As per sec 32(1)(ii) depreciation is allowed on intangible asset acquired on or after 1st April 1998 and expenditure on acquiring database cannot claim as revenue expenditure

Last updated: 08 February 2012

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
the question about admissibility of depreciation of Acquired Business Database is concerned, this issue is covered in favour of the assessee by the judgment of Hon’ble Delhi High Court in the case of CIT vs. Hindustan Coca Cola Beverages Pvt Ltd (331 ITR 192), wherein, Their Lordships, inter alia, have observed that “It is worth noting, the scope of section 32 has been widened by the Finance (No. 2) Act, 1998 whereby depreciation is now allowed on intangible assets acquired on or after 1st April, 1998. As per section 32(1)(ii), depreciation is allowable in respect of know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature.” In view of these discussions as also bearing in mind the entirety of the case, we are of the considered opinion that the CIT(A) ought to have allowed the depreciation on the entire payment of Rs.12 crores towards Acquired Business Database

Citation :
ACIT 2(1) ….. Appellant R.No.575, 5th floor, Aayakar Bhavan,M.k. Road, Mumbai-20 Vs American Express Services India Ltd. .…. Respondent Jiji House, 2nd floor, Damodar Sukhadwala Marg,Mumbai-01 PA No.AABCT 0555 D C.O.No.202/Mum/2009 (arising out of ITA No.4106/M/2007)Assessment year: 2002-03 American Express Services India Ltd. .…. Cross objector Jiji House, 2nd floor, Damodar Sukhadwala Marg,Mumbai-01 PA No.AABCT 0555 D Vs ACIT 2(1) ….. Respondent R.No.575, 5th floor, Aayakar Bhavan,M.k. Road, Mumbai-20

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