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TaxTMI 
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2026 (4) TMI 182
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....rounds of Appeal: 1) "The Ld. CIT(A) has erred in deleting the disallowance of Rs. 2,64,14,409/- on account of deprecation on goodwill without appreciating the facts of the case and reasons elaborated by the A.O. in the assessment order." 2) "The Ld. CIT(A) has ignored the intricacies of 6th proviso to section 32(1), section 49(1)(iii)(e), Explanation 7 to section 43(1) and/or Explanation 2(b) to section 43(6)(c) and section 55(2)(a)(ii) which established that Depreciation cannot be claimed on goodwill arising out of amalgamation under the existing provision of the Income-tax Act." 3) "The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal." 3. The brief facts of the case, as culled out from the assessment order and the impugned order of the CIT(A), are that the assessee is a limited liability partnership firm which filed its return of income for A.Y. 2016-17 on 16.10.2016 declaring total income of Rs. 1,42,588/-. The entity has undergone a series of restructuring events: Unicorn Packers Pvt. Ltd. was amalgamated with Urmin Marketing Pvt. Ltd. with appointed date 01.04.2014 pursuant to a scheme of amalgamation....
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....g Pvt. Ltd., depreciation on goodwill created on account of amalgamation had been disallowed for A.Y. 2015-16 by the Assessing Officer, and that the same position should continue in the hands of the successor. The Assessing Officer also invoked the provisions of the fifth/sixth proviso to section 32(1), section 49(1)(iii)(e), Explanation 7 to section 43(1), Explanation 2(b) to section 43(6)(c) and section 55(2)(a)(ii) to hold that no depreciation could be allowed on goodwill arising in a tax-neutral amalgamation on the footing that there was no cost or that the cost in the hands of the amalgamating company was nil. 4. In appeal, the assessee inter alia pointed out before the learned CIT(A) that the disallowance was made merely by following the earlier disallowance in A.Y. 2015-16, and that the very issue of allowability of depreciation on the same goodwill generated on account of amalgamation had been examined in detail by the co-ordinate Bench of this Tribunal in the case of Urmin Marketing Pvt. Ltd. (now known as Unicorn Packaging LLP) for A.Y. 2015-16 in ITA No.1806/Ahd/2019, wherein the Tribunal had allowed the claim of depreciation on goodwill. The assessee also brought to ....
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.... Court in Smifs Securities Ltd., categorically held that goodwill so arising in the scheme of amalgamation is an "acquired" intangible asset and that the assessee is eligible for depreciation on such goodwill. 5.1. It is evident that the goodwill in respect of which depreciation has been claimed by the present assessee LLP for A.Y. 2016-17 is the very same goodwill which arose on the amalgamation of Unicorn Packers Pvt. Ltd. with Urmin Marketing Pvt. Ltd. with appointed date 01.04.2014 and which has travelled, through subsequent amalgamation and conversion, into the books of Unicorn Packaging Pvt. Ltd. and thereafter into the books of the assessee LLP. There is no fresh goodwill or new transaction in the year under appeal; it is merely a continuation of the depreciation claim on the same block of intangible asset (goodwill) in the hands of the successor. The only difference is the change in the legal form and name of the entity through amalgamation and conversion to LLP, which has already been recognised in the earlier order of the Tribunal. We also find that the disallowance in the present year has been made by the Assessing Officer merely following his earlier stand in the cas....
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....5.2022 in terms of Section 148A(b) of the Act to which the assessee had submitted reply on 10.06.2022. Thereafter, the AO issued further letter on 28.07.2022 calling for further explanations before 01.08.2022. Thereafter, the order u/s 148A(d) of the Act was passed by the Assessing Officer on 17.08.2022. Thereafter, the fresh notice u/s 148 of the Act issued on 25.08.2022. 7.2. The Ld. AR explained that as per the decision of Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal (2024) 167 taxmann.com 70 (SC), the order u/s 148A(d) of the Act was required to be passed and notice u/s 148 of the Act under the new regime was required to be issued within the time limit surviving under the Income Tax Act read with TOLA. He explained that since the original notice u/s 148 of the Act was issued on 30.06.2021, the Assessing Officer had only 1 day surviving limit under the Income Tax Act read with TOLA. Therefore, new notice u/s 148 of the Act was required to be issued within the extended period of 7 days, from the date of response of the assessee to the notice u/s 148A(b) of the Act. The Ld. AR submitted that as the notice u/s 148 of the Act was issued in this case beyon....
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....ers were required to issue the reassessment notice under Section 148 of the new regime within the time limit surviving under the Income Tax Act read with TOLA and that all notices issued beyond the surviving period were time barred and liable to be set aside. This time-line was also demonstrated in para 112 of the order with an illustration. 8.3. In the present case, the original notice u/s 148 of the Act was issued on 30.06.2021 which was treated as deemed notice u/s 148A(b) of the Act. Since this notice was issued on 30.06.2021, the surviving time period available to the Assessing Officer to complete the further proceedings, including the issue of notice u/s 148 of the Act, was one day only, which was extended to seven days. Accordingly, the Assessing Officer was required to pass the order a u/s 148A(d) of the Act and also to issue notice u/s 148 of the Act in this case within a period of seven days from the date of receipt of reply of the assessee. As the assessee had filed its reply on 10.06.2022, the time limit available to the Assessing Officer to issue the notice u/s 148 of the Act was till 08.07.2022 only. Even if we take the time given by the AO for further explanation ....
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....gs Pvt.Ltd. has had ceased to exist when the notice u/s.143(2) was issued and even the assessment has been framed in the name of nonexisting company. Therefore, the decision of the Hon'ble Supreme Court was squarely applicable in this case. The Ld. DR has not brought any distinguishing fact or law to our knowledge. Therefore, we uphold the decision of the Ltd. CIT(A) in respect of the aforesaid legal ground also. 13. This appeal of the Revenue is, therefore, dismissed. ITA Nos.897/Ahd/2025 for AY 2018-19 14. In ITA No.897Ahd/2025, the Revenue has taken the following grounds of appeal: 1) "In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in deleting addition of the disallowance of Rs. 4,34,01,641/- to the extent of exempt income earned by the assessee without appreciating the fact of the case and the Explanation to section 14A r.w.r. 8D of the IT Act." 2) "The Revenue craves leave to add/alter/amend and/or substitute any or all of the grounds of appeal." 15. The Assessing Officer noted that the assessee had claimed exempt income to the tune of Rs. 11,28,06,751/- in its return of income. The AO also observed that the assessee h....
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....f the assessee namely, Urmin Products Pvt Ltd. (supra) relying upon the decision of the Hon'ble Jurisdictional Gujarat High Court in the case of PCIT vs. CIMS Hospital Pvt.Ltd. reported in (2021) 125 Taxmann.com 227 (Guj.) and in the case of PCIT vs. Gujarat Flurochemicals Ltd. reported in (2023) 155 Taxamann.com 135 (Guj.) held that the AO having not recorded dissatisfaction u/s 14A(2) of the Act before invoking Rule 8D of IT Rules, he could not have made any disallowance u/s 14A of the Act. We, therefore, do not find any infirmity in the order of the Ld. CIT(A) on this issue. This appeal of the Revenue is, accordingly, dismissed. ITA No.898/Ahd/2025: 19. In this appeal, the Revenue has taken the following grounds of appeal: 1) "The Ld. CIT(A) has erred in deleting the addition on account of disallowance of depreciation on goodwill of Rs. 27,80,82,942/- without appreciating the facts of the case and reasons elaborated by the A.O. in the assessment order." 2) "The Ld. CIT(A) has ignored the intricacies of 6th proviso to section 32(1), section 49(1)(iii)(e), Explanation 7 to section 43(1) and/or Explanation 2(b) to section 43(6)(c) and section 55(2)(a)(ii) wh....