2013 (3) TMI 195 - AT - Income Tax

Rental Income - Income from House Property or income from PGBP or Income from other sources - held that:- Merely because the building has been let out to the distributor of the assessee, the rental income cannot be treated as business income in the absence of any material to show that letting out was necessary for the purpose of business. Similarly, merely because one of the objects of the assessee was letting out of the property, it cannot automatically lead to the conclusion that the assessee was actually doing business in letting out buildings. - income in question has to be assessed as income from other sources. - Decided against the assessee.

Valuation of closing stock - inclusion of MODVAT Credit - held that:- The issue is no longer resintegra and has been decided by the Hon’ble Delhi High Court in the case of CIT vs. Mahavir Alluminium Ltd., [2007 (11) TMI 41 - HIGH COURT, DELHI] , wherein the Hon’ble Delhi High Court held that whenever adjustment on account of Modvat credit is made corresponding adjustment is also to be made to opening stock.

Rate Depreciation on Trucks - Electrically operated vehicles - held that:- The dictionary meaning of vehicle as given in Oxford English Reference Dictionary is “any conveyance for transporting people, good etc. especially on land”. - In our view the devices on which the assessee claimed 100% depreciation satisfy this requirement as they carried goods on land albeit within the factory. These provisions allowing depreciation at 100% being beneficial provision calls for broad interpretation. - it cannot be said that these provisions intended to cover vehicle as per the Motor Vehicle Act 1988. - these devices were battery operated and renewable energy saving devices. - depreciation at 100% allowed - Decided in favor of assessee.

Depreciation versus Amortization - Capital Expenditure or Revenue Expenditure - held that:- the dies and molds are actually acquired by the packing material supplier and considering the fact that the cost of such molds and dies are reimbursed by the assessee to the packing material supplier, the assessee cannot be said to have acquired a capital asset in the form of molds and dies. - The test of enduring benefit is therefore not satisfied. - The assessee on a conservative basis amortized such cost for a period of 4 years and claimed deduction in 4 years. - Decided in favor of assessee.

Expenditure on protection of copyright / trademark - trademark belong to others - held that:- the assessee would derive a benefit by any legal recourse taken by the proprietor of the trademark for protecting the trademark. If the Assessee does that on its own even that would protect the business interest of the Assessee. - the agreement clearly envisages that the assessee will bear cost as mutually agreed between the assessee and the owner of the trademark. - there is no requirement for any further written agreement between the owner of the trademark and the assessee for sharing of cost. - Claim of Expenditure allowed - Decided in favor of assessee.

Deduction u/s 80IB - allocation of employee cost, depreciation, capital expenditure on R &D of Head office to the eligible units - held that:- The allocation has been made on estimate on the basis of turnover, which in our view is not correct. - The assessee had maintained separate accounts from which it could be easily found out whether the expenditure had been incurred or not but no material has been placed on record by the revenue to prove, that the assessee had incurred any such expenditure in relation to eligible Unit. - Decided in favor of assessee.