Brand Names Are Specie Of The Trademark: Delhi High Court Allows Depreciation
The Delhi High Court has allowed the depreciation and held that the expression "trademark" under Section 32(1)(ii) of the Income Tax Act, 1961, and in the appended Explanation 3(b) would clearly include brand names.The bench of Justice Rajiv Shakdher and Justice Girish Kathpalia has observed that the definition of assets, as explained in the explanation, includes commercial rights of...
The Delhi High Court has allowed the depreciation and held that the expression "trademark" under Section 32(1)(ii) of the Income Tax Act, 1961, and in the appended Explanation 3(b) would clearly include brand names.
The bench of Justice Rajiv Shakdher and Justice Girish Kathpalia has observed that the definition of assets, as explained in the explanation, includes commercial rights of similar nature. Brand names certainly invest in the owner's commercial rights and, therefore, will fall within the scope of intangible assets, which are amenable to depreciation under Section 32(1)(ii) of the Income Tax Act, 1961.
The respondent/assessee claimed depreciation on its chemical recovery unit as well as the brand names it employed in its paper-making business.
The department disallowed depreciation on brand names since brand names are not referred to in Section 32(1)(ii). The CIT (A) allowed the depreciation of brand names, treating them as intangible assets.
The ITAT upheld the order of CIT (A), against which the department preferred the appeal.
The department argued that additional evidence was admitted by CIT (A) without giving an opportunity to AO, and the brand name is not referred to in Section 32(1)(ii), hence depreciation was not allowable.
The court noted that brand names are a type of trademark. It is evident upon reading the definitions of "trademark" and "mark" provided in the allied statute, i.e., the Trade Marks Act, 1999. A trademark is a mark that is capable of being represented graphically and is capable of distinguishing the goods or services of one person from those of others. It may include the shape of goods, their packaging, and combinations of colours. The expression "mark" which is defined in Section 2(m) of the Trademark Act, includes, among others, a "brand".
Case Title: Pr. Commissioner Of Income Tax -1, Chandigarh Versus M/S Kuantum Papers Ltd.
Citation: 2023 LiveLaw (Del) 824
Date: 16.08.2023
Counsel For Petitioner: Sanjeev Menon
Counsel For Respondent: Sanjeev Menon