TMI Blog2012 (8) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... e's goodwill being a valuable commercial asset similar to other intangibles specified in the definition of block assets, is eligible to depreciation - in favour of assessee. Disallowance of provision for leave encashment - Held that:- As in Exide Industries Limited And Another Versus UOI And Others [2007 (6) TMI 175 - CALCUTTA HIGH COURT] wherein the Hon'ble Court has struck down sec.43B(f) which stated that leave encashment could be allowed only on actual payment, in these circumstances the assessing authority is directed to give deduction for the provision of Rs. 93,815/- made by the assessee towards leave encashment Apportionment of expenses - Held that:- As decided in favour of the assessee by the co-ordinate Bench of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as "the Act") was issued to the assessee. The Assessing Officer vide assessment order dated 20.11.2007 determined the total income of the appellant as Rs. 4,31,30,470/- after making additions in respect of interest on fixed deposits, disallowance of club membership, goodwill, leave encashment and deduction under section 80IB. Aggrieved against the assessment order, the assessee filed an appeal before CIT(A) impugning the additions made by the Assessing Officer. The CIT(A) vide order dated 11.11.2010 partly allowed the appeal of the assessee. Still aggrieved against the order of the CIT(A), the assessee has come in second appeal before the Tribunal impugning the order dated 11.11.2010 primarily on the following grounds:- ( i ) Disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2,18,735/-. To support his contentions, he relied on the judgement of the Hon'ble Calcutta High Court in the case of Exide Industries Ltd. v. UOI [2007] 292 ITR 470/164 Taxman 9 as well as the order of the Tribunal in the case of Asstt. CIT v. Siemens Building Tech (P.) Ltd. in [IT Appeal No.57 (Mds) of 2011, dated 27.06.2011. 5. The third issue in appeal relates to apportionment of expenses. The counsel for the assessee submitted that the CIT(A) in appeal relevant to the assessment year 2003-04 vide order dated 7.12.2006 has decided the similar issue in favour of the assessee. The CIT(A) held that the turnover method for the allocation of indirect expenses is required to be adopted in the case of the assessee for computing pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t "goodwill is not specifically mentioned in section 32(1)(ii) of the Income Tax Act. Depreciation is allowable not only on tangible assets covered by clause (i) of section 32(1) but on the intangible assets specifically enumerated in clause (ii) and such of the other business or commercial rights similar to the items specifically covered therein." Similarly, the Division Bench of the Hon'ble Delhi High Court has upheld that "payment on account of goodwill is similar to assets like patents, copyrights, trademarks, licences referred to in the definition of the block of assets in the senses that the function of all these assets is to restrict their misuse and to earn maximum profits in the business. The function of goodwill acquired by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs (292 ITR 470). On merit, this issue is covered in favour of the assessee by virtue of the decision of the Hon'ble Supreme Court in the case of Bharat Earth Movers v. CIT (245 ITR 428). In law, the issue is again in favour of the assessee by virtue of the decision of the Hon'ble Calcutta High Court in the case of Exide Industries Ltd. v. UOI Ors. (292 ITR 470) wherein the Hon'ble Court has struck down sec.43B(f) which stated that leave encashment could be allowed only on actual payment. In these circumstances, we direct the assessing authority to give deduction for the provision of Rs. 93,815/- made by the assessee towards leave encashment. The assessee is successful in its cross objection." 10. Respectfully following the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of allocation of expenditure, that is, on the basis of unit-wise turnover and directed to apportion concerned common expenditures. In the absence of any evidence brought on record by the Assessing Officer, the method adopted by the CIT(A) is sustainable in law. Once the method adopted by the CIT(A) is found to be accepted in law, the quantum modification arising out of the direction of the CIT(A) is only a consequence of a lawful direction. We have no reason to interfere in such lawful consequences. Therefore, we find that the ground raised by the Revenue on this point of allocation of expenditure is not meritorious. The appeals filed by the Revenue are liable to be dismissed." The D.R. was unable to produce any judgement or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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