3.1 The assessee was asked to justify this claim in the light of the provisions of section 32, which allow depreciation at 25% on trademarks. In reply, the assessee states in its letter dated 14.10.2008 that as the right to use the trademarks is restricted to three years, the deduction is claimed under section 37, for a period of three years. The assessee was informed by this office letter dated 17.11.2008 that section 37 covers such deductions that are not covered by sections 30 to 36. The deduction for acquisition of Trade Mark is covered by section 32. Explanation 3 to section 32(1) says that 'block of assets' shall mean inter alia, intangible assets being trade mark. In other words, the deduction for the acquisition of trade mark should be under section 32. IT rules allow depreciation @ 25% on 'intangible assets'. Therefore deduction can be allowed on trademarks (which is intangible asset according to section 32) only under section 32, i.e., @ 25%. Further, section 43(6) says that WDV of an asset purchased in an earlier year is the cost less depreciation actually allowed. In this case as deduction has already been claimed and allowed, the opening WDV will be the balance remaining to be written off, i.e., Rs.25,23,333/- accordingly, depreciation was to be allowed on this amount @ 25%, or Rs.6,30,834/-
