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TMI Blog2014 (9) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... pared in accordance with the provisions of Part-II and III of Schedule VI of the Companies Act, 1956 and as reduced by the adjustments as specified in the section - the AO is bound to make only such adjustments as has been specified in the said section to arrive at a MAT income – the order of the CIT(A) is upheld – Decided against revenue. Depreciation of goodwill disallowed – Held that:- As decided in assessee’s own case for the for the earlier assessment year, it has been held that the claim of depreciation holding that the assets said to have been put to use as the claim of depreciation allowed in earlier years and there are no different facts during the year under consideration, the depreciation on assets is directed to be allowed – following the decision in Commissioner of Income Tax, Kolkata Versus Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] - goodwill is an asset eligible for depreciation - the AO is directed to allow the claim of depreciation on goodwill – Decided in favour of assessee. Treatment of surplus on reorganization/demerger – Held that:- Following the decision in Commissioner of Income Tax. Central-I Versus M/s. Pruthvi Brokers & Shareholders P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld.CIT(A) erred in directing the Assessing Officer to verify the claim of the assessee in respect of telephone expenses of ₹ 97,630/- and allow such claim which is required to the survival of the assessee s business ignoring the fact that assessee had not conducted any business activity during the previous year. 4. On the facts and in the circumstances of the case and in law the Ld.CIT(A) erred in directing the Assessing Officer to verify the claim of the assessee s other expenses totalling to ₹ 26,74,830/- and allow such claim which is required for the survival of the assessee s business ignoring the fact that assessee had not conducted any business activity during the previous year. 5. On the facts and in the circumstances of the case and in law the Ld.CIT(A) erred in directing the Assessing Officer to make only specific adjustments in computing book profit u/s. 115JB ignoring the fact that the Assessing Officer had rightly made the adjustments but the assessee had wrong adjustment since it has not derived profit from sick industrial company and hence no deduction is allowable on this count. 3. Ground No. 1 to 4 relate to the deletion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied the matter before the Ld. CIT(A). The Ld. CIT(A) after considering the facts and the submissions observed that during the relevant year under consideration a scheme for revival was under active consideration for the revival of business of the company. The Ld. CIT(A) found merit in the contention of the assessee that the expenses were necessarily incurred for ensuring the survival and existence of the company and is therefore allowable under the provisions of Sec. 37(1) of the Act. 8. Regarding the claim of travelling expenses, the Ld. CIT(A) directed the AO to verify the claim made under the head travelling expenses and to allow such expenses as have been incurred by the employees/consultants for attending to various matters in connection with preserving and keeping the business alive so as to ensure its survival. 9. Regarding professional charges, the Ld. CIT(A) directed the AO to allow the claim of professional charges except those expenses in connection with disputes/cases pertaining to earlier years. The Ld. CIT(A) further directed that in respect of such expenses pertaining to disputes/cases of earlier years, the expenses shall be allowed only if the liability crysta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be carried out except those specifically required to in the said section. The Ld. CIT(A) directed the AO to strictly follow the provisions of Sec. 115JB in the light of the decision of Hon ble Supreme Court in the case of Apollo Tyres Ltd. VS CIT 255 ITR 273. 16. In our considered view while determining the income u/s. 115JB, the computation has to start from the book profit as shown in the P L account prepared in accordance with the provisions of Part-II and III of Schedule VI of the Companies Act, 1956 and as reduced by the adjustments as specified in the said section. The Hon ble Supreme Court in the case of Apollo Tyres Ltd. (supra) has held that the AO is bound to make only such adjustments as has been specified in the said section to arrive at a MAT income. Therefore, we do not find any error or infirmity in the findings of the Ld. CIT(A), we affirm the same. Ground No. 5 is accordingly dismissed. 16. In the result, the appeal filed by the Revenue is dismissed. ITA No. 2317/Mum/2010 Assessee s appeal 17. The assessee has raised 3 substantive grounds of appeal with sub grounds. Ground No. 1 relates to upholding the disallowance of conveyance expenses of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have carefully perused the orders of the lower authorities. We have also the benefit of the order of the Tribunal in assessee s own case for A.Y. 2004-05 and 2005-06 in ITA No. 6252 6253/M/2010 wherein the Tribunal has allowed the claim of depreciation holding that the assets said to have been put to use as the claim of depreciation allowed in earlier years and there are no different facts during the year under consideration, the depreciation on assets is directed to be allowed. 25. In so far as claim of depreciation on goodwill is concerned, this issue is no more res integra because of the decision of the Hon ble Supreme Court in the case of Smifs Securities (supra) wherein the Hon ble Supreme Court has held that goodwill is an asset eligible for depreciation. Respectfully following the decision of the Hon ble Supreme Court, we direct the AO to allow the claim of depreciation on goodwill. Ground No. 2 and its sub grounds are allowed. 26. Ground No. 3 reads as under: Treating of surplus on reorganization/demerger as per BIFR of ₹ 19,43,73,928/- as taxable income. 1. The Ld. CIT(A) erred in confirming the treatment of surplus on reorganization/demer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from total income by way of a letter filed during the course of the assessment proceedings. When questioned about the practicability of this waiver of loan, the assessee contended that the remission is a capital receipt since it is remission of loan liability. The AO did not accept this contention of the assessee. The AO was of the firm belief that provisions of Sec. 28(iv) along with the provisions of Sec. 41 squarely apply on the facts of the case. Considering the provisions of Sec. 28(iv) and Sec. 41(1) and the decision of the Hon ble Supreme Court in the case of Goetz (India) Ltd. (supra), the additional claim of deduction of ₹ 19,43,73,928/- was disallowed. The AO further disallowed the claim of the assessee that increase in value of land hive off is not chargeable to capital gain tax by virtue of the provisions of Sec. 47(via) of the Act. 30. The assessee carried the matter before the Ld. CIT(A). But Ld. CIT(A) at para 10.4 of his order observed that the additional claim for deduction had been made by means of a letter. The Ld. CIT(A) further observed that the assessment is made on the basis of the revised return filed. It is on the basis of the revised return that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht on record. We have also considered the decisions relied upon by both sides. At the very outset, the decision of the Hon ble Supreme Court in the case of Goetz (India) (supra) restricts the AO for considering any claim otherwise than by a revised return. The said bar is not applicable to appellate authorities. Our view is fortified by the decision of the Hon ble Jurisdictional High Court in the case of Pruthivi Brokers Share holders Pvt. Ltd. (supra) at para-23 of its order, the Hon ble Bombay High Court thus held as under: It is clear to us that the Supreme Court did not hold anything contrary to what was held in the previous judgments to the effect that even if a claim is not made before the AO, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim has not been negated by the Supreme Court in this judgement. In fact, the Supreme Court made it clear that the issue in the case was limited to the power of the assessing authority and that the judgement does not impinge on the power of the Tribunal u/s. 254. 34. Coming to the merit of the additional claim made by the assessee, is on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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