https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=459096 https://www.taxtmi.com/caselaws?id=459096 Disallowance of depreciation on goodwill - allowability of amortization/depreciation of the goodwill emerged out of amalgamation of two entities with assessee - HELD THAT:- Goodwill falls in the category of Intangible Assets , but its advantages must be tangible and assessee has to establish on record that by virtue of Goodwill what are the financial and non-financial gains are accruing to him. In this case what we observed, pre-merger and post-merger is simply a consolidation of figures of entities involved and not a percentage growth in terms of sales, profitability, net worth and customer base etc. post-merger. In view of the above discussion and legal history analysed, we are of the considered view that order of Ld. CIT (A) is not sustainable in law and order of AO is restored as found to be based on sound legal logics. In the result Ground Nos. 1 2 of the Revenue is allowed. Disallowance of Expenses Attributable to Real Estate Project - We found that it s a settled legal position of law that Legal Professional Expenses and Marketing and Business Development Expenses are time related expenses and not related to any specific project. As far as Brokerage Expenses are concerned those were incurred only towards Dosti Ambrosia which has been completed during the year and revenue is also offered accordingly. For A.Y. 2014-15 also on the similar grounds claim of expenses was allowed by coordinate bench of ITAT, Mumbai [ 2022 (9) TMI 1641 - ITAT MUMBAI] - As revenue is failed to produce any evidence or argument which differentiates the facts of the of the assessee for current A.Y. vis- -vis A.Y. 2014-15, we respectfully follow the order of coordinate bench and dismiss the appeal of Revenue on this ground. As these are the revenue expenditure allowable u/s. 37 of the Act, further disallowance of the same and capitalising the same will tantamount to double addition, as on the one hand expenses claimed by the assessee is reduced on the other hand same are capitalised as work-in-progress will enhance the value of inventory and profits will be increased. Hence Ground No. 3 raised by the Revenue is dismissed. Provisions made for meeting expenses in future - Assessee s contention that since 49% of the total area is sold and a total consideration is offered to tax and a corresponding cost of construction of the total estimated cost has to be claimed following the Matching Concept . Regarding the balance 51% total estimated cost is carried to work-in-progress and will be claimed against the corresponding sales value - HELD THAT:- A lot of water has flown, since this matter reached to us and this issue has already been examined in depth in later years by the department itself. Now the only grievance of the revenue can be of deferment of profits, which also became irrelevant/ academic only on the given facts. Law of land laid down by Hon ble Apex Court on this issue is very clear that on the issue of deferment of results no reopening or other actions can be taken, if otherwise there is no loss to the revenue. We found force in the arguments of assessee on the pretext of double addition. As on the one hand revenue wants to disallow the provision and on the other hand they want to add the same to WIP of the assessee, it clearly tantamount to double addition. Considering the facts of the matter along with legal principles laid down by Hon ble High Courts and Apex Court, we found the order of Ld. CIT (A) as sustainable on above grounds and requires no interference from us. In the result Ground No. 4 raised by the Revenue is dismissed. Addition u/s. 14A - Suo moto addition made by assessee - HELD THAT:- Before making disallowance, the AO has not given any cogent reasons for rejecting the disallowance under section 14A made by the appellant itself and resorting to the provisions of section 14A (2) read with Rule 8D. A perusal of the impugned order reveals that the AO has not properly examined the suo-moto disallowance made by the assessee. Nor has the AO expressed any opinion on the correctness or otherwise of the appellant s claim in respect of aforesaid expenditure. Hon ble Apex Court in the case of M/s Maxopp Investments Limited [ 2018 (3) TMI 805 - SUPREME COURT] held that the AO needs to record satisfaction before invoking provisions of Section 14A reads with Rule 8D. As far as investments in partnership forms are concerned assessee was only a partner and there is no active involvement at the end of the Assessee. Hence, share of profit received by the Assessee which is exempt u/s 10(2A) cant trigger disallowance provisions of Section 14A. Decided against revenue. Case-Laws Income Tax Thu, 13 Apr 2023 00:00:00 +0530