AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 42
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.... raised by the Revenue is against the order of ld. CIT (A) allowing the depreciation of Rs.7,89,99,274/- u/s 32(1) of the Act, which has been disallowed by the ld. AO on the basis of 5th Proviso to Section 32 of the Act as amalgamating company was not claiming depreciation on goodwill before amalgamation. 2.1. The facts in brief are that the assessee filed the return of income on 20.11.2016, declaring total income of Rs.3,16,80,608/-. The case of the assessee was selected for scrutiny and statutory notices along with questionnaire were issued and served upon the assessee. During the course of assessment proceedings, the AO observed that the assessee has claimed depreciation on goodwill and accordingly, the assessee was given show cause n....
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.... "Ground 2 is regarding disallowance of depreciation on an intangible asset i.e. goodwill which has come into existence after amalgamation with M/S PearltreeTradelinkPvt. Ltd.,(amalgamating company) with the company u/s 391 to 394 of the Companies Act,1956 w.e.f. 31.03.2014. It has been noted that this asset "goodwill" was not in existence prior to amalgamation in the books of amalgamating company, it has been created due to amalgamation itself being the difference between the amount of payment to the shareholders of the amalgamating company and value of the assets transferred from amalgamating company to the amalgamated company. In this circumstances 5th Proviso to Section 32(1) of the Income Tax Act, 1961 will not be applicable. Further,....
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....power Solution Pvt Ltd, which is a 100% holding company of M/s PearltreeTradelink Pvt Ltd. The AO has concluded the amount of Rs. of Rs. 150,00,00,000/ was a bogus entry of unsecured loan to manipulate the accounts of the assessee to raise a non-existant goodwill and evade taxation in the scheme of merger/amalgamation. Now the appellant has shown that this additions/disallowances made by the AO in Order u/s 144 in the case of PearltreeTradelinkPvt. Ltd. has been deleted by the CIT(A) vide Order dated 29/03/2019 and on further appeal by the Revenue before the Hon'ble ITAT Kolkata Bench in ITA No. 2392/Kol/2019, the Order of the CIT(A) deleting the additions/disallowances has been upheld vide Order dated 01/09/2022. Thus, I am not in agreemen....
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....fter hearing the rival contentions and perusing the materials available on record, we find that in this case the ld. AO has disallowed the depreciation on goodwill crated out of amalgamation approved by the Hon'ble High Court vide order dated 08.05.2014, with effect from 01.04.2014. We also note that the court rejected the objections raised by the Central government with regard to valuation of shares of transferor company and approved the valuation of shares. Thus, the goodwill was accounted for by the assessee in the books of accounts. The ld. AO disallowed the depreciation on goodwill by relying on the decision of United Breweries Limited, Bangalore ITA No. 722, 801, 1065/Bang/2014 and Mumbai Bench in the case of Toyo Engineering Indi....
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....it Rules. 3.1. After hearing the rival contentions and perusing the materials available on record, we find that during the year the assessee has not earned any income by way of exempt income. Therefore, being a settled position of law that no disallowance is called for when there is no exempt income earned during the year. Accordingly we set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition. 4. At the time of hearing, the assessee raised additional ground which is extracted below: "3. For that the ld. CIT (A) should have also held that the opening Written-down value of asset brought forward from earlier year cannot be distributed and as such depreciation on goodwill was also allowable on that score."....