2014 (2) TMI 1392 - AT - Income Tax

Disallowance of provision for damaged goods - CIT-A allowed the claim - HELD THAT - Since Ld. CIT(A) has followed the earlier order of the Tribunal for A.Y. 2005-06 2010 (7) TMI 1202 - ITAT AHMEDABAD in assessee s own case we are not inclined to interfere with the order of Ld. CIT(A) and the same is hereby upheld. This ground of revenue s appeal is dismissed. Disallowance of depreciation on intangible assets in the form of non-compete territory rights - HELD THAT - CIT-A following the Tribunal decision A.O. is directed to decide the issue in the light of the final decision of the Hon ble High Court for A.Y. 2002-03 2012 (7) TMI 958 - GUJARAT HIGH COURT This ground of appeal is allowed subject to the final decision of Hon ble Gujarat High Court 2012 (7) TMI 958 - GUJARAT HIGH COURT Since Ld. CIT(A) has decided this ground following the order of the Tribunal for A.Y. 2005-06 in assessee s own case we are not inclined to interfere with the order of Ld. CIT(A) and the same is hereby upheld. This ground of revenue s appeal is also dismissed.

Summary

Issues:
1. Disallowance of provision for damaged goods
2. Disallowance of depreciation on intangible assets

Disallowance of Provision for Damaged Goods:
The appeal dealt with the disallowance of a provision for damaged goods amounting to Rs. 8,05,08,113. The CIT(A) upheld the appellant's contentions based on precedents in the appellant's own case for earlier assessment years. The Tribunal directed the Assessing Officer to verify the actual expenditure incurred in the subsequent year and make adjustments accordingly. Since the CIT(A) followed the earlier order of the Tribunal, the revenue's appeal on this ground was dismissed.

Disallowance of Depreciation on Intangible Assets:
The second issue involved the disallowance of depreciation amounting to Rs. 36,33,728 on intangible assets in the form of non-compete territory rights. The CIT(A) relied on a Tribunal decision for A.Y. 2005-06 in the appellant's own case to dismiss the revenue's appeal. The CIT(A) directed the Assessing Officer to decide the issue in light of the final decision of the Hon'ble High Court for A.Y. 2002-03. Following the Tribunal's decision, the appeal on this ground was also dismissed. As a result, the revenue's appeal was ultimately dismissed by the Tribunal.

This judgment highlights the importance of precedents in tax matters and the significance of following earlier decisions in similar cases. The Tribunal emphasized the need for verifying actual expenditures and considering previous rulings to make informed decisions on disallowances and depreciations.