TaxTMI 
TaxTMI 
2014 (9) TMI 350
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessee's business ignoring the fact that assessee had not conducted any business activity during the previous year. 2. On the facts and in the circumstances of the case and in law the Ld.CIT(A) erred in directing Assessing Officer to verify the claim of professional charges of Rs. 9,93,354/- and allow only such expenses which had been crystallised during the year under consideration ignoring the fact that assessee had not conducted any business activity during the previous year. 3. 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 in respect of telephone expenses of Rs. 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 expens....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wed the claim of the assessee mainly on the ground that the assessee was not carrying on any business activity and hence the expenditure cannot be treated as revenue in nature. The AO also stated that the existence and survival of the company cannot be termed as "for the purpose of business" especially in the scenario of its being defunct. The AO disallowed travelling expenses at Rs. 2,29,731/-, professional charges at Rs. 9,92,354/-, conveyance expenses at Rs. 1,31,999/-, telephone expenses Rs. 97,362/- and other expenses at Rs. 26,74,830/-. 7. The assessee carried 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 expens....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... circumstances of the case, we do not find any reason to interfere with the findings of the Ld. CIT(A). We, therefore, affirm the order of the Ld. CIT(A). Ground No. 1 to 4 are accordingly dismissed. 14. Ground No. 5 relates to the directions of the Ld. CIT(A) to the AO to make only specific adjustments in computing book profit u/s. 115JB. 15. This issue has been discussed by the Ld. CIT(A) at para-11 on page 14 of his order wherein the Ld. CIT(A) accepted the contention of the assessee that for the determination of income u/s. 115JB, no adjustment 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xpenses, the assets of the assessee were ready to use. It is the say of the Ld. Counsel that considering the facts and surrounding circumstances, there was a passive use of assets and therefore the claim of depreciation deserves to be allowed. In so far as the depreciation of goodwill is concerned, the Ld. Counsel stated that this issue has been settled by the Hon'ble Supreme Court in the case of CIT Vs Smifs Securities Ltd 348 ITR 302. 23. The Ld. Departmental Representative strongly supported the findings of the Ld. CIT(A). 24. 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed that the assessee has credited the waiver of bank and financial institutions principal and interest of Rs. 17,34,01,111/- in the profit and loss account and in the computation of income reduced the same. The AO further observed that the interest amount to Rs. 8,97,01,648/- was disallowed under the provisions of Sec. 43B in the earlier years. 29. As regards component of principal amount of Rs. 8,36,99,463/-, the AO observed that this has been credited to the profit and loss account and also shown in the revised return of income but subsequently deducted 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Ld. CIT(A) have been duly considered and distinguished. The Ld. Counsel also relied upon the decision of the Tribunal Mumbai Bench in the case of Rama Pulp & Paper Ltd. in ITA No. 3573/M/ 2011, M/s. Prism Cement Ltd. Vs JCIT 101 ITD 103 (Mum), Bombay Gas Company Ltd. Vs ACIT 54 SOT 13 (Mum) and ITO Vs Aristo Realty Developers Ltd., in ITA No. 7052/M/08. 32. The Ld. Departmental Representative supported the findings of the lower authorities. 33. We have carefully perused the order of the lower authorities and the relevant material evidences brought 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 Su....