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2020 (10) TMI 402 - AT - Income TaxExpenditure for cost of adhesive stamp in connection with preparation of deed of transfer and assignment of receivables - Revenue or capital expenditure - assessee had stated that the same was in connection with acquisition of business and was claimed as revenue expenditure - HELD THAT:- This assignment is admittedly for facilitating the business of the assessee by assigning receivables and as the assessee has acquired the said industrial unit for a lump sum consideration. The expenditure is in connection with facilitating recovery of receivables which is a part of current asset - expenditure in this regard cannot be said to be in the capital filed of acquiring business. It is in fact for facilitating the business of the assessee and in this view of the matter expenditure is allowable as business expenditure. The case laws referred by learned counsel of the assessee in the case of Bombay Dyeing Mfg. [1996 (2) TMI 8 - SUPREME COURT]and India Cements Ltd. [1965 (12) TMI 22 - SUPREME COURT] are accordingly germane and support the case of the assessee. CIT(A) has been in error in holding that the case laws are not applicable here. - Decided in favour of assessee. Provision for warranty as claimed as expenditure - Claim denied by AO on the ground that it is an unascertained liability and a contingent liability - CIT(A) in principal upheld the action of AO but directed that only the provision made during the year should be disallowed - HELD THAT:- As relying on case ROTORK CONTROLS INDIA (P) LTD. case [2009 (5) TMI 16 - SUPREME COURT] authorities below have erred in considering the provisions of warranty as contingent liability. As already submitted by learned Counsel of the assessee in assessee's own case, subsequently revenue authorities have allowed the expenditure on the basis of same Hon'ble Supreme Court decision. Hence, we set aside the order of the authority below and decide the issue in favour of the assessee. Depreciation in respect of customer contracts - assessee had claimed that the customer contracts are valuable right and therefore capital asset - Claim denied by the authorities below it was held that the assessee cannot be allowed depreciation as intangible asset u/s 32(1)(ii) as this does not fall under the definition of intangible asset as contained in section 2(11) - HELD THAT:- In case of Areva T&D India Ltd. v. CIT [2012 (4) TMI 79 - DELHI HIGH COURT] has held that excess amount paid over and above tangible asset for acquisition of various business and commercial rights and slump sale can be categorised under the goodwill and difference between purchase consideration and value of tangible asset taken over being the balancing figure was held to be goodwill and depreciation thereon was held to be allowable on the touchstone of decision of Techno Shares and Stocks Ltd. [2010 (9) TMI 6 - SUPREME COURT] and CIT v. Simfs Securities Ltd [2012 (8) TMI 713 - SUPREME COURT] - The details of value of tangible assets taken over by the assessee by the slump sale agreement are necessary to be considered for adjudication of this issue - the issue of depreciation of goodwill and customer contracts being an intangible asset claimed in this case by the assessee needs to be examined by the Assessing Officer on the touchstone of the aforesaid decision. Accordingly the issue of depreciation of customer contracts and goodwill is remitted to the file of the AO.
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