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The Tax Publishers Bharti Teletech Ltd. Dy. CIT [ITA No. 753/Del./2007, dt. 29-4-2016] : 2016 TaxPub(DT) 2105 (Del-Trib) Disallowance of depreciation on goodwill and interest free funds advanced to subsidiaries. *Facts:* Assessee was in the business of selling telecom equipments, had claimed depreciation on goodwill which was disallowed by assessing officer. They had sufficient accumulated reserves which were advanced to its BPO/call center subsidiary Bharti Infotec. In line with the memorandum of association which contained advancing of monies as well. This was also objected and part of the interest paid was disallowed by the assessing officer. Commissioner (Appeals) upheld the views of the assessing officer. On further appeal. Both points were held in favour of the assessee that they were eligible to claim depreciation on goodwill following CIT v. Smifs Securities Ltd. - 348 ITR 302. No interest disallowance is warranted applying Hero Cycles Pvt. Ltd., 63 taxmann.com 308 (SC). Hero cycles (SC) quoted - '26. The expression "commercial expediency" is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency.

The Tax Publishers

Bharti Teletech Ltd. Dy. CIT [ITA No. 753/Del./2007, dt. 29-4-2016] : 2016 TaxPub(DT) 2105 (Del-Trib)

Disallowance of depreciation on goodwill and interest free funds advanced to subsidiaries.

Facts:

Assessee was in the business of selling telecom equipments, had claimed depreciation on goodwill which was disallowed by assessing officer. They had sufficient accumulated reserves which were advanced to its BPO/call center subsidiary Bharti Infotec. In line with the memorandum of association which contained advancing of monies as well. This was also objected and part of the interest paid was disallowed by the assessing officer. Commissioner (Appeals) upheld the views of the assessing officer. On further appeal.

Both points were held in favour of the assessee that they were eligible to claim depreciation on goodwill following CIT v. Smifs Securities Ltd. - 348 ITR 302. No interest disallowance is warranted applying Hero Cycles Pvt. Ltd., 63 taxmann.com 308 (SC).

Hero cycles (SC) quoted - '26. The expression "commercial expediency" is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency.