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2013 (10) TMI 756 - AT - Income TaxDepreciation on goodwill - Goodwill acquired on the retirement of a partner Held that:- Though the partner retired, the partnership firm continued as such with new partners. The partnership firm being a separate and independent assessable unit, it continued its business through its new partners. Therefore, the assets and liabilities of the firm continued as such. The tangible and intangible asset including all its commercial rights, like goodwill, trademark, etc. continued with the partnership firm. What was paid to the retiring partner is his share of capital and not a cost for acquisition of any right from him - No part of the goodwill was acquired by the partnership firm while making payment to the retiring partner. In fact, the right of the partner on the partnership asset is ceased to exist on settlement of his capital account Therefore, goodwill has no value and hence, no question of any depreciation Decided against the Assessee. Profit on the sale of vehicle Held that:- The taxpayer has not shown the profit or loss arising out of sale of the vehicles in the profit & loss account. The details of the persons to whom the vehicles were sold are not available on record Therefore, addition made @10% as profit over and above the book value, by A.O. is confirmed Decided against the Assessee. Whether the payment of interest @18% to the relatives of the partners is fair or excessive Held that:- This excessive rate of interest payment to be adjudged on the basis of the rate of interest prevailing in the market - When the banks are charging interest at 16% to 25% for providing loans to the citizens, this Tribunal is of the considered opinion that paying interest @18% to the relatives of the partners cannot be considered to be excessive or unreasonable. The matter may be different if the rate of interest charged by the taxpayer exceeds the bank interest Rate of payment is reasonable Decided in favor of Assessee. Concealment of income Penalty under section 271(1)(c) of the Income Tax Act Held that:- The details of the borrowed funds which were given to the sister concern of the taxpayer are available on record. What was found during the course of survey is the investment made by the sister concern in the capital asset - This does not amount to concealment of any part of income or furnishing inaccurate particulars. It is a difference of opinion between the assessing officer and the taxpayer with regard to a claim made.
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