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2017 (1) TMI 1196 - AT - Income TaxDisallowance of claim of depreciation - Held that:- AO’s observations are very much self contradictory if we go by different portions therein. He is of the view in former portion that the assessee has also sold its equipments to customers. He however opines in middle portion that the assessee’s ownership over the equipments in question is not in dispute. We thus feel it appropriate that the Assessing Officer shall carry out a detailed exercise in tune with ld. co-ordinate bench’s directions as in assessment year 2006-07 as well. He shall prepare a detailed list of assessee’s equipments. If he finds it not to have transferred ownership thereof to its customers/patients, the impugned depreciation relief would be held allowable Addition made to Royal College Pathologist, London towards reimbursement of travelling expenses - whether there was no corroborative evidence to prove that the same was indeed incur wholly and exclusively for the purpose of the business? - Held that:- There is hardly any dispute that the assessee company manufactures and trades in diagnostics reagent strips and kits along with sale and service of diagnostics instrument. It has incurred the impugned expenditure in the nature of payment made to sponsor air fare of London Delhi London business class of two speakers based in England. The Assessing Officer is fair enough in not rebutting the fact that the said speakers attended an educational meeting at the Apollo Hospital, New Delhi in February 2007. His only case is that the assessee has not proved any business expediency in the said expenditure. The CIT(A) on the other hand agrees with assessee’s contention that it had paid the impugned expenditure for publicity purposes. We thus view assessee’s expenses as very much connected having direct nexus with its manufacture and sale of diagnostics product wherein it is supposed to garner wider publicity in order to create a niche for itself in the field of diagnostics instruments market. We thus find no reason to interfere in CIT(A)’s order under challenge Addition on account of receivables written off and claimed as business loss - Held that:- There is no quarrel between the parties so far as basic facts pertaining to the instant issue are concern that the assessee has claimed the loss in question on account of short recovery of receivables wherein majority of the sale sums stands recovered leaving behind only a portion of the amount which stands claimed as business loss because of short fall in recovery. The assessee has already declared the sums recovered as its business income. It is thus clear that the amount not recovered in question does have very much a direct and live nexus with assessee’s business so as to be treated as an allowable business loss claim. We accept assessee’s argument accordingly to delete the impugned business loss disallowance Disallowance of expenditure incurred on subscription and purchase of office and general purpose books - Held that:- The assessee first of all refers to the nature of its reading material for being subject matter of the impugned issue. The same appears to be “ McEvoy & Farmer” literature regarding research work stated to be throwing light on assessee’s business and latest developments in the field. Learned CIT(A) only refers to depreciation schedule including books also to conclude that the above subscribed books amount to capital expenditure. He has nowhere discussed assessee’s peculiar line of business manufacturing and selling diagnostics products wherein the books in question update it about latest research developments in the field. We thus find force in assessee’s contention seeking to treat the impugned expenditure as revenue in nature. The Assessing Officer is directed to delete the disallowance in question.
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