INCOME TAX ACT, 1961

--Depreciation--Assets eligible for depreciaton Stock encharge membership card--Stock Exchange Membership Cards are assets eligible for depreciation under section 32 of the Income Tax Act, 1961.

Income Tax Act, 1961 Section 32

INCOME TAX ACT, 1961

--Depreciation--Assets eligible for depreciation Goodwill--In accordance with Scheme of Amalgamation of Y with assessee duly sanctioned by Hon'ble High Courts of Bombay and Calcutta) with retrospective effect from 1-4-1998, assets and liabilities of Y were transferred to and vest in the company. In the process goodwill has arisen in the books of the company. It was further explained that excess consideration paid by the assessee over the value of net assets acquired of Y should be considered as goodwill arising on amalgamation. It was claimed that the extra consideration was paid towards the reputation which the Amalgamating Company was enjoying in order to retain its existing clientele. AO held that goodwill was not an asset falling under Explanation 3 to section 32(1). Held: Explanation 3 to section 32 states that the expression 'asset' shall mean an intangible asset, being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature. A reading the words 'any other business or commercial rights of similar nature' in clause (b) of Explanation 3 indicates that goodwill would fall under the expression 'any other business or commercial right of a similar nature'. The principle of ejusdem generis would strictly apply while interpreting the said expression which finds place in Explanation 3(b). In the circumstances, 'Goodwill' is an asset under Explanation 3(b) to section 32(1) of the Act.