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TMI Blog2011 (5) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... same is treated as capital in nature, depreciation is to be allowed at the rate of 60 per cent as against 25 per cent held by the Assessing Officer and upheld by the CIT(A). 3. Both the parties fairly agreed that the issue has to go back to the file of the Assessing Officer for fresh adjudication in the light of the decision of Special Bench of ITAT in the case of Amway India Enterprises v. Dy. CIT [2008] 111 ITD 112 (Delhi). In view of the above submission made by both the sides, we set aside the order of CIT(A) and restore the matter to the file of the Assessing Officer with a direction to decide the issue afresh in the light of the decision of the Special Bench of ITAT cited supra and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Ground No. 1 of assessee's appeal is accordingly treated as allowed for statistical purpose. 4. In ground No. 2, the assessee has challenged the order of CIT(A) in confirming the addition of non-compete fee of Rs. 16,00,000 paid to Foot Forward Communications Pvt. Limited. 5. Facts of the case, in brief, are that the Assessing Officer during the course of assessment proceedings not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer or CIT(A) for fresh adjudication. 7. After hearing both the sides, we find merit in the submission of the ld. Counsel for the assessee that the matter should go back to the file of Assessing Officer for fresh adjudication. Admittedly, the assessee has not claimed any expenditure on account of non-compete fee during the year since amortisation of miscellaneous expenditure of Rs. 1,87,15,371 claimed in the P&L account has been disallowed in the computation of total income. The Assessing Officer shall decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. Ground No. 2 of assessee's appeal is accordingly allowed for statistical purpose. 8. In ground Nos. 3 & 4, the assessee has challenged the order of CIT(A) in confirming the disallowance of Rs. 75,31,489 and Rs. 6,43,07,700 on the ground that the assessee had not deducted tax as required under section 40(a)(i) of the Act. 9. At the outset, the ld. Counsel for the assessee submitted that the amount of Rs. 75,31,489 has been paid towards legal and professional fees and editorial fees paid to residents of USA and UK. Similarly, the payment of Rs. 6,43,07,700 has been pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Grounds of appeal Nos. 3 & 4 are accordingly allowed for statistical purpose. 12. In grounds of appeal Nos. 5(a) and 5(b) the assessee has challenged the order of CIT(A) in confirming the addition of Rs. 64,60,337 made by the Assessing Officer as prior period expenses. 13. Facts of the case, in brief, are that the Assessing Officer during the course of assessment proceedings noted from the details furnished before him that the assessee has paid expenses pertaining to earlier year to the extent of Rs. 64,60,337 and also received income relating to earlier year to the extent of Rs. 9,35,780 and has debited the net amount of Rs. 55,24,557 in the P&L account as prior period expenses. According to the Assessing Officer, the legal position is that income pertaining to earlier years is taxable on receipt basis under section 41 of the Act but expenses pertaining to earlier year are not allowable as they are not pertaining to the year under consideration. He further noted that the assessee company has not filed any documentary proof in support of its clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year. Even before us also the assessee could not substantiate that the expenses have crystallised during the year under consideration. Therefore, the addition of Rs. 64,60,337 made by the Assessing Officer and sustained by the CIT(A) is justified. We do not find much force in the submission of the ld. Counsel for the assessee that the same should have been netted off and the balance only could have been disallowed as a deduction during the relevant previous year. In our opinion, the addition of prior period income of Rs. 9,35,780 is governed by provisions of section 41(1) whereas the allowability of prior period expenses of Rs. 64,60,337 is governed by the provisions of section 37(1) of the Act. Further, the Assessing Officer had also given a finding that the prior period expenses have not been incurred for earning the prior period income. Nothing has been brought on record to controvert the finding given by the Assessing Officer In this view of the matter we do not find any infirmity in the order of the ld. CIT(A) and uphold the same. The grounds raised by the assessee are accordingly dismissed. ITA No. 905/Mum/2008 (By the revenue for assessment year 2002-03) 17. Grounds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad debts written off amounting to Rs. 3,54,984. We find after going through the full details filed by the assessee, the Assessing Officer disallowed the claim of bad debts on the ground that the transactions pertain to the current year and the same was written off by the assessee in the same year itself. According to the Assessing Officer the bad debt claimed by the assessee has in fact not yet matured to claim it as bad and irrecoverable. We find the CIT(A) allowed the claim of bad debts on the ground that the assessee fulfilled the conditions of section 36(1)(vii) read with section 36(2) of the Act. We find this issue has now been decided in favour of the assessee by the decision of Hon'ble Supreme Court in the case of T.R.F. Ltd. v. CIT [2010] 323 ITR 397 wherein it has been held that after the amendment of section 36(1)(vii) of the Income-tax Act, 1961 with effect from 1-4-1989, in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. Since the assessee has written off the amount of bad debts in the books of account, therefore, in view of the decision cited above, we do not find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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