee company was in terms of a Scheme of Arrangement approved by the Hon'ble High Courts of Allahabad, Delhi and Chandigarh, whereby the paper undertaking of ABCL was demerged and vested in the assessee company w.e.f. 1st April 2006. The assessee had shown the above brands as capital asset and had claimed depreciation of Rs. 99,01,500/- for the year under consideration @ 25% applicable to intangible assets. The above treatment of the brands by the assessee and depreciation claimed @ 25% on the same was allowed by the AO in the earlier two assessment years, viz. A.Y. 2006-07 and 2007- 08. However, during the year under consideration, the AO has accepted the assessee's claim that the above brands were capital assets, but the claim of depreciation was disallowed by holding that "brands" are not covered under the "intangible assets" as per Section 32(1) (ii) of the Act. Further, the Assessing Officer also disallowed the claim of depreciation amounting to Rs. 7,44,36,109/- on chemical recovery plant on the ground that the said plant was not put to use during the year under consideration as certain assets were still under construction/testing st....
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....g by the Ld. CIT(A) thereafter was conclusive and in favour of the assessee. It was submitted that in view of the factual finding categorically stated by the Ld. CIT(A) in the impugned order, the impugned action of the Ld. CIT(A) be upheld. 5. We have heard the rival submissions and have perused the relevant material on record. It is seen that the Ld. CIT (A) has discussed and adjudicated the issue relating to depreciation on the paper brand in Para 5.2 of the impugned order which reads as under:- 5.2 I have carefully considered the assessment order and the submissions made by the Id. AR on the above issue. For the sake of clarity, I would like to reproduce the provisions of Section 32(1 )(ii) of the Act which is as under: "32. (1) In respect of depreciation of- (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed" As can be seen from the above, the definition of "intangible asset....
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....a has held that if the software is useable/used for more than 2 years, it is a capital expenditure and if it is for less than 2 years, it is revenue expenditure. We thus following the ratio laid down therein come to the conclusion that in the present case, since the assessee had purchased the user of brand name, trademark, logo for 3 years and similarly, the intellectual property right such as design, drawings, manufacturing processes and technical knowhow in respect of the products manufactured by unit was acquired, we hold that the expenditure incurred in this regard as valued by the approved valuer is capital expenditure on which the claimed depreciation was allowable. In this regard we also find support from the cited decision of Delhi Bench of the Tribunal in the case of Hindustan Coca Cola Beverages (P) Ltd Vs. DCIT holding that even if an amount is termed as 'goodwill' in the books of account but it is a business or commercial right in the nature of know-how, patent, copyrights, trademarks, licenses, franchises, the claim of depreciation is indeed admissible thereupon. We accordingly direct the A.O to allow the claimed depreciation on the above assets." In view of the fac....
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....cal Recovery Plant was not put to use during the year under consideration as certain parts were still under construction / testing stage as per details retrieved from "details of addition of fixed assets" submitted by the assessee on sample basis. However, as argued by the Id. AR, the total depreciation (including additional depreciation) claimed by the assessee for the above plant was Rs. 7,67,09,481/- which included depreciation on factory building at Rs. 22,73,462/- and depreciation on plant and machinery at Rs. 7,44,36,109/-. T h e Assessing Officer has disallowed the depreciation on plant and machinery, but has allowed depreciation on the factory building which is part and parcel of the same Chemical Recovery Plant. It is argued by the Ld. AR, both the building and plant and machinery were compositely completed and put to use together in March 2008. It is argued that the AO's action in partly allowing depreciation on the above factory while disallowing depreciation on the remaining part is bad in law and facts. Further, it is argued by the Ld. AR that the said Chemical Recovery Plant was fully commissioned on 21.03.2008 and it started its operations from the said date. The sai....