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2014 (5) TMI 35 - ITAT MUMBAIDisallowance of depreciation on goodwill – Held that:- The decision in CIT vs Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] followed - Explanation 3 states that the expression `asset' shall mean an intangible asset, being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature - A reading the words `any other business or commercial rights of similar nature' in clause (b) of Explanation 3 indicates that goodwill would fall under the expression `any other business or commercial right of a similar nature' – Decided in favour of Assessee. Disallowance of gratuity payment – Held that:- The issue is now approved by the CIT as per the letter of approval appended in the APB – thus, the assessee's prayer for allowance of the gratuity payment is allowed – the order of the CIT(A) set aside – Decided in favour of Assessee. Disallowance u/s 14A of the Act – Held that:- The decision in M/s Just Dial Private Limited Versus Dy. CIT 9(2), Mumbai [2013 (12) TMI 770 - ITAT MUMBAI] followed - the application of Rule 8D is w.e.f. assessment year 2008-09 as per the decision of Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT, [2010 (8) TMI 77 - BOMBAY HIGH COURT] - the matter has been remitted back to the AO for fresh adjudication in the subsequent assessment year – Decided in favour of Assessee. Taxability of income - Income from publication in yellow pages – Held that:- The revenue is to be booked when the work is completed - the work undertaken gets spilled over in the next year, wherein, the assessee books its revenue & declares it - if the orders of the revenue authorities are to be sustained, the department will have a revenue gain, because, the AO has not made any adjustment to the income pertaining to the preceding year and has been booked in the current year - In effect, the assessee is being taxed for the preceding year, and as per the orders, for the current year as well - to keep the consistent approach and most importantly there being no revenue loss, the view of the revenue cannot be accepted – thus, the order of the CIT(A) set aside and the AO is directed to delete the addition – Decided in favour of Assessee. Disallowance of renovation and civil expenses – Held that:- The premises renovated did not belong to the assessee and the assessee incurred expenses, to design the premises to a condition for its use - Since the premises are leased, the lessee always have an option to remove the alternations done by him/it, because he has to return the premises, at the end of tenor in the same condition, as it was taken - the licensee is authorized to remove all its renovations at the time of vacation or it can ask the licensor to take the same - the repairs and renovations are done only for the period of stay/tenor, which may be short or long, it cannot be said to giving an enduring benefit to the assessee - the expenditure incurred by the assessee on repairs and renovations are allowable expenses – the order of the CIT(A) set aside and the AO is directed to delete the addition – Decided in favour of Assessee. Disallowance of franchise termination compensation – Held that:- There is an agreement for termination, but the amount as claimed is at variance, because as per the orders, the amount paid aggregates to ₹ 19,50,000/- and not ₹ 18,50,000 – thus, the matter is remitted back to the AO for fresh for the issue of payment of termination compensation of ₹ 18,50,000 – Decided in favour of Assessee.
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