TaxTMI 
TaxTMI 
TaxTMI 
2021 (8) TMI 469
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....ncy rights amounting to Rs. 5,41,406/- 3. Briefly stated, the facts of the case are that during the course of scrutiny assessment proceedings and on perusal of the schedule of fixed assets, the Assessing Officer observed that the assessee has claimed depreciation of Rs. 5,41,406/- @ 25% on the tenancy rights. Vide order sheet noting dated 22.02.2013, the Assessing Officer issued show cause notice to the assessee to explain as to why the claim of depreciation on tenancy rights be not disallowed in light of provisions of section 32 of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short]. 4. In its reply, the assessee stated as under: The assessee had some-time back [relevant to A.Y 2008-09 settled the dispute....
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....9 which means that depreciation was claimed in earlier years also. We find that this is not the initial year of claim of depreciation. In our considered opinion, unless claim is disturbed in the initial A.Y of the claim, the same cannot be disturbed in the subsequent A.Y if the facts are same. 10. The Hon'ble High Court of Delhi in the case of Hindustan Coco Cola Beverages [supra] had an occasion to examine the provisions of section 32 of the Act. The relevant part of the judgment reads as under: "21. It is worth noting, the scope of Section 32 has been widened by the Finance (No.2) Act, 1998 whereby depreciation is now allowed on intangible assets acquired on or after 1st April, 1998. As per Section 32(1)(ii), depreciation is allowa....
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.... connected with the premises in which the business was previously carried on or with the name of the old firm, or with any other matter carrying with it the benefit of the business". In Trego v. Hunt 1896 A.C. 7 (HL) Lord Herschell described goodwill as a connection which tended to become permanent because of habit or otherwise. The benefit to the business varies with the nature of the business and also from one business to another. No business commenced for the first time possesses goodwill from the start. It is generated as the business is carried on and may be augmented with the passage of time. Lawson in his Introduction to the Law of Property describes it as property of a highly peculiar kind. In CIT v. Chunilal Prabhudas & Co. [1970] ....
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....17(HL) that although goodwill was easy to describe, it was nonetheless difficult to define. In a progressing business goodwill tends to show progressive increase. And in a failing business it may begin to wane. Its value may fluctuate from one moment to another depending on changes in the reputation of the business. It is affected by everything relating to the business, the personality and business rectitude of the owners, the nature and character of the business, its name and reputation, its location, its impact on the contemporary market, the prevailing socio-economic ecology, introduction to old customers and agreed absence of competition. There can be no account in value of the factors producing it. It is also impossible to predicat....
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....tion or consumption patterns and habits of consumers in the territory and the difference between the consideration paid for business and value of tangible assets. The tribunal has treated the same to be valuable commercial asset similar to other intangibles mentioned in the definition of the block of assets and, hence, eligible to depreciation. It has also been noted by the tribunal that the said facts were stated by the assessee in the audit report and the assessing officer had examined the audit report and also made queries and accepted the explanation proferred by the assessee. The acceptance of the claim of the assessee by the assessing officer would come in the compartment of taking a plausible view inasmuch as basically intangible a....