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2010 (12) TMI 700 - AT - Income TaxDisallowance - Slump sale - advertisement and sales promotion - Revenue or capital expenditure - The main contention of the revenue is that the assessee was creating a Brand in India and the same is in the nature of intangible asset as contemplated in section 31(1)(ii) providing rights to the assessee - Held that: the provisions of section 32(1)(ii) of the Act, as amended by the Finance (No.2) Act, 1988 with effect from 1.4.1999 are not applicable to the present case. The assessee has not acquired any intangible asset on or after 1.4.1998 so that only depreciation will be allowed on the same and not the expenditure incurred in acquiring them. - expenditure are revenue in nature. Regarding voluntary retirement scheme - Deduction u/s 35DDA or 37(1) - since the assessee did not conform to the guidelines laid down under Rule 2BA / 35DDA, provisions of section 35DDA are not applicable - amount paid under VRS allowed as deduction u/s 37(1). Regarding depreciation - whether in case of slump sale, depreciation has to be allowed on the assets sold in slump sale up to the date of transfer or no depreciation is to be allowed on assets transferred for the year in which such transfer takes place in terms of section 43(6)(c)(i)(C)(b). - Held that:- Assessing Officer was right in computing depreciation for the period from 1.4.2002 to 30.3.2003 and reducing the same while computing the value of assets transferred in slump sale. Whether in view of section 43(6)(c)(i)(C)(b) only depreciation actually absorbed against the profits is to be taken into consideration or allowable depreciation has to be computed for all the years after 1.4.1988 for computing value of assets to be reduced from block of asset irrespective of the fact whether in the books the assessee had charged depreciation or not. - Held that:- Depreciation is to be charged for the period from 1.4.2002 to 30.3.2003 while computing the actual cost of the assets transferred by way of slump sale. - The depreciation allowable on the assets for the period upto 31.3.2002 has to be taken into consideration while computing the actual cost of the assets transferred by way of slump sale.
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