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2013 (11) TMI 273 - AT - Income TaxExpenditure on issuance of shares - revenue in nature of not - Held that - . By no standard this expenditure can be considered as revenue. Since the Assessing Officer himself has allowed deduction u/s 35DD at the rate of 1/5th of the total expenses, we hold that no further relief can be allowed - Decided against the assessee. Depreciation on Goodwill - claim through revised return - AO refused to admit such claim for deductions claimed through revised computation in view of the judgment of the Hon ble Supreme Court in the case of Goetze (India) Ltd. v. CIT 2006 (3) TMI 75 - SUPREME Court . - Held that - restriction has been placed on the Assessing Officer for not entertaining any claim for deduction otherwise than by filing a revised return and not on the appellate authorities. We, therefore, set aside the impugned order and remit the matter to the file of the Assessing Officer for deciding the question of deductibility or otherwise in respect of such fresh claims as per law after allowing a reasonable opportunity of being heard to the assessee. - matter remanded back. Claim for deduction of security deposit with government, written off - Major amount is against deposits given to Electricity Board; to Collector of Custom against import clearance; to Indian Oil Corporation against gas cylinders; and to Posts & Telegraphs Department against telephone connections - Except for some minor amounts included in this sum, the larger chunk represents deposits given to the Government Departments / PSUs Held that - No rationale in claiming deduction for security deposits given during the currency of business to various Government Departments. When the business is going on and the electricity and other facilities as provided against such security deposits are being used, how these Departments can refund the security deposit given at the time of installation of meters or availing the facility. The assessee has written off the said amount by claiming it to be irrecoverable, which is not acceptable contention. One cannot accept that the Government has failed to refund any sum legitimately becoming due to its citizens. When the amount has not become due for refund because of the continuation of business, how the assessee becomes entitled to its refund, is beyond comprehension Decided against the Assessee. Claim for custom duty draw back not recoverable Held that - The assessee wrote off this sum due from Government being duty draw back. No material has been placed on record to show as to how the amount of duty draw back became irrecoverable from Government Decided against the Assessee. Disallowance of amount in respect of tax deducted at source for which TDS certificates were not received from parties - Claim of the assessee is that certain parties made payments to the assessee after deduction of tax at source, but failed to issue TDS certificates and hence the amount of TDS certificates not recovered should be allowed as deduction as business loss Held that - except for internal documents, there is no material on record to indicate as to why so many parties refused to issue TDS certificates to the assessee after duly deducting the same. No reason worth the name has been stated as to why the assessee did not take any action as prescribed under the law against such erring parties Decided against the Assessee.
Issues:
1. Disallowance of share issue expenses deduction. 2. Disallowance of postal expenses deduction. 3. Denial of depreciation on goodwill and other expenses. 4. Disallowance of security deposits not recoverable. 5. Disallowance of custom duty draw back not recoverable. 6. Disallowance of tax deducted at source for which TDS certificates were not received. Analysis: Issue 1: Disallowance of Share Issue Expenses Deduction The assessee claimed deduction for expenses incurred on share issue, which the Assessing Officer disallowed partly. The ITAT upheld the decision, stating that the expenditure on share issuance cannot be considered as revenue. As the AO allowed deduction under a specific section, no further relief was granted. Issue 2: Disallowance of Postal Expenses Deduction Similar to the first ground, the disallowance of postal expenses related to share issuance was confirmed. The ITAT upheld this decision, following the view taken in the first ground. Issue 3: Denial of Depreciation on Goodwill and Other Expenses The assessee claimed depreciation on goodwill and other expenses during the assessment proceedings, which was not entertained by the AO citing a Supreme Court judgment. However, the ITAT clarified that the restriction on entertaining claims without a revised return applies to the AO and not the appellate authorities. The matter was remitted back to the AO for a decision on the fresh claims. Issue 4: Disallowance of Security Deposits Not Recoverable The disallowance of security deposits not recoverable was upheld by the ITAT. The assessee's claim for deduction on written-off deposits to various government departments was rejected, as the business was ongoing, and the rationale for considering the deposits irrecoverable was not convincing. Issue 5: Disallowance of Custom Duty Draw Back Not Recoverable Similarly, the disallowance of custom duty draw back not recoverable was confirmed. The ITAT approved the decision, stating that no material was provided to show the irrecoverability of the duty draw back from the government. Issue 6: Disallowance of Tax Deducted at Source for Which TDS Certificates Were Not Received The ITAT upheld the disallowance of tax deducted at source for which TDS certificates were not received. The claim for deduction on unrecovered TDS certificates was rejected, as the tax payment is considered an application of income and not a deductible expense. The authorities were justified in not allowing the deduction for this amount. In conclusion, the ITAT partly allowed the appeals for statistical purposes, remitting certain issues back to the Assessing Officer for further consideration based on the legal principles discussed in the judgment.
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