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2017 (12) TMI 1322 - AT - Income TaxDisallowance of rental expenses - non deduction of tds - Held that:- The impugned amount of ₹ 68,890/- was well below the threshold limit of ₹ 1,20,000/- as prescribed u/s 194-I during impugned AY so as to trigger the stated TDS provisions. Moreover, the annexure to certificate u/s 197 issued by concerned TDS officer quantifies the ‘Estimated Total Billing for F.Y.2009-10’ u/s 194-I’ which lead us to conclude that the same was applicable for the whole financial year. Resultantly, this addition stands deleted and this ground of assessee’s appeal succeeds. Addition against incentive expenses crystallization - Held that:- The only basis on which the same has been disallowed by Ld. AO is that the same has been credited to the accounts of the respective parties in succeeding assessment years. However, in our opinion, if the liability had already been quantified and crystallized and provision thereof was made in the books of accounts, the same was allowable to the assessee irrespective of actual credit to the respective parties since the assessee, following mercantile system of accounting, was eligible to claim the same. The Ld. AR has placed elaborate documents in the paper book to demonstrate that the liability had actually crystallized during impugned AY. Therefore, without much deliberation, we restore the matter back to the file of Ld. AO to reappreciate the documentary evidences submitted by the assessee and decide as per law. The assessee, in turn, is directed to demonstrate the crystallization thereof in the impugned AY. Resultantly, this ground of assessee’s appeal stands allowed for statistical purposes. Disallowance of depreciation which is estimated @10% of amalgamation reserve accruing to the assessee - Held that:- Lower authorities has erred in concluding that the amalgamation reserve represent lower payment made by the assessee to acquire depreciable assets of higher value whereas we have noted that the same represent difference of net assets taken over by the assessee and share capital issued to transferor company upon amalgamation. Further, all the assets & liabilities have been taken over at the book values only as evident from the Annual Report of the Company and moreover, this fact is never been controverted by the revenue. Prima facie, the transaction is in the nature of demerger as defined in Section 2(19AA), the written down value of which is governed by Explanation 2A and 2B to Section 43(6). Since, the assessee is resulting company, Explanation 2B is applicable which says that where in a previous year, any asset forming part of a block of assets is transferred by a demerged company to the resulting company, then, notwithstanding anything contained in clause (1), the written down value of the block of assets in the case of the resulting company shall be the written down value of the transferred assets of the demerged company immediately before the demerger. Therefore, while deleting the impugned additions, we deem it proper to restore the matter back to the file of Ld. AO as directed to verify that the depreciation allowable to the demerged entity, in case demerger had not taken place and the actual depreciation claimed by the assessee under Income Tax Act remains the same. Resultantly, this ground of assessee’s appeal stands allowed for statistical purposes.
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