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2011 (6) TMI 403 - AT - Income TaxProportionate depreciation for six months - Amalgamation - appellant has used the assets acquired from Hindustan lever Limited (HLL) only for one month - Held that:- Assets have been acquired and used from 29-8-2003 in this case, therefore, proportion adopted by the assessee as fifty fifty seems to be correct. Though this proportion can be changed 1/7 to amalgamating company and 6/7 to amalgamated company because the amalgamating company has used the assets only for one month out of the total usage of seven months. However, this apportionment has to be done out of the total depreciation which was allowable at 100% in view of the second proviso. Thus assessee i.e. amalgamating company has rightly claimed the depreciation for the first six months because only depreciation of six months has been claimed in the case of amalgamated company. Provision for trade discount disallowed - year of allowability - Held that:- In the documents filed a note on temporary price reduction process, flow chart and internal working of the provision have been filed. Some sample documents prepared by the sales department and sample of temporary price reduction from bakery fats division submitted by the distributors, as well as sample price circulars have been filed. Though these documents relate to later year, but it was mentioned that in earlier years also similar issue was involved and the allowability can be considered on the basis of these documents for the later year - remand the issue to the file of the AO for re-examination of the issue in the light of the additional documents filed vide letter dated 16th May, 2011. Proportionate interest expenses out of expenses incurred on establishment - Dis-allowance under section 14A - Held that:- If there were funds available, both interest free and interest bearing, then a presumption would arise that interest free funds have been generated for investments, interest could not have been disallowed u/s.14A as decided in Reliance Utilities & Powers Ltd.(2009 (1) TMI 4 - HIGH COURT BOMBAY). In any case, it has already been held in the case of Godrej & Boyce Mfg. Co.Ltd. v. Dy. CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] that Rule 8D is not of retrospective application and cannot be applied before A.Y 2007-08. Therefore, interest could not have been disallowed u/s.14A and, accordingly, we delete the addition on account of interest. Non compete fees - Capital or Revenue - Held that:- Business expenditure incurred on warding off of competition in business from a rival dealer would constitute a capital expenditure and is not allowable business expenditure, issue decided in favour of the Revenue [Tecumseh India (P.) Ltd. [2010 (7) TMI 685 - ITAT, DELHI]
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