Mumbai ITAT rules that
consideration received by assessee-company (engaged in research development,
manufacturing, licensing of bio-pharmaceuticals products) on assignment
of indigenously developed patent of a medicine shall be taxable
as ‘capital gains’ and shall be subject to applicability of Sec. 55(2)
(which states that cost of acquisition for self-generated goodwill, right to
manufacture etc. shall be taken at ‘nil’) for AY 2008-09; Assessee had argued
that the amount was a non-taxable capital receipt, as no cost was incurred for
developing the patent and further even if cost was incurred, it was not
ascertainable, moreover transfer of know–how/patent was not covered by Sec.
55(2); ITAT notes that for developing a patent of medicine, assessee has
to carry out research analysis and experimentation, further notes that medical
patents require clinical tests and administering drugs to the patients, hence
the claim that no cost was incurred is not acceptable; ITAT holds that
assessee’s case falls under the ambit of ‘right to manufacture/produce/process
any article or thing’ as envisaged u/s 55(2)(a), distinguishes assessee’s
reliance on ITAT ruling in Kwality Biscuit (P.) Ltd. as it dealt with
trade-mark and brand name, similarly distinguishes assessee’s reliance on
Bombay HC ruling in Fernhill Laboratories and Industrial Establishment on
facts:ITAT
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