Self generated goodwill

Nikhil Goenka (Student) (24 Points)

10 May 2010  

A self generated goodwill is created over the years during which the business run. On sale of such goodwill, as the cost of acquisition shall be taken as 'nil' (Sec 55) , the entire sale consideration shall be taxed as capital gains. Is such gain on sale of self-generated goodwill long term or short term? Whats is the basis to arrive at such a conclusion. One view is that its long term as it builds in the year of starting the business (may be badwill initially, but transformed as goodwill later) its a depreciable business asset, it can be viewed as short term as well.

Your thoughts please!!!! Thanks in advance.