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2014 (1) TMI 650 - ITAT DELHIDisallowance on account of reimbursement of warranty claims - Nature and allowability of Expenses – Expenses incurred to be treated as business expenses or not – Held that:- HML is the seller and not the assessee company - even if any liability is taken over by the assessee as a part of business purchase agreement, discharge of such liability cannot be claimed as a revenue expenditure - the purchase of business is a purchase of a capital asset - so far as customers are concerned, they are duly satisfied because their rights under the warranty have been met by HML - So far as customer satisfaction is concerned, it is irrelevant whether the assessee reimbursed the liability to HML or not - reimbursement of the warranty claims by the assessee to HML has no business expediency – Decided against Assessee. Disallowance of Depreciation on capitalization of professional charges – Held that:- The cost of the assets was determined after allocation of professional charges - the Department cannot take a different stand in different years in respect of allowability of depreciation in respect of professional charges capitalized and allocated to the cost of various assets. In this case, in the first two years, i.e., AY 2006-07 and 2007-08, the Assessing Officer has disallowed the depreciation - in the subsequent years, as per the contention of the assessee, the depreciation on the professional charges has been allowed in the orders passed under Section 143(3) – thus, there would not be any justification for disallowance of depreciation on the professional charges in the earlier years – order set aside and the matter remitted back to the AO for fresh adjudication – Decided in favour of Assessee.
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