Depreciation should be allowed on trademark, even though it may not be registered in name of assessee

Facts

a)  Assessee acquired business of a company including its trademark. It claimed depreciation on cost incurred on acquisition of such trademark.

b)  Assessing Officer (AO) disallowed depreciation on ground that trademark was not registered in the name of assessee.

c)  CIT(A) confirmed the order of AO. Aggrieved assessee filed the instant appeal before tribunal.

The tribunal held in favour of assessee as under-

1)  Section 32 of the Income-tax Act allows depreciation on trademark which is owned, wholly or partly, by the assessee and used for the purposes of the business or profession. The admissibility of depreciation on trademark is not contingent upon its registration.

2)  In the instant case, the entire business was transferred to the assessee as a going concern and the assessee was conducting the business as such under the same trademark. Hence, the effective use of the trademark was not disputed.

3)  Further, the rights to use the trademark were assigned to the assessee by the person who had these legal rights. Therefore, the fact that the trademark was not registered in the name of the assessee would not affect assessee's valuable rights. Hence, assessee was eligible for claiming depreciation on trademark- [2016] 67 taxmann.com 348 (Ahmedabad - Trib.)