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2014 (9) TMI 350 - AT - Income TaxVarious expenses disallowed - Travelling expenses, Professional charges, Telephone expenses and other expenses – Held that:- Following the decision in M/s. Graham Firth Steel Products (I) Ltd. [2014 (9) TMI 294 - ITAT MUMBAI] - The assessee company had made bonafide efforts to revive its business which is supported by the fact that the BIFR sanctioned the rehabilitation scheme - the assessee company commenced its activities in subsequent years and has achieved substantial turnover which go to prove that the assessee never intended to windup its activity - it can be said that there were only a ‘temporary’ lull in the business – the order of the CIT(A) is upheld – Decided against revenue. Computation of book profits u/s 115JB – Held that:- For the determination of income u/s. 115JB, no adjustment can be carried out except those specifically required to in the section – relying upon Apollo Tyres Ltd. VS CIT [2002 (5) TMI 5 - SUPREME Court] - while determining the income u/s. 115JB, the computation has to start from the book profit as shown in the P&L account prepared in accordance with the provisions of Part-II and III of Schedule VI of the Companies Act, 1956 and as reduced by the adjustments as specified in the section - the AO is bound to make only such adjustments as has been specified in the said section to arrive at a MAT income – the order of the CIT(A) is upheld – Decided against revenue. Depreciation of goodwill disallowed – Held that:- As decided in assessee’s own case for the for the earlier assessment year, it has been held that the claim of depreciation holding that the assets said to have been put to use as the claim of depreciation allowed in earlier years and there are no different facts during the year under consideration, the depreciation on assets is directed to be allowed – following the decision in Commissioner of Income Tax, Kolkata Versus Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] - goodwill is an asset eligible for depreciation - the AO is directed to allow the claim of depreciation on goodwill – Decided in favour of assessee. Treatment of surplus on reorganization/demerger – Held that:- Following the decision in Commissioner of Income Tax. Central-I Versus M/s. Pruthvi Brokers & Shareholders Pvt. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT] – merely dealing with such waiver with the assessee in its books of account could not alter the effect of the order of BIFR - No remission or cessation of liability towards interest nor the assessee became entitled to waiver of interest therefore Sec. 41(1) could not be invoked to at a waived amount - under section 41(1) remission can be only by an act of creditor and cessation of liability can come by agreement or by law - the liability was reduced under the scheme of BIFR and the assessee has not enjoyed any actual benefit of remission of liability in the nature of trading - CIT(A) has erred in confirming the findings of the AO – thus, the order of the CIT(A) is set aside and the AO is directed to allow the claim of deduction in respect of the waiver of loan – Decided partly in favour of assessee.
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