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(R.K. Mehta) Dy. Commissioner of Income tax Circle 9(1), New Delhi.

4. During the course of assessment proceedings, it was submitted that the amount of goodwill on which the depreciation was claimed was paid to Philips India Ltd. on account of purchase of running business of X-Ray Analytical instrumentation and software for X-Ray diffraction (XRD) and X-Ray fluorescence spectrometry (XFS) which was divested by then in M/s Spectris Technologies Pvt. Ltd. along with all data, contracts, staff and non-competitive agreement. The data base given the assessee a list of large number of clients who were having AMC, repair & maintenance and services from company through expertise staff who were also part of disinvestment and they were having experience of such business since last 20 years and market contacts. Such investment by the assessee has given income generation in the company at least for 10 years so the amount paid for which nomenclature it is kind of assets which gives the assessee an enduring benefit in future and hence come under the definition of assets and thus, entitled for depreciation. However, AO did not accept such contention of the assessee and by applying the decision in the case of B. Srinivasa Shetty Vs. CIT 128 ITR 294 (SC) has held that goodwill is not a capital asset. Hence, assessee was not entitled to claim depreciation on purchase of goodwill and in this manner depreciation claimed on goodwill amounting to Rs. 2,77,36,26/- has been disallowed and in this manner in the impugned order the income of the assessee has been assessed at Rs. 62,61,780/- in place of earlier assessed loss of Rs. 2,14,74,490/-. The view taken by the AO has been upheld by ld. CIT(A) the assessee is aggrieved, hence in appeal.