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TMI Blog2015 (4) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... of the patients who were patients of the previous owners. When the good will paid was for ensuring retention and continued business in the hospital, it was for acquiring a business and commercial rights and it was comparable with trade mark, franchise, copyright, etc. referred to in the first part of clause (ii) of section 32(1) and so much so, goodwill was covered by the above provision of the Act entitling the assessee for depreciation - decided in favour of assessee. Disallowance of building repair expenses - there was no check to identify whether the expenditure was capital or revenue in nature made a disallowance of 2,50,000 out of building repairs claimed by the assessee as per AO - CIT(Appeals) allowed the deduction - Held that:- CIT (Appeals) allowed the deduction to the assessee by observing that looking at the nature of expenses and condition of building which was rented one, the expenditure appears to be regularly incurred on monthly basis as per requirement to maintain the building, and therefore, it was revenue in nature. The Departmental representative merely relied on the order of the Assessing Officer. No material could be brought on record to show that any part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opy of the order of this Tribunal in the case of the assessee itself for the assessment year 2006-07 passed in I. T. A. No. 2062/Ahd/2009, order dated June 17, 2011 and submitted that the Tribunal confirmed the order of the Commissioner of Income-tax (Appeals) allowing the claim of depreciation on goodwill to the assessee and dismissed the appeal of the Revenue. Therefore, following the same, the ground of appeal of the Revenue in the present year of appeal should also be dismissed. 6. On the other hand, the Departmental representative supported the order of the Assessing Officer. 7. We have heard the rival submissions and perused the orders of the lower authorities and materials available on record. The undisputed facts of the case are that the Assessing Officer disallowed the claim of depreciation of ₹ 6,25,000 on goodwill to the assessee by following his order for the earlier assessment year 2006-07. On appeal, the Commissioner of Income- tax (Appeals) vacated the disallowance by following his order for the assessment year 2006-07. We find that the Tribunal in the case of the assessee in the assessment year 2006-07 confirmed the order of the Commissioner of Income-tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made a claim for depreciation on the amount of goodwill paid to the partners, whereas in the assessee's case an amount of ₹ 25,00,000 has been paid for the purchase consideration of business and commercial rights for acquiring the running business of Sahitya Mudranalaya which was in existence for the past several years and the assessee had acquired running business of the said firm which was successfully being conducted for several years. In support of his contention learned counsel for the assessee relied upon the decision of the Income-tax Appellate Tribunal, Mumbai Bench, in the case of Skyline Caterers P. Ltd. v. ITO [2008] 306 ITR (AT) 369 (Mum) whereby the Tribunal held that acquisition of business with its business and commercial rights constituted an intangible asset entitled to depreciation under section 32 of the Income-tax Act and while deciding the issue, the Tribunal had elaborately discussed the case of Bharatbhai J. Vyas. Learned counsel for the assessee further furnished a copy of audited profit and loss account of the company for the year ended March 31, 2004 to March 31, 2006 and submitted that after taking over the firm of M/s. Sahitya Mudranalaya, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ran Pillai v. CIT [2011] 332 ITR 531 (Ker) and submitted that since the decision of the hon'ble High Court is directly applicable to the matter in issue, therefore, the Departmental appeal has no merit and the same may be dismissed. 6. We have considered the rival submissions and gone through the above decision and we find that the issue is finally decided in favour of the assessee by the hon'ble Kerala High Court. The hon'ble Kerala High Court in the case of B. Raveendran Pillai v. CIT [2011] 332 ITR 531 (Ker) held as under (headnote) : 'Held, allowing the appeal, that in fact, without resorting to the residuary entry the assessee was entitled to claim depreciation on the name, trade mark and logo under the specific head provided under section 32(1)(ii) which covered trade mark and franchise. Admittedly the hospital was run in the same building, in the same town, in the same name for several years prior to purchase by the assessee. By transferring the rights to use the name of the hospital itself, the previous owner had transferred the goodwill to the assessee and the benefit derived by the assessee was retention of continued trust of the patients who were pati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was mentioned as goodwill and nothing else.' 7. Considering the facts in the light of the above decisions, we do not find any merit in the appeal of the Revenue. The same is accordingly dismissed." In absence of any distinguishable features pointed out by the Departmental representative, respectfully following the above quoted decision of the Tribunal for the assessment year 2006-07 we confirm the order of the Commissioner of Income-tax (Appeals) and dismiss the ground of appeal of the Revenue. 8. Ground No. 2 of the appeal is directed against the order of the Commissioner of Income-tax (Appeals) allowing ₹ 2,50,000 on account of building repair expenses. 9. The brief facts of the case are that during the year under consideration, the Assessing Officer observed that there was a substantial increase in expenses under the head "Building repairs". The Assessing Officer further observed that the assessee explained that the premises are rented one and is part of more than 100 years old textile mill. The walls, roofs, flooring are in a depleted condition and the printing machinery and raw materials being heavy paper rolls, damages the structures, walls and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of ₹ 6,58,652 made under section 14A of the Act. 13. The brief facts of the case are that the Assessing Officer observed that the assessee has received exempt dividend income of ₹ 9,94,877. According to the Assessing Officer, as per the provision of section 14A, no deduction should be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income. He observed that the assessee has incurred interest expenses of ₹ 8,63,818 on borrowed funds. Further, there are administrative expenses to deploy the funds and earn exempt dividend income. Therefore, he computed the disallowance as per rule 8D of the Act and made disallowance on account of administrative expenses of ₹ 3,43,283 and out of interest expenses of ₹ 3,15,370 and thereby made a total disallowance of ₹ 6,58,652 under section 14A of the Act. 14. On appeal, the Commissioner of Income-tax (Appeals) observed that as on March 31, 2007, the assessee had share capital of ₹ 50 lakhs and reserves and surplus of ₹ 13,33,35,273 totalling to ₹ 13,83,85,273 and investment of ₹ 8,26,00,390 was made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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