2010 (7) TMI 1202 - AT - Income Tax

Summary

Issues involved:
1. Disallowance of liability for damaged goods.
2. Disallowance of depreciation on non-compete territory rights.

Issue 1: Disallowance of liability for damaged goods

The appeal was filed by the revenue against the order of the Learned Commissioner of Income Tax(Appeals)-XI, Ahmedabad dated 19-3-2008. The ground of appeal was related to the addition made on account of disallowance of liability for damaged goods amounting to Rs. 1,64,57,674/-. The Appellate Tribunal noted that the Learned Commissioner of Income Tax(Appeals) had deleted the disallowance following the orders of the Tribunal in the assessee's own case for Assessment Year 2005-06. The Tribunal found that the disallowance made by the Assessing Officer was not justified as the actual expenses were furnished by the assessee, and only a specific amount should have been disallowed. The Tribunal directed the Assessing Officer to re-examine the issue in light of the previous decisions and allowed the appeal for statistical purposes.

Issue 2: Disallowance of depreciation on non-compete territory rights

The assessee claimed depreciation of Rs. 64,59,961/- on non-compete territory rights at the rate of 25%. The Assessing Officer disallowed the claim as necessary details were not furnished by the assessee to verify the correctness of the claim. The assessment was re-opened under section 147 of the Income Tax Act, 1961. The assessee had filed a Special Leave Application before the Gujarat High Court challenging the notice under section 148 for the Assessment Year 2002-03. The High Court granted interim relief to the assessee. The Learned Commissioner of Income Tax (Appeals) observed that the matter was sub-judice with the High Court and directed the Assessing Officer to decide the issue in light of the final decision of the High Court. The Tribunal upheld the decision of the Commissioner as the issue was similar to previous years and no distinguishing features were pointed out by the Revenue. The appeal of the Revenue was treated as partly allowed for statistical purposes.