S. 32(1)(ii): Any right (including leasehold rights) which enables carrying on business effectively and profitably is an “intangible asset” & eligible for depreciation

The assessee paid a sum of Rs. 60 lakhs to acquire leasehold rights to premises. The assessee claimed that the said leasehold rights were an “intangible asset” and eligible for depreciation u/s 32(1)(ii). The AO & CIT(A) rejected the claim of the assessee. On appeal by the assessee to the Tribunal HELD allowing the appeal:

S. 32(1)(ii) allows depreciation on “business or commercial rights” The expression “business or commercial rights” means rights obtained for effectively carrying on business or commerce. Commerce is a wider term which encompasses business in its fold. Therefore, any right which is obtained for carrying on business effectively and profitably has to fall within the meaning of the term “intangible asset” (Kotak Forex Brokerage Ltd 33 SOT 237(Mum) & Smifs Securities Ltd 348 ITR 302 (SC) followed)