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2014 (4) TMI 527 - AT - Income TaxApplicability of Explanation 3 to section 43(1) of the Act Claim of depreciation @ 25% - Actual cost of the copy rights and trademarks - Whether the CIT(A) erred in holding that Explanation 3 to Section 43(1) is not applicable with regard to claim of depreciation on the assets covered in the deed of assignment between the assessee and Bennett, Coleman & Co. Ltd. Held that:- The goodwill can be in the form of copy rights, patent, trade mark, marketing rights, particular customers, franchisee, brand value, etc. - the assessee has only taken the part of the goodwill in the form of trade mark and copy right, however, that alone cannot be said to be a part of goodwill, especially when the assessee has acquired such a high end brand products in the form of one of the most popular magazine and right to organize mega events under such brand name - part of the acquisition cost can also be said to be for goodwill of the brand product - the manner in which the AO has adopted the value of the goodwill is absolutely incorrect and without any method, which is generally adopted for evaluating the goodwill - once there is no dispute that the total consideration for tangible and intangible assets is for '91 crores, which has also been accepted by the AO - then it is presumed that such consideration also includes goodwill on account of brand or product besides trade mark and copy rights. The decision in Commissioner of Income Tax, Kolkata Versus Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] followed - the depreciation is to be allowed on such intangible assets which constitute goodwill - Once the depreciation allowable on goodwill at the same rate on which the assessee has claimed depreciation on trade mark and copy right, then it is immaterial to disallow the entire claim of depreciation made by the assessee on intangible assets - the depreciation is to be allowed on goodwill also as any other intangible asset - Thus, it will not make any difference to segregate the various intangible assets for the purpose or making any disallowance on account of depreciation Decided against Revenue. Deletion on account of provision towards unsold magazines and discount on advertisement income Computation u/s 115JB of the Act - Held that:- The AO has considered the provision of the month of March 2005 as eligible for deduction, then there is no reason for not allowing the remaining portion which pertains to the prior period to March 2005 - Once such scientific basis has been adopted for making the provisions in the earlier years, as well as in the subsequent years, there is no reason to uphold the reasoning given by the AO thus, the order of the CIT(A) upheld Decided against Revenue. Disallowance u/s 36(1)(va) of the Act - Deduction of EPF contribution Held that:- The decision in CIT v/s Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] followed - if the employees' P.F. contribution is paid within the due date of filing of the return of income, the same is an allowable expenditure Decided in favour of Assessee. Disallowance u/s 14A of the Act Held that:- The decision in Godrej & Boyce Mfg. Co. Ltd. v/s DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] followed - rule 8D is not applicable prior to the assessment year 2008-09 thus, the order of the CIT(A) set aside and the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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