No denial of depreciation on trademark just because agreement on acquisition was entered into on post-dated stamp papers

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No denial of depreciation on trademark just because agreement on acquisition was entered into on post-dated stamp papers

[2019] 109 taxmann.com 404 (Chennai – Trib.)
INCOME TAX : Where assessee, engaged in trading and distribution of mobile phones and accessories, acquired trademark from another concern, its claim for depreciation in respect of same could not be rejected on ground that agreement to acquire trademark was entered into on post dated stamp paper
Section 32 of the Income-tax Act, 1961 – Depreciation – Allowance/Rate of (Acquisition of trademark) – Assessment years 2007-08 to 2009-10 – Assessee-company was engaged in business of wholesale trading and distribution of mobile phones and accessories – In course of assessment, Assessing Officer noted that assessee had acquired trademark from ‘U’ Ltd. – Assessee claimed depreciation on said intangible asset – Genuineness of agreement was doubted on ground that agreement was on post dated stamp paper – Assessing Officer also questioned necessity of procuring trademark and again giving back to same party for a consideration of 0.01 per cent of turnover – Thus, Assessing Officer opined that transaction was mala fide and disallowed claim for depreciation – As regards first objection, fact that agreement was entered on post dated stamp paper was immaterial and not germane to decide whether or not transaction was genuine – So far as commercial expediency was concerned, it was not open to Assessing Officer to question necessity of incurring an expenditure as he could not step into shoes of assessee to determine as to how business activities were to be conducted – Whether in view of aforesaid, impugned order passed by Assessing Officer denying assessee’s claim for depreciation was to be set aside – Held, yes
Indus Mobile Distribution (P.) Ltd.

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