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2013 (9) TMI 79 - ITAT MUMBAIDisallowance of expediture - Acquisition of brand name/trade mark "Libra" - Held that:- The said brand had been acquired by the assessee vide agreement dated June 1, 1998. A perusal of the agreement placed at page 15 of the paper book shows that the assessee had been allowed only exclusive licence to use the brand name. Thus, as per agreement the assessee had been allowed the use of brand name for a period of five years and was not the owner of the brand. However, subsequently on expiry of the five year period, the assessee sold the business along with brand name to a third party. Based on such action, it has been concluded by authorities below that the assessee was actually owner of the brand - no useful purpose will be served in disturbing the claim made by the assessee, which is at a rate lower than the rate of depreciation allowable to the assessee even if the assessee is treated as owner of the asset. The orders of the Commissioner of Income-tax (Appeals) disallowing the claim cannot therefore be upheld - Decided in favour of assessee. Disllowance of loss - Foreign exchange fluctuation - Held that:- The dispute is regarding allowability of loss on account of foreign exchange fluctuation in respect of foreign currency loan taken by the assessee. The assessee had been restating foreign exchange loan liability on the balance-sheet date which resulted into loss which has been claimed as deduction. The loss/gain on account of foreign exchange fluctuation on restatement of the loan liability on the balance-sheet date is required to be taken into account in computation of income if the loan is on revenue account or is a working capital loan. Loss is allowable as deduction under section 37(1) as held by the hon'ble Supreme Court in the case of Woodward Governor India P. Ltd. [2009 (4) TMI 4 - SUPREME COURT]. The loan in this case had been taken as working capital loan as is clear from the loan agreement wherein the purpose of the loan is clearly mentioned to use it as a working capital to finance the activities of the company. As held by the hon'ble Supreme Court in the case of Sutlej Cotton Mills Ltd. v. CIT [1978 (9) TMI 1 - SUPREME Court], foreign currency fluctuation loss is allowable as deduction if the foreign currency is held on revenue account or as trading asset or as part of circulating capital employed in the business. As regards the year of allowability, the claim has to be allowed on the basis of restatement of the liability on the balance-sheet date as held by the hon'ble Supreme Court in the case of Woodward Governor India P. Ltd. Thus the claim of the assessee is allowable. In case there is gain in a year and the assessee has not offered it to tax, the Revenue is free to take action under law. In these years, admittedly there is loss which is allowable as deduction - Decided in favour of assessee. Sale of personal weighing scale business - Slump sale - Held that:- the entire personal scale business had been sold as a going concern for a lump sum amount of Rs.30 lakhs and no part of the consideration was attributable to any particular asset or liability. Thus it was a case of a slump sale as defined in section 2(42C) and the profit arising from such slump sale is chargeable to tax as capital gain under the provisions of section 50B which is applicable from the assessment year 2000-01. Therefore, in our view, the capital gain has to be computed in accordance with the provisions of section 50B which is applicable in the case of the assessee. - matter restored before AO for re-computation - Decided in favor of revenue.
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