AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (3) TMI 1903
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....preciation on intangible assets amounting to Rs. 1,54,43,383. It is prayed that the A.O. may be directed to allow the claim of depreciation on intangible assets amounting to Rs. 1,54,43,383. Further, the Hon'ble CIT(A) also erred in not following the orders for A.Y. 2005-06, A.Y. 2006-07, A.Y. 2007-08 and A.Y. 2008-09 wherein the Hon'ble CIT(A) on same facts had allowed the claim of the assessee. Ground No.3 On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the action of the A.D. in disallowing the interest claim of 9% (24% - 15%) amounting to Rs. 1,60,22,465 in respect of the fully convertible debentures issued to M/s. Cox & King India Ltd. It is prayed that the A.D. may be directed to allow the claim of interest of Rs. 1,60,22,465. Ground No. 4: On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the action of the A.D. in disallowing proportionate disallowance u/s. 36(1)(iii) of the Act amounting to Rs. 93,35,011 in respect of the interest free loans advanced to various parties. It is prayed that the A.D. may be directed to delete the said disallowance. 2. ....
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....e mentioned Ground of appeal. Ground No.1 and Additional Ground No. 1 5. Since both these grounds of appeal are identical in nature, therefore we have decided to dispose of the same by the common order. Ld. AR appearing on behalf of the assessee submitted that the Ld. CIT(A) erred in confirming the action of the A.O. in disallowing the claim of depreciation on FSI amounting to Rs. 16,19,421 thereby restricting the claim of depreciation on FSI to 10% as against that claimed by the assessee at 25%. It was further submitted that the Ld. CIT(A) also erred in holding that only Rs. 68,16,264 being amount spent during the AY 2005-06 for acquiring rights of FSI is to be added to the block of asset. The Ld. AR also reiterated the same arguments as were raised before the Ld. CIT(A). Our attention was also drawn to the decision in assessee's own case in ITA No. 3189/Mum/2011 which is at page No. 76 to 118 of paper book filed by the assessee. The operative portion is reproduced below at para 18 of the case:- "Now, coming to the rate of depreciation, whether it has to be allowed @ 10% or 25%, we do not find any merits in the contention of the assessee that the additional FSI is a business ....
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.... intangible assets at Rs.B,67,71,053/-on account of WDV as on 31.03.2003 (AY: and the facts are same. Hence, the depreciation on WDV is therefore the disallowance of depreciation at Rs.8,67,71,053/- . 13.2 We have considered rival contentions and perused the record. We found that the CIT(A) in its earlier order for A.Y.2003-04 has deleted the disallowance of depreciation after having the following observation :- "10.4 I have carefully considered the assessment order and the submissions made by appellant during appellate proceedings. The depreciation on intangible assets of Rs.465, 27,78, 949/- at Rs.11,50,94,737/- was claimed by the appellant in respect of the running business which. was acquired "slump sale basis" There is no dispute about the computation of depreciation at RS.11,50,94,7371-. The claim of depreciation or assessment year under consideration is the first year of such a claim. The A. O. has also accepted that intangible assets were part of slump sale. The A. O. h t however, relied mainly on. three propositions for the purpose of denying the depreciation. Briefly stated, they are: (i) The appellant had not bifurcated the amount to different assets (ii) The app....
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....ion etc. had not taken place. This question was posed. to the appellant's AR. who has vide a separate note replied as under:- "Now, a question has arisen, whether in view of the 51h proviso to section 32 of the Income-tax Act, 1961 ("the Act') whether a part of the depreciation is to be apportioned and to the allowed to predecessor owner. In our considered opinion, we would like to state that the said proviso to section 32 is not applicable to the facts of the assessee case. The said provisions are applicable to the following cases only:- (1) Transfer of capital assets by a firm to a company as contemplated in section 47(xiii); (2) Transfer of capital assets by a sole proprietary concern to a company in terms of section 47(ivx); (3) Succession of business, referred to, in section 170; (4) Transfer of assets by a amalgamating company to the amalgamated company and; (5) Transfer of assets in a demerger by the demerged company to the resulting company. Firstly, it is submitted that it is not a case of succession. The assessee had purchased the said hotel in an open bid from the Government owned Corporation i.e. Hotel Corporation of India, and by purchasing, the asses....
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....not be attracted to the case of the appellant. 10.10 Taking into consideration, the facts that the A.O. had accepted that intangible assets were acquired by way of "slump sale" and for the reasons recorded in earlier paras, I hold that the depreciation on intangible assets' at Rs.46,27,78,949/- @ 25% claimed at Rs.11,50,94, 737/- is admissible as the same were used for the purpose of appellant's business. 10. 11 This ground of appeal is therefore allowed." 13.3 We found that allocation of cost of acquisition for each block of assets in a fair and reasonable manner as permitted by law had to be accepted. Further, the CIT(A) observed that even the Assessing Officer has not denied that the hotel business could not be carried out without the sale licenses and permits. The CIT(A) further stated that 5th proviso to Section 32 of the Act would not be attracted to the case of the assessee. We, therefore, do not find any reason to interfere in the order of CIT(A) in this regard. We have considered the aforementioned order in ITA No. 4783 & 5517/Mum/2011 in assessee's own case wherein we found similar ground raised in the aforementioned appeals and identical question involved ....
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....entures due to non availability of liquid funds with the appellant company. Thus there are twin reasons i.e. litigation in the matter as well as severe financial crunch faced by the Company. The debentures issued by the appellant to M/s. Cox & Kings India Ltd are not at all secured, for the appellant is paying interest @ 24% out of compulsion. Also, when the ARC's are charging interest @ 22% when their loans are fully secured, then the appellant is justified for paying interest on debentures @ 24% where no security is provided. It was further submitted that the AO has compared two transactions of the appellant with M/s. Cox & Kings Ltd i.e payment of interest on debentures and payment. of interest on loans. Both these transactions are independent to each other and dependent on various factors such as availability of funds, period of loan etc. It was further submitted that the payment of interest @ 24% on debentures has been fully disclosed and offered to tax by M/s.Cox& Kings India Ltd and there is no loss to the Revenue. Reliance was placed by him 01} the decision in the case of Indian Steel & Wire Products Ltd v. CIT (1968) 69 ITR 379, Calcutta Landing & Shipping Co. Ltd. v.C....
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....) where the assessee is a company, any director of the company, partner of the firm, or firm, association of persons or member of the association or family, or any Hindu un-divided family relative of such director, partner or member; (iii) any individual who has a substantial interest in the business or profession of the assessee, or any relative of such individual; (iv) a company, firm, association of persons or Hindu undivided family having a substantial interest in the business or profession of the assessee or any director, partner or member of such company, firm, association or family, or any relative of such director, partner or member; (v) a company, firm, association of persons or Hindu undivided family of which a director, partner or member, as the case may be, has a substantial interest in the business or profession of the assessee; or any director, partner or member of such company, firm, association or family or any relative of such director, partner or member; (vi) any person who carries on a business or profession,- (A) where the assessee being an individual, or any relative of such assessee, has a substantial interest in the business or profession of that pe....
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....e assessee is allowed. After analyzing the aforementioned order as well as the order passed by the Ld. CIT(A) and paper book filed by the assessee, we found that Ld. CIT(A) has confirmed disallowance of Rs. 1,60,22,465 u/s 40A(2) of the Act made by the AO on the account that Mr. Ajay Ajit Peter Kerker, Chairman of the assessee company was the Director of M/s Cox & Kind India Ltd during the relevant period. In this regard, the Ld. CIT(A) further relied upon the comments of the Auditors in the audit report that the interest claimed by the assessee company in respect of interest paid @ 24% is prejudicial to the interest of the company. On the appreciation of the facts on record, we have noticed that the Revenue has not placed on record any material or findings of the AO under the identical facts and circumstances that the rate of interest paid as claimed by the assessee is either excessive or unreasonable as laid out in section 40A(2)(b) of the Act, we therefore, respectfully follow the order of Coordinate bench of Hon'ble ITAT, Jaipur bench in ITA NO. 760/JP/2015 as mentioned above. Keeping in view the above facts and while considering the facts that the AO has not recorded any fin....