TaxTMI 
TaxTMI 
2005 (8) TMI 279
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....und No.1, which is as under: "(a) The learned CIT(A)-VI has grievously erred in confirming depreciation claimed on goodwill for an amount of Rs. 1,89,375 on misinterpretation of provision of section 32 since the appellant has fulfilled all the requisites as mentioned in the statutes." 3. Brief facts are - The Assessing Officer during the assessment proceedings noted that the assessee was a partner in M/s. Nodule Cast along with Shri J.B. Vyas, his father and one Shri O.A Lokhandwala. The firm was dissolved and a sum of Rs. 15.15 lacs was paid as goodwill to Shri Lokhandwala. The assessee during the assessment proceedings stated that in view of the provisions of section 32 relevant from assessment year 1999-2000, depreciation can be claim....
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....d used for the purpose of business or profession, the following deduction shall be allowed. These provisions postulate the following requirements for allow ability of claim: (a) The intangible assets have not been defined in the Act, but a sort of descriptive items have been given such as know-how, patents, copyrights, trade marks, licenses, franchises or any other business or commercial rights of similar nature being intangible assets. This can be interpreted as the intangible assets known by any name but if it can qualify under the above mentioned descriptive words, depreciation can be allowed. (b) Second important point in the above provisions is that the intangible assets must be acquired which mean that payment should have been ma....
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....r, was in the nature of capital expenditure, that is to acquire the interest in a profit-yielding asset. Further reliance was placed on CIT v. Purandas Ranchoddas & Sons [1988] 169 ITR 480 (AP) for the proposition that amount paid by partners of new firm to original partners under deed of dissolution, as a consideration for relinquishing interest in goodwill of dissolved firm, was a capital expenditure. It was contended that the amount of Rs. 15.15 lakhs paid by the assessee for the goodwill to Shri Lokhandwala was intangible asset in terms of section 32(1)(ii) and was eligible for depreciation. 6. The learned DR relied on the order of lower authorities. 7. We have heard the rival submissions and perused the material available on record. ....