Know-how, business contacts, business information, etc. intangible assets under Section 32(1)(ii) Income Tax act: ITAT

Delhi High Court ruled that Income Tax Appellate Tribunal erred in law in holding that know-how, business contacts, business information, etc. acquired as part of the slump sale described as “goodwill” were not entitled for depreciation under Section 32(1)(ii) of the Income Tax Act.
The Court said “The fact that after the specified intangible assets the words “business or commercial rights of sim…ilar nature” have been additionally used in Section 32 (1)(ii), clearly demonstrates that the Legislature did not intend to provide for depreciation only in respect of specified intangible assets but also to other categories of intangible assets, which were neither feasible nor possible to exhaustively enumerate.”
The Court observed that in case of the assessee, intangible assets, viz., business claims; business information; business records; contracts; employees; and knowhow, are all assets, which are invaluable and result in carrying on the transmission and distribution business by the assessee.
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