TaxTMI 
TaxTMI 
2007 (2) TMI 173
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....ransfer date (March 31, 1998) for a total consideration of Rs. 23,70,00,000 plus goodwill amounting to Rs. 4,30,00,000. 4. For the year ended March 31, 1999, relevant to the assessment year 1999-2000, the assessee filed its return of income claiming depreciation on the goodwill claiming it to have been acquired and put to use during the year in question. In the note annexed to the statement of income from business, it was stated thus : "(4) Since the net working capital and the dealership network was acquired from Greaves Limited on April 1, 1998, the company states that goodwill, being inextricably linked to the business operations which in turn is linked to the acquisition of the net working capital and the dealership network, was also effectively acquired on April 1, 1998, and put to use from that date." 5. During the assessment proceedings, the Assessing Officer called upon the petitioner to furnish the particulars regarding goodwill acquired by the petitioner. The petitioner informed the Assessing Officer that stamp duty on transfer of goodwill amounting to Rs. 21,50,000 was paid on April 1, 1998, and that the goodwill was effectively transferred on June 25, 1998, and used....
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....stinguish his goods' . The dictionary meaning of the word 'franchises' is 'a licence from the owner of a trademark or trade name permitting another to sell a product or service under that name' . In section 32(1)(ii) of the Act it speaks of 'any other business or commercial rights of similar nature' . The meaning of 'any other business or commercial rights of similar nature' has to be understood in the context of the words 'know-how, patents, copyright, trade marks, licences, franchises' . Without prejudice to the above discussion, as per section 32(1)(ii) depreciation on intangible assets acquired on or after April 1, 1998, is to be allowed. On a perusal of the agreement submitted by the assessee it was observed that the said agreement was dated March 30, 1998, therefore even if goodwill to be treated as an intangible asset falling in the purview of section 32(1)(ii), then it was acquired on March 30, 1998, and hence depreciation on goodwill is not allowable. As discussed above, the word goodwill doesn\qt come in the purview of know-how, patents, copyrights, trade marks, licences, franchises. Therefore, goodwill is not an intangible asset as per section....
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....ich is a condition precedent for reopening the assessment beyond four years from the end of the relevant assessment year and, therefore, the impugned notice issued beyond four years is liable to be quashed and set aside. (d) The Assessing Officer had no material, information or evidence to show or reason to believe that the claim for depreciation on "goodwill" is improper and/or excessive. The assessment order was passed after scrutinising the annual accounts, audit report in Form No. 3CA, com putation of income, letters dated January 21, 2002, note dated February 28, 2002, and after considering all the material facts relating to the acqui sition of goodwill after April 1, 1998. Both the pre-conditions required for reopening the assessment beyond four years from the end of the relevant assessment year, namely, failure to disclose fully and truly all material facts and reason to believe that income has escaped assessment are absent in the present case and, therefore, the impugned notice is liable to be quashed and set aside. 10. Relying upon the judgment of the apex court in the case of Alapati Venkataramiah v. CIT reported in [1965] 57 ITR 185 and the decision of this court in t....
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....1, 1998, to March 31, 1999 (assessment year 1999-2000), the goodwill at Rs. 4.30 crores is shown in the opening block of fixed assets, which obviously means that the goodwill was acquired prior to April 1, 1998, and accordingly in the tax audit report for the assessment year 1999-2000, no depreciation is claimed on the goodwill. Thus, there were mutual contradictions in the tax audit report and the return of income filed by the petitioner regarding the date of acquisition of the goodwill. In these circumstances, we find it difficult to accept the contention that the petitioner had made full and true disclosure of material facts. 15. The argument that the Assessing Officer had taken a conscious decision to grant depreciation after accepting the contention of the petitioner that the goodwill was acquired after April 1, 1998, cannot be accepted because, in his letter there is no reference to the inconsistencies in the tax audit report and the return of income regarding the date of acquisition of the goodwill. Even the assessee in its reply had not explained the said discrepancy. Moreover, there is no discussion whatsoever in the assessment order regarding the discrepancy in the deed ....