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2016 (2) TMI 706 - AT - Income TaxDisallowance of depreciation on goodwill in connection with takeover of unit from Ashok Leyland Limited - Held that:- The assessee has paid over the value of net asset to the extent of ₹ 147.57 lakhs and claimed the same as cost of the goodwill. However, the Assessing Officer disallowed the claim of the assessee on the ground that the payment does not fall within the meaning of know-how, patent or copyright. The Assessing Officer has not considered the judgment of Apex Court in SMIFS Securities Ltd. (2012 (8) TMI 713 - SUPREME COURT ) wherein after considering the provisions of Explanation 3 to Section 32(1) of the Act found that the word “any other business or commercial rights of similar nature” in clause (b) of Explanation 3 indicates that goodwill will fall under the expression “any other business or commercial rights of similar nature”. In view of the above judgment of Apex Court in SMIFS Securities Ltd., we are unable to uphold the orders of the lower authorities. Accordingly, we set aside the orders of the lower authorities. The Assessing Officer is directed to allow depreciation at the applicable rate on the payment relatable to goodwill. - Decided in favour of assessee Disallowance of expenditure which was capitalized in the books of account - expansion of the units - Held that:- Even though it is independent, because of the interconnection of management, financial, administrative and production aspects of each expenditure has to be construed as revenue in nature and therefore, deductible while computing the taxable income.By respectfully following the judgments of Madras High Court in Rane (Madras) Ltd. (2007 (6) TMI 25 - HIGH COURT, MADRAS ) and in Sakthi Sugars Ltd. (2010 (8) TMI 456 - MADRAS HIGH COURT), the orders of the lower authorities are set aside and the Assessing Officer is directed to allow the expenditure incurred by the assessee in connection with the expansion of the units at Sriperumbudur and Hyderabad as revenue expenditure.- Decided in favour of assessee Assessee is eligible for additional depreciation Depreciation on the amount paid to SIPCOT towards development of infrastructure - Held that:- The assessee has contributed to SIPCOT for creation of common facilities such as roads, bridges, electrical lines, drainage, etc. These facilities are owned by the SIPCOT / Government and not by the assessee. Merely because the assessee contributed for establishment of common infrastructural facilities, it cannot be construed that the assessee owned those facilities. For claiming depreciation under Section 32 of the Act, the assessee should be the owner of the property / asset and the same should be used for business of the assessee. In the case before us, the common infrastructural facilities may be assets of the SIPCOT or Government agency to provide certain infrastructural facilities to the assessee. It is not the case of the assessee that those amenities are tools for carrying out the business of the assessee. Unless and until the capital asset is used as a tool for carrying out the business of the assessee and the assessee becomes the owner, this Tribunal is of the considered opinion that the assessee may not be eligible for depreciation. - Decided against assessee
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