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2021 (6) TMI 884 - AT - Income TaxDepreciation on Goodwill - HELD THAT:- We in the backdrop of the aforesaid judgment of the Hon’ble Supreme Court in the case of Smifs Securities ltd. [2012 (8) TMI 713 - SUPREME COURT] are unable to concur with the view taken by the lower authorities that goodwill is not a depreciable asset eligible for depreciation, and accordingly, vacate the same. Resultantly, the disallowance of the assessee’s claim for depreciation on goodwill is vacated. Disallowance of Staff welfare expenses - HELD THAT:- Admittedly, in the present case also, the A.O while resorting to an ad hoc disallowance out of the staff welfare expenses had not called upon the assessee to furnish the details in respect of the staff welfare expenses which as per him were not verifiable. As such, the assessee had suffered the aforesaid part disallowance of staff welfare expenses without being afforded a sufficient opportunity of being heard. We, thus, in terms of our aforesaid observations are of the considered view that the ad hoc/estimated disallowance of the staff welfare expenses made by the A.O/DRP cannot be sustained and is liable to be vacated. Disallowance of Commission expenses - confirmations of the parties to whom commission was claimed to have been paid by the assessee were not filed in the course of the assessment proceedings - HELD THAT:- As material placed on record by the assessee to substantiate the authenticity of the commission expenses; that confirmations from all the dealers could not be obtained after lapse of a substantial period of 5 years (aprox); the PAN Nos. of majority of the parties were furnished by the asssessee; commission expense of ₹ 1.099 crores incurred by the assessee against its sales of ₹ 3,176.56 crores worked out at a miniscule figure of 0.03% of its sales; the assessee had duly demonstrated before the DRP the reason and justification for incurring the commission expenditure; and allowability of a similar claim of commission expenses in the past; and respectfully following the aforesaid order of the Tribunal in the assessee’s own case, we find no justification in disallowance of a similarly placed assessee’s claim for deduction of commission expenses - We, thus, in terms of our aforesaid observations direct the A.O to vacate the disallowance of commission expenses. Ad hoc disallowance w.r.t miscellaneous expenditure - HELD THAT:- On objection filed by the assessee, the DRP had wrongly observed that the disallowance was being restricted to 5% as against 10% made by the A.O, as the facts were never so. Be that as it may, the A.O in his impugned order passed u/s 153A/143(3) r.w.s 144C(1), dated 31.10.2011 though referred to the aforesaid mistake of the DRP but without pointing out as to what all expenses were not supported by documentary evidence, therein restricted the disallowance on an ad hoc basis As neither of the lower authorities had pointed out as to what all expenses out of total miscellaneous expenseswere not supported by documentary evidence, therefore, no ad hoc disallowance under such circumstances could justifiably have been made. In our considered view a disallowance of an expense made by an A.O in the thin air can by no means be sustained. We vacate disallowance made by the A.O/DRP w.r.t the miscellaneous expenses.
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