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2017 (11) TMI 1914 - AT - Income TaxDepreciation of the Lucknow property - CIT(A) failed to note that the property was obtained by the assessee only in lieu of surrendering its tenancy rights over another property - HELD THAT:- As it is noticed that the issue is squarely covered by the decision of the Co-ordinate Bench of this Tribunal in the assessee’s own case for the AY 1993-94 and as it is noticed that the CIT(A) has followed the judicial discipline in following the decision, we find no reason to interfere with the order of the Ld.CIT(A) on this issue. Depreciation on non-compete fee - HELD THAT:- As it is noticed that the issue is squarely covered by the decision of the Hon’ble Jurisdictional High Court in the case of M/s.Pentasoft Technologies Ltd., [2013 (11) TMI 1057 - MADRAS HIGH COURT] the findings of the Ld.CIT(A) on this issue stands confirmed. Addition made towards the amount taken to general reserve by the assessee - difference between the value of assets over the value of liabilities of the transferor companies, after adjusting the aggregate face value of new shares issued was added to General Reserve - HELD THAT:- A perusal of the provisions of Sec.28(iv) shows that the said provision is to treat the income as profits & gains of business or profession, the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of profession. In the present case, it is clearly shows that the acquisition, more so, the amalgamation of the three companies with the assessee company is not the business of the assessee company. Consequently, it cannot be said that the provisions of Sec.28(1)(iv) of the Act applied to the excess of the net book value of the entities over the consideration paid in any way nor is it income liable to tax under the head ‘profits & gains’ of business in the hands of the assessee company. Further clearly, the Revenue has not been able to point out any defects in the findings of the Ld.CIT(A) on this issue. Disallowance of the contributions made to the Employee Welfare Funds - AO had disallowed the contributions to the various Employees Welfare Funds on the ground that the payments were not statutory obligations - HELD THAT:- As it is noticed that it has been categorically held by the Hon’ble High Court of Madras in the assessee’s own case for the AY 1997-98 that the settlement agreement entered into by the assessee with its employees u/s.12(3) of the Industrial Disputes Act are Statutory Agreements, we are of the view that only for the purpose of examining, as to whether the quantification is correct, the issue is restored to the file of the AO. In the result, Ground of the assessee’s appeal is partly allowed for statistical purposes. Depreciation on goodwill - specified intangible assets acquired under slump sale - HELD THAT:- In the absence of the aforesaid intangible assets, the assessee would have had to commence business from scratch and go through the gestation period whereas by acquiring the aforesaid business rights along with the tangible assets, the assessee got an up and running business. This view is fortified by the ratio of the decision of the Supreme Court in Techno Shares and Stocks Ltd. [2010 (9) TMI 6 - SUPREME COURT] wherein it was held that intangible assets owned by the assessee and used for the business purpose which enables the assessee to access the market and has an economic and money value is a “license” or “akin to a license” which is one of the items falling in Section 32(1)(ii) of the Act. We are of the view that the specified intangible assets acquired under slump sale agreement were in the nature of “business or commercial rights of similar nature” specified in Section 32(1)(ii) of the Act and were accordingly eligible for depreciation under that Section. It is not necessary to decide the alternative submission made on behalf of the assessee that goodwill per se is eligible for depreciation under Section 32(1)(ii) of the Act. In the circumstances, the substantial question of law is decided in the affirmative and this appeal is allowed in favour of the assessee and against the Revenue and the impugned order is set aside. Disallowance of various provisions which had been claimed as an expenditure in respect of the non-transmission and distribution business - HELD THAT:- Once the whole of the non-T&D business has been transferred then admittedly there is nothing left of the said business representing a liability which is liable to be allowed in the assessee’s hands in respect of the said business. This being so, we find that the order of the Ld.CIT(A) and the AO on this issue to be on a right footing. CIT(A) has accepted the claim of the assessee that the sale of the non T&D business was on a slump sale by applying the provisions of Sec.50B and the liabilities which have been claimed for deduction now have also not crystallized during the year as also the issue that the claim of the assessee is in respect of the provisions and mere provisions cannot be allowed as a deduction. This being so, the finding of the Ld.CIT(A) & the AO on this issue stands confirmed. In the result, Ground Nos.6 & 7 of the assessee’s appeal stands dismissed. Taxing under capital gains - excess consideration received on the transfer of the non-T&D business - HELD THAT:- the consideration of the transfer has been specified in the said scheme at ₹ 41.30 Crs. How this difference of ₹ 10.00 Crs. has taken place, has not been explained by the assessee? Nor the assessee has been able to explain as to why the additional sum of ₹ 10.00 Crs. has been paid. If at all, it can be considered as an exchange, the question that arises is when the total net assets only ₹ 31.30 Crs. why the shares of the value of ₹ 41.30 Crs. has been allotted. Though, the assessee has mentioned that the valuation is as per the valuation done by the Accountants still the valuation arrived at by the Accountants is to an extent of ₹ 41.70 Crs. and even that is not the consideration of the transfer because as per the Scheme, the consideration for the transfer is shown at ₹ 41.30 Crs. Even otherwise, a perusal of the Scheme clearly shows that the term used is ‘consideration for the transfer’, the words are not ‘exchange’. This being so, we find no error in the findings of the AO and the Ld.CIT(A) on this issue and the same stands confirmed. Not granting the deduction on Excise Duty paid on the Closing Stock - HELD THAT:- As it is noticed that the issue is squarely covered by the decision of the Hon’ble Special Bench of this Tribunal, respectfully following the said decision, the AO is directed to grant the assessee, the deduction of the Excise Duty to the extent that the same has been actually paid during the relevant AY u/s.43B.
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