TaxTMI 
TaxTMI 
2021 (3) TMI 758
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....e during the course of assessment proceedings, for depreciation on goodwill arising on amalgamation of subsidiary with the appellant company b) In confirming non allowance of deduction on account of depreciation on goodwill arising on amalgamation of subsidiary with the company. c) In concluding that the ground raised by the appellant in respect of depreciation on Goodwill is not at all maintainable. d) In holding that the action of the Assessing Officer in not allowing fresh claim is as per the law since the appellant had not filed revise return of Income & accordingly assesse does not deserve any relief on the account. e) In concluding that there is no error or illegality in the Order of the AO which can be challenged in the appellate proceedings. f) In not directing the Assessing Officer to allow depreciation on Goodwill as claimed by the assesse. 2. In confirming the disallowance of Rs. 19,65,397/- on account of delay payments of Employee's Contribution." 3. The fact in brief is that return of income showing deemed income u/s. 115JB of Rs. 31,08,52,427/- was filed on 30th Nov, 2013. The case was subject to scrutiny assessment and notice u/s. 143(2) of th....
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....reciation on goodwill to the amount of Rs. 14.19 crores, the Assessing Officer has not considered its claim without any reason at the time of assessment proceedings. The ld. counsel also submitted that ld. CIT(A) has not adjudicated the claim of the assessee on merit. The ld. counsel has placed reliance on the decision of Hon'ble Jurisdictional High Court in the case of Principal CIT-4 vs. Zydus Wellness Ltd. (2017) 87 taxman.com 82 (Guj), CIT vs. Mitesh Impex (2014) 46 taxman.com 30 (Guj), UTI Bank Ltd. (T.A. No. 382 to 384 of 2016 and in the case of Pruthavi Brokers & Shareholders. 349 ITR 346 (Bombay High Court), Urmin Marketing (P.) Ltd. 122 taxmann.com ITAT, Ahmedabad. The ld. D.R. has placed reliance on the order of ld. CIT(A). 6. Heard both the sides and perused the material on record. During the course of assessment proceedings, the assessee has claimed depreciation on goodwill arised on amalgamation of Fame India Ltd. into Inox Leisure Ltd. The Assessing Officer has not made any reference or discussion to the impugned claim of depreciation on goodwill in spite of the fact that the assessee has made detailed submission during the course of assessment vide letter dated 20th....
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....ubsidiary of INOX on 6th January 2011 viz. on completion of open offer. 7) Subsequently in the financial year 2011-12, INOX acquired further 2,02,12,212 shares of FAME by way subscription to Right's Issue of FAME at cost of Rs. 88,93,37,328. 8) INOX also purchased 6,59,737 equity shares of FAME from open market during the financial year 2011-12, and then another 6,52,200 equity shares of FAME from open market in the financial year 2012-13 total cost Rs. 9,52,34,771. 9) In this manner, INOX acquired a total of 3,90,90,512 equity shares of FAME for a total cost of Rs. 183.48 crores 10) A summary of total Cost of investment in 3,90,90,512 equity shares of fame is enclosed as Annexure 1. 11) Subsequently under a composite Scheme of Amalgamation (Scheme) (Annexure 2) under Section 391 to 394 of the Companies Act, 1956, FAME, along with its subsidiaries (Fame Group), was amalgamated into INOX as per Hon'ble High Court of Gujarat Order dated 12 March 2013 read with Order dated 20 March 2013 (Annexure 3) and Bombay High Court Order dated 10 May 2013 (Annexure 4) with an appointed date being 1 April 2012 is with effect from lst April 2012. (copy of the orders alongwit....
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.... to Rs. 10/- 101,306,360 5 Excess of cost of acquired shares and Face value of shares issued to outside sharp holder over net assets received in amalgamation - (5) = (4-3) 323,103,102 6 Depreciation on Goodwill allowable under Income Tax Act. 25% 80,775,776 Reconciliation with the financials Total Goodwill as above 323,103,105 Less: Cost Of Fame shares, carried in the balance sheet 1,834,841,705 Credit 1,511,741,603 Reserves and Surplus of Fame India - taken under respective head of accounts 1,231,150,335 Less: Face value of shares issued to Inox Credit 280,591,268 Benefit Trust 344,315,700 Amalgamation reserve as per financial statements 36,275,568 On the basis of above working, it will be observed that there arises, on the basis of excess consideration, a Goodwill of Rs. 3,231.U3 Lacs on amalgamation of Fame and its subsidiaries with Inox on 1.04.2012. The treatment in books of accounts including the details of amalgamation scheme are as per Note 30 in notes to financial statements for the year ending 31st March 2013. The net surplus credited t....
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....n the capital field. In short, by crediting treasury shares fresh shares are not required to be issued but existing shares are transferred. However the effect remains the same that is in both the cases consideration received towards transfer of treasury shares or issue of fresh equity shares the proceeds are on account of capital account. Therefore, in fact, the above goodwill is required to be increased by the face value of the shares of Rs. 24,43,15,700 issued to IST. Sr. N 3 Particulars Rs Rs 1 Cost of investment in 3,90,90,512 equity shares of Fame India Ltd as per books of Inox. 1,834,344,705 2 a Face value of shares issued to the outside shareholders of erstwhile Fame India Ltd. pursuant to the scheme of amalgamation. 101,306,360 b Face value of sharps issued to Inox Benefit Trust for the benefit of Inox in terms of scheme of amalgamation. 244,315,700. Total - ( 2a+ 2b ) 345,622,060 3 Total (3) = ( 1+2 ) 2,180,466,765 4 Less; Net assets received from Fame Group on amalgamation (Details in Annexure 5 ) 1,013,047,963 5 Excess ....
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....our of assessee] A copy of the above decision is as per Annexure 16. Now the jurisdictional Gujarat High Court in the case of Zydus Wellness Ltd. has also decided similar issue. The Gujarat High Court has held as under: a) The issue of the tenability of a claim though not raised in the original return is examined by the courts in various decisions. The Gujarat High Court in case of Mitesh Impex referred to and relied on several decisions of the Supreme Court and High Courts including the decision of Bombay High Court in case of Pruthvi Brokers & Shareholders (P.) Ltd. and observed that if a claim though available in law is not made either inadvertently or on account of erroneous belief of complex legal position, such claim cannot be shut out for all times to come merely because it is raised for the first time before the appellate authority without resorting to revising the return before the AO b) With respect to the claim of depreciation, the decision of Supreme Court in case of Smifs Securities Ltd. is applicable. There is no material provided by the AO to hold that the claim of depreciation was fictitious. If the High Court read his entire expression in this respect, ....
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.... or on account of erroneous belief on complex legal position, such claim cannot be shut for all time to come merely because it is raised for the first time before the appellate authority without resorting to revising the return before the Assessing Officer. Similarly, the Hon'ble Gujarat High Court in the case of Pr. CIT vs. UTI Bank Ltd., T.A. Nos. 382 to 384 of 2016 dated 13-06-2016 after referring the decision of Mitesh Impex has recognized the power of the appellate commissioner to entertain a new claim for the first time though not made before the Assessing Officer and the intention of the revenue would be to tax real income. During the course of assessment proceedings, the assessee has given a complete detail along with supporting documents demonstrating that goodwill was arised on account of amalgamation of companies, however, the Assessing Officer has not made any discussion to the claim of the assessee. At the appellate stage, the ld. CIT(A) has held in a unwarranted manner that the claim of the assessee is not permitted under the existing law on the pretext that the issue raised requires investigation and verification. We consider that the decision of the ld. CIT(A) is un....