2024 (7) TMI 27

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....ormerly known as Doosan Machine Tools India Private Limited is a company incorporated on July 05, 2016 and is engaged in the business of trading in parts and spares used in machine tools and other business support service activities. 3. The assessee fled its return of income for year under consideration on 29/11/2017 declaring an income of Rs. 18,58,390/-. The case of the assessee was selected for scrutiny after issuing statutory notices. During the course of assessment proceedings, the AO made 4 additions mentioned as under:- 4. So far as the addition of Rs. 1,20,46,911/- i.e disallowance of depreciation on goodwill the AO took a view that assessee is not entitled for depreciation on goodwill because there was no valuation report on ....

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.... for examining afresh in the light of some additional evidences filed before us. It is pertinent to observe that assessee filed certain additional evidences, before the Bench under rule 29 of the ITAT vide letter dated 13/-05/2024. 11. So far as ground No.2 is concerned i.e. depreciation on goodwill, the contentions of the assessee are that the assessee has taken over the business of (DICEIPL) vide transfer agreement dated 29/07/2016. The assessee submitted that M/s DICEIPL was rendering such services which akin to the assessee's business hence in the interest of business the assessee has purchased the business of the DICEIPL for an amount of Rs. 11,93,57,990/-. The counsel for the assessee further pointed out that this purchase consider....

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.... 13. After considering the rival submissions, perusing the material on record and case law cited by the Bar, it is observed that the AO has basically gone by the presumption that the share holding pattern of the assessee company and of the seller company DICEIPL is same. It observed that this observation of the AO is factually incorrect as evident from the share holding pattern, submitted by assessee and the same is extracted herein below for the sake of reference: 14. Perusal of the above chart would show that both the parties are not related parties and hence the AO has erred in making adverse comments. 15. The next observation of the AO that there was no intangible asset transferred to the assessee by the seller company is also n....

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....ransaction cannot be doubted in the hands of purchaser. On this count also, we find force in the argument of Ld, A.R. that AO not established that the main purpose of transfer of such asset was reduction of liability to income tax by claiming extra depreciation on enhanced cost. In order to establish aforesaid fact, it has to be established that apart from claiming additional depreciation on enhanced cost, there is other main purpose for acquiring the asset i.e. goodwill in question. The AO in the instant case wrongly invoked the explanation 3 to section 43 of the Act. Our above decision is also supported by the order of the Tribunal relied by the Ld. A.R. in the case of ACTT v. Dorma India (P.) Ltd., Chennai in [IT Appeal Nos. 1664 to 1666....