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2016 (1) TMI 163 - ITAT DELHI

2016 (1) TMI 163 - ITAT DELHI - TMI - Depreciation claim - put to use - whether the assessee was entitled to depreciation at half the normal rates, even though asset in respect of Deltron Unit was acquired and put to use on 1.10.2004; because the assessee had itself claimed depreciation on assets other than building at half of the normal rates? - Held that:- No merit in the claim of the appellant that depreciation is to be allowed for the entire year particularly having regard to the fact that a .....

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R> Disallowance of 50% of boarding and lodging expenses in respect of foreign travelling - Held that:- In the instant case, the assessee claimed foreign and travelling expenses of ₹ 20,33,758/-. The Assessing Officer has noted that during the assessment proceedings, the assessee could not furnish bills and vouchers in respect of boarding and lodging expenses aggregating to ₹ 6,32,295/- and as such, disallowed 50% of the expenditure and computed the disallowance at ₹ 3,66,148/- .....

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t of which, disallowance has been made by him, the adhoc disallowance so made is deleted - Decided in favour of assessee - ITA No.134/Del./2009, ITA No.1319/Del./2011, ITA No.5656/Del./2010, ITA No.316/Del./2013 - Dated:- 16-10-2015 - SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI A.T. VARKEY, JUDICIAL MEMBER For The Assessee : Shri Pardeep Dinodia & R.K. Kapoor, CAs For The Revenue : Smt. Parwinder Kaur, Senior DR ORDER PER A.T. VARKEY, JUDICIAL MEMBER : These four appeals filed by the assesse .....

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nd on facts in upholding that the assessee was entitled to depreciation at half the normal rates, even though asset in respect of Deltron Unit was acquired and put to use on 1.10.2004; because the assessee had itself claimed depreciation on assets other than building at half of the normal rates. 2 On the facts and in the circumstances of the case, the assessee was statutorily entitled to full depreciation at normal rates as per law as the assets acquired from Deltron Ltd. were put to use admitte .....

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y were purchased on the basis of valuation of the Govt. approved valuers, who were experts; and as such, the invoking of the provision of Explanation 3 to section 43(1) was uncalled for an unjustified. 5 On the facts and in the circumstances of the case, the learned CIT(A) has failed to appreciate that the written down value as per Income Tax Rules, of Deltron Ltd. of the various assets including building was low, as cost of acquisition of building, plant and machinery etc. in the R&D unit o .....

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s follows: 4. The assessee company is engaged in the business of manufacturing of electronic components. The return of income was filed on 28.10.2005 declaring an income of ₹ 7,04,54,286/- which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter the Act ) on 30.10.2006 at the returned income filed by the assessee. The case was selected under scrutiny and statutory notice u/s 143(2) dated 2.8.2006 was issued to the assessee, fixing the hearing on 17.8.2006. In response to the .....

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.10.2004. Further, the AO observed that a new unit M/s Deltron Ltd. had been acquired in the AY 2005-06 as a going concern and all fixed assets thereof had been claimed to have been put to use on 1.10.2004. The AO asked the assessee to submit the copy of agreement and details and valuation of assets and liabilities and their reflection in the depreciation chart of the assessee for AY 2005-06 and the assessee furnished a letter dated 16.11.2007 alongwith the agreement of purchase of plant and mac .....

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o furnish the names of common directors/shareholders and their share holdings in the two companies. The assessee on 30.11.2007 furnished the requisite details. From the details, the AO observed that the concerns were running under common management, the directors were also common and they were operating from the same address. The AO further observed that the facts of purchase of fixed assets of M/s Deltron Ltd. as a going concern was disclosed by the assessee only after the probe during assessme .....

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d their corresponding sale price in the books of M/s Deltron Ltd. and the assessee submitted the requisite details. The AO was of the opinion that the purchase consideration paid by the assessee on various block of assets was substantially higher than the WDV of these assets as per the Act as on 1.4.2004. 4.2 According to the AO, in the light of the Explanation 3 of section 43(1) defining the actual cost for the purpose of bloc of assets, he observed that it was, therefore, necessary to look int .....

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oing to be any tax incidence on M/s Deltron Ltd. as any short term capital gain would get absorbed in the current s well as brought forward losses and deprecation. The AO further observed that M/s Deltron Ltd. had evidently shown short term capital gain of ₹ 2,16,17,776/- on transfer of land, building and plant and machinery to the assessee company, which had been totally observed in the business losses and return with total income of Nil had been filed by M/s Deltron Ltd. for A.Y. 2005-06 .....

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cision of Hon ble Supreme Court in the case of Mcdowell & Co. Ld. vs. CTRO 154 ITR 148 SC and, applied Explanation to section 43(1) to adopt the actual cost at the written down value of the assets in the hands of the transferor company, namely M/s Deltron Ltd. and excess deprecation claimed by the assessee was worked out by the AO as under: Block WDV as on 1.4.2004 in the case of M/s Deltron Ltd. Cost of acquisition as inflated by the assessee company Depreciation claimed by the asessee comp .....

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as admissible for half rate as all assets of the acquired plant were claimed to have been put to use is less than 180 days. He therefore observed that there would be corresponding excess claim in subsequent years for full years. 4.3 The AO observed that it was clear from the aforesaid table that the assessee had used this device to inflate the cost of building from as low as ₹ 7,098/- (WDV) to ₹ 66,00,000/- being the cost as per the agreement with the company to show cause as to why .....

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used by them was unique and they were not ordinarily marketable commodities, so as to have any valuation of their market price. He further observed that both the companies knew that there was no market for the old plant and machinery except for the opinion that the assets of one company doing the same business were used by the other. The AO, therefore, rejected the valuation reports obtained from the registered valuer holding it to be self serving documents. Further, he held that Explanation 3 .....

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ly, the same was adopted in assessee s case and excess depreciation on inflated cost claimed by the aassessee was disallowed. The AO discussed in his order the legal position on application of Explanation 3 to section 43(1) in various cases as held by Hon ble Apex Court and High Courts. The AO after considering the legal position and facts and circumstances of the case and being unsatisfied with the explanation of the assessee, made disallowance of deprecation of ₹ 12,23,215/- and added it .....

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fied in allowing depreciation for half of the year and not for the entire year in respect of the assets acquired by the assessee company from M/s. Deltron Ltd. 6 The assessee, being aggrieved, is in appeal before us. 7 The ld. AR submitted the written synopsis which reads as under: This addition needs to be examined and split into two aspect as under:- 1 Depreciation on building allowed at half rates. 2 Explanation 3 to section 43(1) invoked by the AO to determine the actual cost The main ground .....

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ese assets at higher value only to get higher amount of depreciation. 4 The AO/CIT(A) has relied upon few cases to justify the addition as per the respective orders. ASSESSEE S SUBMISSIONS: 1 Firstly, it is clarified that M/s Deltron Ltd. is a listed public ltd. company. All the necessary approvals of shareholders and approval of SEBI for selling any business has been obtained. All necessary disclosures as were required under law were made in the audited accounts of Deltron Ltd. as would be seen .....

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he transaction is not at arm s length is misconceived and erroneous. Infact, the AO/CIT(A) has misconstrued the requirements of arm s length principles while judging this transaction. 2 As has been clarified that the transaction of sale of the business as a going concern was based upon a certificate of transaction was undertaken based on such valuation report. This valuation was absolutely necessary both from assessee s as well as Deltron s point of view because the sale was required to be appro .....

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it came to be probed by him is also factually incorrect. There is a disclosure in Director s report that assessee has acquired business of Deltron Ltd. as a going concern, PB page 2. Similarly in Schedule T of Balance sheet being notes on accounts as note no. 10 assessee company has disclosed that it has purchased Electronic Business of M/s Deltron at a net consideration of ₹ 7.54 crores-PB page 22 Thus, the basic assumption of AO that assessee did not disclose the transaction is factuall .....

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building the AO has also alleged that there is no evidence when the building was occupied. It is respectfully submitted that such an observation is totally erroneous. The existing business was purchased as a going concern alongwith building. There was no special formalities required for taking over building: The building was already housing all other assets i.e. plant and machinery etc. So, the allegation is totally out of context. 6 Explanation 3 of section 43(1) requires the AO to determine t .....

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d party at the same cost? The answer is yes because Deltron Ltd. had got the valuation of these assets done from a Government approved valauer. Deltron Ltd., as already clarified, is a pubic limited listed company, and whereas the assessee is a closely held company. Its actions were accountable and subject to scrutiny of various agencies including it spublic shareholders. The AO has not done any exercise worth invoking the provisions of Explanation 3 of section 43(1) of the Act. He has merely ad .....

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llowed 100% deduction u/s 35(1)(iv)/35(2) as expenditure on scientific research carried on by the Deltron Ltd; and as such, these assets had Nil cost u/s 43(1) read with Explanation 1. The cost of such assets in the hands of Deltron Ltd., which had appeared at Nil value, was as under:- i) Building ₹ 75,91,127 ii) Plant & Machinery ₹ 5,06,12,466 iii) Computers ₹ 16,94,379 iv) Furniture ₹ 2,12,182 R. 6,01,10,154 The assessee had also produced the relevant assessment ord .....

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late order as part of submissions of the assessee, but there was no discussion or decision thereon as well by the CIT(A). CIT(A) has restricted herself to Explanation 3 to section 43(1) of the I.T. Act. Following issues arise for consideration:- 1) Whether the assets in respect of which 100% write off has been allowed to Deltron Ltd. u/s 35(1)(iv)/35(2) the actual cost of which was therefore Nil in view of Explanation 1 to section 43(1), the actual cost to the buyer will still be Nil in view of .....

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ease hold improvements of the property and it is not the WDV of the building B-96, Phase-III, Industrial Area, Mohali as held by the AO-PB-A3 3) The assessee had purchased building B-96, Phase-III Industrial Area, Mohali having a covered area of 14346 sq.ft. at a value of ₹ 66 lakhs, which had Nil cost on account of deduction allowed to Deltron Ltd. u/s 35(i)(iv)(35)(2).-PBA-3 4) Explanation 3 to section 43(1) specifically provides that the Assessing Officer shall determine the actual cost .....

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es of the case. It may be noted that the legislature in its wisdom had specifically stated that WDV shall be the actual cost in other explanations, except in Explanation 3. Please refer to Explanation 4, 4A, 6, 7 & 7A and 2 of section 43(1). 5) Whether the expert opinion of Govt. approved valaurs as regards the value of the building and plant and machinery purchased by the assessee can be disregarded/overlooked withut any discussion or reasoning thereon by the AO. The AO cannot be said to be .....

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ot a partnership firm, but is a quoted company (Public Ltd. Co.), which has been in existence for over two decades. Therefore, the reliance by the AO on these citations is totally misplaced as the facts of the assessee s case are substantially different. M/s Deltron Ltd. had been allowed 100% deduction as expenditure under the special provisions in respect of its cost of assets valued at ₹ 6 crores approximately. These assets, therefore, could not appear in the deprecation chart as per Inc .....

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hat the price at which the assets were purchased were reasonable and could not be brushed aside without any comment. Fixed asset schedule and the purchase value is reproduced again-PB-A4 Particulars WDV as on 31.3.2004 (under Companies Act) Value at which taken over by assessee Building 74,25,264 66,00,000 Plant & Machinery 3,71,66,624 89,66,000 Computers 82,020 69,499 Furniture & Fixture 3,76,317 3,46,484 Vehicles 5,95,569 5,11,566 Office and Other equipments 14,74,265 14,23,115 Total 4 .....

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the case of the assessee. Statement of WDV without taking into consideration of section 35(1)(vi) and the value at which the assets were taken over by the assessee is as under: Particulars WDV as on 31.3.2004 (under IT Act without taking into consideration 100% dep. As (R&D) Value at which taken over by assessee Building 36,68,570 66,00,000 Leasehold improvements 7,098 - Plant and Machinery 1,66,59,047 89,66,000 Computers 61,446 69,499 Furniture and Fixture 3,63,553 3,46,484 Vehicles 3,91,9 .....

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nder IT Act without taking into consideration 100% dep. As (R&D) Value at which taken over by assessee Building 74,25,264 36,68,570 66,00,000 Leasehold improvements - 7,098 - Plant and Machinery 3,71,66,624 1,66,59,047 89,66,000 Computers 82,020 61,446 69,499 Furniture and Fixture 3,76,317 3,63,553 3,46,484 Vehicles 5,95,569 3,91,971 5,11,566 Electrical Installation - 95,852 14,23,115 Water Cool - 29 Other equipments 14,74,265 3,58,164 Industrial Installation - 615 Total 4,71,20,059 2,16,06, .....

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.9.2004 for a consideration of ₹ 7.54 crore. We find that in the assessment order, the AO has observed that the aforesaid fact of purchase of fixed assets was disclosed by the AR only after the probe by him during the assessment proceedings and no such details have been furnished in any manner in the audit report papers enclosed with the return of income. He has also noticed that both the companies deal in electronic business and have same address at C-120, Naraina Industrial Area and run .....

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s returned total income of Nil for the relevant assessment year 2005-06.Further, the AO observed that, both the companies are engaged in the same kind of electronic business & plant and machinery used by them is unique and they are not ordinarily marketable commodities, so as to have any valuation of their market price. Both the companies knew that there is no market for the old plant and machinery except for the opinion that the assets of one company doing the same business are used by the .....

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ts as per Explanation 3 of section 43(1) of the Act from the books of account of the seller company and ignored the price paid by the assessee on which the assessee had claimed depreciation. He has noted that assessee had claimed depreciation of ₹ 20,41,601/- whereas, according to him, deprecation allowable on the WDV of these assets is only ₹ 8,18,386/- and the difference comes to ₹ 12,23,215/-. In arriving at the above figure of ₹ 8,18,386/-, the Assessing Officer has h .....

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over from M/s. Deltron Ltd. as per records and recalculate the differences, and, recomputed the disallowance accordingly. 9 Section 43(1) reads as under: 43. In sections 28 to 41 and in this section, unless the context otherwise requires- (1) "actual cost" means the actual cost of the assets to the assessee, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority: [Provided that where the actual cost of an asset, bein .....

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t business and a deduction has to be made under [clause (ii) of sub-section (1)] of section 32 in respect of that asset, the actual cost of the asset to the assessee shall be the actual cost to the assessee as reduced by the amount of any deduction allowed under clause (iv) of sub-section (1) of section 35 or under any corresponding provision of the Indian Income-tax Act, 1922 (11 of 1922). [Explanation 2.-Where an asset is acquired by the assessee by way of gift or inheritance, the actual cost .....

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88, as if the asset was the only asset in the relevant block of assets.] Explanation 3.-Where, before the date of acquisition by the assessee, the assets were at any time used by any other person for the purposes of his business or profession and the [Assessing] Officer is satisfied that the main purpose of the transfer of such assets, directly or indirectly to the assessee, was the reduction of a liability to income-tax (by claiming depreciation with reference to an enhanced cost), the actual c .....

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t:- i) The assets which are acquired by the assessee were used by any other person before the date of acquisition; ii) The Income-tax officer arrives at objective satisfaction that such assets were transferred with the main purpose of reducing tax liability by claiming depreciation with reference to enchanced cost. iii) Then the Income- tax officer is empowered to determine the actual cost having regard to all the circumstances of the case. 11 So from a perusal of the aforesaid provision, we fin .....

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on 3 to section 43(1). 12 Here, in this case, we firstly notice that the AO s observation that neither in the audit report or in the papers filed alongwith the return the acquisition was not mentioned, is not correct. We find that in the Director s report, it has reported that the assessee had acquired business of Deltron Limited as a going concern (paper book page 2). Similarly, we find that in schedule T of balance sheet being notes on accounts as Note 10, assessee company has disclosed that i .....

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ources to run the business as a profitable unit now and in future as it needs to continuously invest heavily in R & D and in developing process capabilities to keep pace with the advancing technologies, ….. 1. That the entire electronics business of Deltron Ltd. is agreed to be taken over by CDIL at a net consideration as described in Annexure I to this agreement mentioned therein with effect from 30th September, 2004. 2. ……….. 3. That in view of the transfer of t .....

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r to the take over date, shall be taken over by CDIL. ………… 8. ……….. a) the transfer of all the plant & machinery and all the material as appearing in the books of Deltron Ltd. as on 30th September 2004 without payment of excise duty. 14 A perusal of the above agreement makes it abundantly clear that the purport of the transfer of electronic business from the public limited company namely M/s. Deltron Ltd. to the assessee was on account of lack .....

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mon office is a relevant consideration but the same is not of conclusive nature. The prime requirement under Explanation to section 43(1) of the Act is that the transfer of a going concern has been effected to defraud the revenue and such defraud had been attempted by claiming depreciation at an enhanced cost. We have already stated above that here was a case of transfer by a public limited company and the purpose stated in the agreement is not a matter of dispute. The Assessing Officer in the o .....

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wever stated that such assets were appearing in the balance sheet prepared under the Companies Act as on 31.3.2004 at ₹ 4,71,20,059/- and if the deduction under section 35(1)(iv)/35(2) is ignored, WDV of such assets as on 31.3.2004 would stand at ₹ 2,16,06,346/-. The cumulative position which emerges is as under: Particulars WDV as per Companies Act as on 31.3.2004 WDV as on 31.3.2004 (under IT Act without taking into consideration 100% dep. As (R&D) Value at which taken over by .....

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71,20,059 2,16,06,346 1,79,16,664 1,76,84,338 15 From the aforesaid tabulation, we find force in the contention of the learned AR that it is not a case where building as held by the Assessing Officer of ₹ 7,098/- were sold at ₹ 66,00,000/-. On the contrary, it is a case where building having book value of ₹ 74,25,264/- was transferred to the assessee company at ₹ 66,00,000/- and thus, likewise, it is not a case where plant and machinery of ₹ 59.94 lacs as noted by t .....

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s and plant and machinery used by them was unique and they were not ordinarily marketable commodities, so as to have any valuation of their market price. He further observed that both the companies knew that there was no market for the old plant and machinery except for the opinion that the assets of one company doing the same business were used by the other. It will be thus seen that the Assessing Officer has not found any specific defect vis-à-vis valuation adopted by the appellant on t .....

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cer and upheld by the CIT(A) is valuation of the assets adopted for the purpose of transfer. In such circumstances, we find force in the claim made before us that it is not a case of valuation having been adopted by a higher price more particularly when the transaction is between the closely held company and public limited company and price is paid to public limited company by the closely held company. It is also not a case where price as stated in the agreement has not been paid by the assessee .....

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R 26 wherein their Lordships had specifically held The valuation report is by a registered valuer Neither in the assessment order nor in the Tribunal s order is there any whisper that the valuation report by the registered valuer is incorrect in any manner whatsoever. Once there is a report by the registered valuer it is encumbent upon the authority to dislodge the same by bringing adequate material on record in the form of a departmental valuation report, because in the absence of the same a te .....

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was necessary for the authority who wanted to determine the actual cost (as required by Explanation 3 to section 43 of the Act) to place some evidence on record. It could not have substituted its opinion and adopted the book value or the written down value in the hands of the assesseecompany. As can be seen from explanation 3 to section 43(1) of the Act, the Income-tax Officer is required to determine the actual cost to the assessee having regard to all the circumstances of the case and if in h .....

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the case of Nirma Industries (P.) Ltd. 148 ITD 126 (Ahd) wherein it has been held as under: 3.4 We find that in the present case, the entire case of the A.O. is based on Explanation (3) to Section 43(1) as reproduced above. As per this explanation, we are of the considered opinion that the A.O. can determine the original cost of the assets for allowing depreciation to the assessee only if he is satisfied that the main purpose of transfer of such asset, directly or indirectly to the assessee, was .....

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tion on enhanced cost, there is no other main purpose for acquiring the asset in question. In the present case, the A.O. is only disputing the valuation of intangible asset i.e. the trademark acquired by the assessee from related parties without even making an allegation that such acquisition of assets was not having any main purpose except claiming extra depreciation. 3.7 In view of our above discussion, we find that the action of the A.O. is not justified for two reasons. The first reason is t .....

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rt of any other independent valuer, the A.O. has made his own exercise for valuation of the asset in question although it cannot be accepted that the A.O. is a technical expert for valuation of the asset in question. Moreover, the A.O. has adopted the royalty rate of past instead of expected royalty rate in future. Even from the past royalty rate, he has reduced 50% income on this basis that the goodwill was not transferred and sub-licensed by NCWL to NL and NCCL but he has forgotten that the in .....

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regard to the peculiar facts and circumstances in the case of the assessee company as highlighted above, such a factor alone cannot be made a basis to invoke Explanation 3 to section 43(1) of the Act. Explanation 3 to section 43(1) of the Act is not an absolute rule. The Assessing Officer is empowered to substitute the value. However, such a valuation cannot be substituted where there is no intent to reduce the tax liability. In the instant case, as stated above, the assets as held by M/s. Delt .....

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valuer s report which has not been found to be incorrect by any other technical valuation. Hence, we do not subscribe to the conclusion of the authorities below. 19 The Assessing Officer has referred to the judgment of the Kerala High Court in the case of CIT vs Poulose and Mathen (Pvt.) Ltd. 236 ITR 416. In the said case, the assessee was a partner in a partnership firm consisting of nine partners. The partnership firm was dissolved on February 25, 1985 and as per the books of accounts of the f .....

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f the said provision was that Assessing Officer had power to determine the actual cost if the reduction of liability to income tax by claiming depreciation. The Hon ble Court held that in such a case, substitution of actual cost by the Assessing Officer was correct as the partners of the firm had constituted themselves into a private limited company. All the shareholders of the company were the partners or therefore, nominees and the shares were held in the same proportionate as held by the part .....

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alue of the assets also shows that the claim is not arbitrary or unreasonable or irrational, particularly when supported by registered valuer s report furnished by the assessee. Likewise, is the case of Kungundi Industrial Works Pvt. Ltd. vs. CIT 57 ITR 540 wherein too, it was a case of conversion of firm into company and not a transfer by the public limited company to the private limited company. It was noticed that the shares allotted in the same proportionate to the shareholders as the shares .....

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ging to Guzdar Kajora Coal Mines Ltd. for a consideration of ₹ 6,00,000/-. In the said case, the ITO on directions of the Tribunal had carried out valuation which proved that vendor company was making good profits but no provision had been made for the goodwill of the company in the business, which was worked out to ₹ 2,56,960/-. In such circumstances, it was held that if circumstances exist showing that a fictitious price has been put on the asset or there is fraud or collusion betw .....

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he asset. Thus having regard to the above, in such circumstances, it was held that if circumstances exist for going behind the valuation as also the allocation given in the deed of conveyance, it was and is open to the income tax authorities to determine the valuation as well as the allocation between depreciable and non-depreciable assets. There is no dispute to the above conclusion of the Hon ble Apex Court. However, on the said facts as is the case of the assessee company, such an interferenc .....

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distinguishable on the facts of the case of the assessee and therefore, cannot be made a basis to draw the conclusion as has been drawn by the Assessing Officer and upheld by the CIT (A). 20 Having regard to the above, we hold that Assessing Officer was not justified in invoking Explanation 3 to section 43(1) of the Act on the facts and circumstances of the case of the appellant company and therefore, appellant is entitled to claim of depreciation on the actual cost as incurred by the appellant .....

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der. My observation on the issue are as under: i) On page 4 of the assessment order, a chart has been given by the Assessing Officer. Column 3 of the chart gives the cost of acquisition as shown by the assessee and column 4 of the chart shows the depreciation claimed by the assessee. As per the chart, except for depreciation on building, the assessee himself has claimed depreciation at half rate. ii) Second proviso to section 32 lays down as under. provided further that where an asset referred t .....

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ove proviso makes it clear that two primary condition for calculation of depreciation are - date of acquisition and date on which the asset is put to use for the purposes of business or profession . iii) During the proceedings before me, the learned AR was asked to give details of the additions made to fixed assets during the year under consideration. The relevant extracts of the chart given by the learned AR is reproduced are under: Addition on which depreciation is taken for full year Addition .....

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e as to when was the building occupied/ put to use by the assessee concern. In response thereto, one note was submitted, explaining thereby that when the electronics business of Deltron Ltd. ( DL in shrot) was transferred to assessee concern on 30.09.2004 all plant and machinery as well as all material was transferred on a going-concern basis and the business was carried on after the said date as though no change had taken place. It is pertinent to mention here that the note submitted by the ass .....

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are satisfied for claiming depreciation for more than 180 days. Moreover, as already pointed out, except for building, the assessee itself has claimed depreciation for half year. in view of the above, I find that the Assessing Officer was justified in allowing the depreciation at half rates and grounds of appeal 1,2,& 7 are, therefore, dismissed. 22 Having regard to the above finding, we do not find any merit in the claim of the appellant that depreciation is to be allowed for the entire ye .....

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entire year. 23 In light of the above, Ground No. 1 and 2 as raised by the appellant are rejected and ground No. 3 to 5 are allowed. 24 Ground No. 6 in ITA No. 134/Del/2009 is against the disallowance of 50% of boarding and lodging expenses in respect of foreign travelling. 25 The assessee has claimed the directors foreign travelling expenses of ₹ 20,33,758/-. During the assessment proceedings, the AO asked the assessee to the file the details of the same along with the bills and vouchers .....

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had disallowed a sum of ₹ 3,66,148/- being 50 % of expenses on boarding and lodging for which the assessee could not produce the bills and vouchers. He submitted that the boarding and lodging expenses have been incurred out of foreign exchange @ 500 USD per day. He submitted that the AO stated that assessee filed details but did not furnish details of boarding & lodging. He submitted that the details of foreign traveling expenses are filed which were also filed before the A.O./ CIT(A) .....

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