Law:

Section:

Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/rate of - Assessment year 2005-06 - Assessee vide a slump sale agreement acquired as a going concern, 'transmission and distribution business' of transferor-company - Payment over and above book value of net tangible assets, was allocated by assessee towards acquisition of bundle of business and commercial rights, compendiously termed as 'goodwill' in books of account, which comprised of business claim, business information, business records, contracts, skilled employees and know-how - Assessee claimed depreciation on amount paid for acquisition of above mentioned intangible assets termed as goodwill - Assessing Officer disallowed claim of assessee - Whether fact that in section 32 after specified intangible assets words 'business or commercial rights of similar nature' have been additionally used, clearly demonstrates that legislature did not intend to provide for depreciation only in respect of specified intangible assets but also to other categories of intangible assets, which are neither feasible nor possible to exhaustively enumerate - Held, yes - Whether, therefore, nature of 'business or commercial rights' cannot be restricted to only six categories of assets, viz., know-how, patents, trademarks, copyrights, licenses or franchises - Held, yes - Whether in case of assessee, all impugned intangible assets were required for carrying on transmission and distribution business by assessee, which was hitherto being carried out by transferor, without any interruption - Held, yes - Whether aforesaid intangible assets were, therefore, comparable to a license to carry out existing transmission and distribution business of transferor because in absence of aforesaid intangible assets, assessee would have had to commence business from scratch and go through gestation period whereas by acquiring aforesaid business rights along with tangible assets, assessee got an up and running business - Held, yes - Whether specified intangible assets acquired under slump sale agreement were in nature of 'business or commercial rights of similar nature' specified in section 32(1)(ii) and were accordingly, eligible for…

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