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2015 (4) TMI 718 - AT - Income TaxDepreciation on goodwill - CIT(A) allowed the claim - Held that:- Tribunal in the case of the assessee in the assessment year 2006-07 confirmed the order of the Commissioner of Income-tax (Appeals) allowing the claim of depreciation on goodwill to the assessee and dismissed the appeal of the Revenue as relying on B. Raveendran Pillai v. CIT [2010 (9) TMI 434 - Kerala High Court] wherein held the assessee was entitled to claim depreciation on the name, trade mark and logo under the specific head provided under section 32(1)(ii) which covered trade mark and franchise. Admittedly the hospital was run in the same building, in the same town, in the same name for several years prior to purchase by the assessee. By transferring the rights to use the name of the hospital itself, the previous owner had transferred the goodwill to the assessee and the benefit derived by the assessee was retention of continued trust of the patients who were patients of the previous owners. When the good will paid was for ensuring retention and continued business in the hospital, it was for acquiring a business and commercial rights and it was comparable with trade mark, franchise, copyright, etc. referred to in the first part of clause (ii) of section 32(1) and so much so, goodwill was covered by the above provision of the Act entitling the assessee for depreciation - decided in favour of assessee. Disallowance of building repair expenses - there was no check to identify whether the expenditure was capital or revenue in nature made a disallowance of ₹ 2,50,000 out of building repairs claimed by the assessee as per AO - CIT(Appeals) allowed the deduction - Held that:- CIT (Appeals) allowed the deduction to the assessee by observing that looking at the nature of expenses and condition of building which was rented one, the expenditure appears to be regularly incurred on monthly basis as per requirement to maintain the building, and therefore, it was revenue in nature. The Departmental representative merely relied on the order of the Assessing Officer. No material could be brought on record to show that any part of the expenditure of ₹ 2,50,000 allowed by the CIT (Appeals) was capital and not revenue expenditure. Hence, we find no infirmity in the order of the CIT(Appeals) - Decided against revenue. Disallowance u/s 14A - CIT(A) deleted the addition - Held that:- Assessing Officer has not shown any nexus between the borrowed funds of the assessee and the investment made by the assessee to establish that the borrowed funds were utilised by the assessee in making the investments. Therefore, we find no error in the order of the Commissioner of Income-tax (Appeals) holding that the assessee had interest-free funds far in excess of the investment made by it as at the year ending on March 31, 2007 and deleting the disallowance of interest expenditure of ₹ 3,15,370. Thus, this ground of appeal of the Revenue is dismissed. - Decided against revenue.
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