“going concern”
The decision most relied on for going concern is Areva T&D India Ltd. v. DCIT (345 ITR 421), cited in 97 judgments on BharatTax.
Leading authorities on going concern
Business contracts and commercial rights of similar nature qualify as intangible assets under Section 32(1)(ii) and are eligible for depreciation. The decision also affirms that goodwill is an intangible asset eligible for depreciation.
When a business is purchased as a going concern, the consideration paid in excess of the value of its tangible assets is classified as goodwill, which is an intangible asset eligible for depreciation without needing a separate valuation.
The conditions for claiming a bad debt deduction under Section 36(1)(vii) read with Section 36(2) are not fulfilled if the assessee fails to provide details of the parties associated with the debts or evidence that these amounts were offered to tax in earlier years. An alternate claim for loss under Section 28 is denied without evidence substantiating the loss in the relevant assessment year.
A business concern can still be considered to be carrying on its business even if there are long intervals of inactivity, provided it is kept alive, retains its registered office, and holds meetings. It is not necessary for a business to have work constantly to be considered in existence.
Depreciation is allowable on goodwill, even if it's considered an intangible asset representing future profits, following the Supreme Court's decision in CIT v. SMIFS Securities Ltd.
While the case involves a reference to "fresh tangible material", "valuation of shares", "going concern", and "indexed cost of acquisition", the provided passages do not clearly articulate the specific holding of Bharat Hari Singhania v. CWT.
The Assessing Officer cannot improve his assessment by adopting a new theory during reassessment proceedings.
Depreciation is allowable on standby machinery that is kept ready for use, even if not actually put to use due to reasons such as raw material paucity. This is permissible as long as the business is a going concern.
