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2015 (10) TMI 1769 - KARNATAKA HIGH COURTDenial of expenditure incurred in computation of income of the appellant-assessee - Tribunal denied the expenditure solely on the ground that the business activities are closed in view of the transfer of cement factory, plant and machinery - Held that:- As per the agreement, the assessee has to fulfill other obligations, for which they have to incur expenditure and these are the revenue expenditure. Hence, the assessee is entitled for deduction in respect of expenditure incurred in relation to transfer of plant and machinery to M/s. MCL. As stated earlier, the Assessing Officer has accepted the expenditure for the assessment year 2004-05 and 2006-07. - Decided in favour of assessee. Disallowance of deduction on royalty expenditure - Held that:- The assessee has not produced any documents to show that they have paid royalty during the assessment year 2002-03. As per the agreement of sale entered into between the assessee and M/s. MCL, by executing the irrevocable power of attorney, mining lease was allowed to operate. In fact, the MCL themselves have admitted that the first payment of royalty for mining was made on 2-9-2000 itself. In the absence of any material with regard to expenditure on royalty, all the authorities concurrently held that the assessee has not incurred any expenditure in respect of royalty. Hence, the assessee is not entitled for the deduction towards royalty. - Decided in favour of the Revenue. Denial of setting off of unabsorbed depreciation against the income - Held that:- The Hon'ble Supreme Court in a judgment reported in (CIT v. Jaipuria Chaina Clay Mines (P) Limited [1965 (11) TMI 32 - SUPREME Court] held that unabsorbed depreciation can be carried forward and would be set-off even against the profit under the head other than the "business income". Hence, we are of the opinion that the assessee is entitled to carry forward the unabsorbed depreciation and set-off. - Decided in favour of the assessee. Expenditure on maintenance of corporate office - whether is not deductible from the income of written back - Held that:- The Revenue has not challenged the deduction allowed by the Assessing Officer as well as the First Appellate Authority. However, the Tribunal disallowed the said allowance made by the authorities below which is contrary to law. The Hon'ble Supreme Court in a judgment reported in Mcorp Global Pvt. Limited [2009 (2) TMI 5 - SUPREME COURT] relying upon Hukumchand Mills v. CIT [1966 (9) TMI 38 - SUPREME Court] held that the Tribunal is not authorized to take back the benefit granted to the assessee by the Assessing Officer. The Tribunal has no power to enhance the assessment. In view of the judgment of the Supreme Court, the Tribunal has no power to enhance the assessment, though the said deduction is challenged before the Tribunal. Hence, the assessee is entitled deduction towards the maintenance of the corporate office. - Decided in favour of the assessee.
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