TaxTMI 
TaxTMI 
2020 (4) TMI 129
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....iation on Goodwill by considering the Goodwill as the net worth of the Seller, i.e. Rs. 6.38,707/- instead of Assets as per valuation report as reduced by the Liabilities i.e. Rs. 27,43,135/- 2 On the facts and circumstances of the case and in law the CIT(A) failed to appreciate that a) The Goodwill booked by the Assesse is the Net difference in Consideration paid on purchase of the Unit under Slump Sale, as reduced by the individual Assets other than Assets except Goodwill accounted for as per valuation Report b) The individual Value of assets is reduced as per valuation report and accordingly Depreciation is calculated on all assets on reduced value. c) The Individual assets value cannot match the Assets as in the hooks of ....
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....ards) Rules, 2006 and accordingly, difference between assets and liabilities of the proprietorship firm and consideration paid for acquisition of business has been treated as goodwill in books of accounts of the assessee. The assessee, further submitted that although, the net-worth of proprietorship firm is less than full value of consideration paid for acquisition of business, but the assessee has revalued certain assets, for which necessary valuation report has been obtained from registered valuer and as per said valuation report, the net worth of the undertaking acquired (M/s Rakesh Tainwala) as on 31/03/2012 is at Rs. 1,92,56,865/-. Since, the assessee has paid full value of consideration for acquisition of business at Rs. 2,20,00,000/-....
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....nt order, the assessee preferred an appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee has filed elaborate written submissions on the issue, which has been reproduced at para 5 on page 2 to 12 of Ld.CIT(A) order. The sum and substance of arguments of the assessee before the Ld.CIT(A) are that, it has accounted acquisition of business of erstwhile proprietorship firm, as per accounting standard AS-14 ,accounting for amalgamation notified under the Companies (Accounting Standards) Rule, 2006 and accordingly, determined net-worth of the proprietorship firm at 1,92, 56, 865/- and the difference between full value of consideration paid for acquisition of business and the networth of the undertaking acquired as on the 31/03/2012 has ....
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....were incorrect in taking the value of assets, as per the balance sheet of erstwhile proprietorship firm without appreciating the fact that certain assets and liabilities cannot be taken over by the assessee. In this regard, he relied upon by the decision of Hon'ble Delhi High Court, in the case of De Nora India Limited vs CIT (2015) 370 ITR 0391. 7. The ld. DR, on the other hand strongly supporting order of the Ld. AO, as well as the Ld.CIT(A) submitted that the assessee has adopted different net- worth for different purpose ,which is evident from the fact that for the purpose of goodwill, it has revalued its assets and liabilities, whereas for the purpose of payment of capital gain in the hands of proprietor of erstwhile firm, the net-wor....
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.... goodwill of the business. But, fact remains that whether, an assessee can follow different method of valuation or computation of net-worth for different purposes and such method has been prescribed by AS-14 or not has to be seen. Admittedly, AS-14, nowhere prescribed for different method of computation of net worth of undertaking acquired by way of slump sale for different purposes. In this case, the assessee although, followed AS-14 for accounting of acquisition of business, while arriving at goodwill, it has revalued its assets, which is different from value of assets, as per books of accounts of erstwhile proprietorship firm. However, when it comes to payment of capital gain on slump sale, the proprietor of erstwhile firm has taken net ....