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2013 (1) TMI 654 - AT - Income TaxReopening of assessment - assessee has claimed deprecation on non compete territory right - Held that:- As seen that not only query was raised by the A.O. in the course of original assessment proceeding but reply was also submitted by the assessee and, thereafter, in the assessment order also, it is noted by the A.O. that assessee has made claim of depreciation on these intangible assets @ 12.5% and he did not make any disallowance and under these facts, we are of the considered opinion that in the present case, the reopening done by the A.O. is on mere change of opinion and, therefore, the same is not valid as per this judgement rendered in the case of Gujarat power Corporation Ltd. (2012 (9) TMI 69 - GUJARAT HIGH COURT) and also CIT v. Kelvinator of India Limited (2010 (1) TMI 11 - SUPREME COURT OF INDIA) - in favour of assessee. Applicability of Explanation 3 to section 43(1) to assessee's case - Held that:- As per this explanation 3 to section 43(1) the A.O. can determine the original cost of the assets for allowing depreciation to the assessee only if he is satisfied that the main purpose of transfer of such asset, directly or indirectly to the assessee, was the reduction of liability to income tax by claiming extra depreciation with reference to an enhanced cost. This is the first prerequisite that the A.O. has to establish that the main purpose of transfer of such asset was the reduction of liability to income tax by claiming extra depreciation on enhanced cost. In order to establish this, it has to be established that apart from claiming additional deprecation on enhanced cost, there is no other main purpose for acquiring the asset in question. Valuation of intangible asset i.e. the trademark acquired - held that: - A.O. did not fulfill the pre requirement of invoking Exp.(3) to Section 43(1) & even after invoking this Exp.(3) to Section 43(1) rightly or wrongly, the A.O. has not worked out the value of the asset in question in the proper manner. - He has ignored the valuation report of various technical experts such as RSML & Co. C.A. and others and instead of obtaining the departmental valuation report or any other report of any other independent valuer, the A.O. has made his own exercise for valuation of the asset in question although it cannot be accepted that the A.O. is a technical expert for valuation of the asset in question. - the valuation done by the A.O. is not proper and therefore, the action of the A.O. is not justified - in favour of assessee. Addition as interest on Deep Discount Bonds - Held that:- Assessee is entitled to proportionate claim of expenditure towards discount/interest of DDBs on actual basis in the year of appeal and the A.O. was directed to correctly work out the same and to allow deduction to the extent it relates to the year under appeal.
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