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2012 (8) TMI 276 - ITAT MUMBAIDisallowance of depreciation on goodwill - scheme of amalgamation - Held that:- As the assets and liabilities have not been valued in this case the consideration in the form of cancellation of investments cannot be said to have been made for purchase of assets at book value, when the fair value of each asset and liability is much higher - As the primary asset was land and a building thereon thus, the market value of this asset should have been considered. If the assessee had paid more than the fair market value of assets minus the fair market value of liabilities, then the company would have a case to claim that certain amounts were incurred for goodwill. In the absence of such an exercise there is no goodwill in the nature of commercial rights purchase by the assessee. This is only a book entry and it is only another way of disclosing the intrinsic value of the fixed asset of the company - the very purchase of goodwill is not proved by the assessee - Disallowance of depreciation is thus warranted - against assessee. Disallowance of claim of cessation of liability - Held that:- Provisions of sec. 41(1) will apply when the liability provided has ceased and assessee gets benefit whereas in this case in the amounts were provided as a liability to pay rent in respective assessment years as a ‘provision’ and the assessee has not paid the amounts due to disputes with the land owner and it was informed that no deduction was claimed/allowed in the respective years. Therefore, question of addition u/s 41 does not arise - as the amount has to be considered in AY 2008-09 as the relevant date on which the liability will crystallized and the liability does not pertain to the year under consideration - against assessee.
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