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2013 (9) TMI 647 - AT - Income TaxIssue of notice u/s 148 of the Income Tax Act for assessing escaped income – Held that:- Assessee has filed the Income Tax Return on 27.11.2003 declaring income of Rs. -22,53,000/-, which was processed u/s. 143(1) of the IT Act on 28.4.2004. Since, it was not a case where an assessment was completed after proper scrutiny of the case u/s. 143(3) of IT Act, therefore, there was no question of due application of mind at the first instance; and therefore, theere is no question of change of opinion on the part of the AO. Rather, while processing u/s. 143(1) of the IT Act, the AO did not express any opinion at all and a return was processed as such - AO has not applied his mind in respect of claim of depreciation on goodwill on that occassion. There was no requisite inquiry in respect of the said claim - Income which was alleged to be chargeable into tax had escaped assessment, therefore, the AO had a convincing reason to believe that the said income escaped assessment hence lawfully reopened the assessment – Decided against the Assessee. Depreciation on goodwill - The assessee company was formed on 19.2.1999. In support a certificate of incorporation is placed on record. The goodwill was acquired by the assessee in the Assessment Year 1999-2000 when the firm, as a going concern, was taken over by the company/ appellant along with all the assets. – Held that:- Reliance has been placed upon the judgment in the case of B. Raveendran Pillai, [2010 (9) TMI 434 - Kerala High Court]. Wherein it has been held that goodwill is certainly comparable with trade mark, franchisee, copy right, etc., hence, entitled for the depreciation – Respectfully following this decision wherein the doctrine of ejusdem generic is applied and held that the Goodwill is of like nature of intangible asset as prescribed, therefore, hold that under the totality of the facts and circumstances of the case the assessee is entitled for the claim of depreciation on the DWV of the goodwill for the year under consideration – Decided in favor of Assessee. Disallowance of interest on advance made to sister concern - Interest of ₹ 2,12,507/-, being interest @ 12% on advances made to sister concern amounting to ₹ 17,70,891/- - Interest free deposits to the tune of ₹ 204.04 were available. The assesse has claimed that the said interest free deposits were advanced to the sister concern – Held that:- Merely by stating that the funds are available, no practical purpose is served unless and until through bank statements it is established that the interest free funds have actually been disbursed to the sister concern. In certain precedents, even the Courts have held that if the assessee has sufficient interest free bank balance, other than interest bearing funds, then he has to prove that out of those interest free bank balance transferred the funds to a sister concern. In the absence of any direct evidence, finding of Revenue is affirmed – Decided against the Assessee.
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