TaxTMI 
TaxTMI 
2026 (7) TMI 1709
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing workload of assessment of reopening of cases as well as not putting up by the concerned official. The explanation does not smack of mala fides, therefore, delay of 42 days in filing appeal is condoned. 3. Ld. Departmental Representative for appellant/revenue submitted that Ld. CIT(A) erred in giving finding that goodwill is not an international transaction is devoid of merits and facts and has not considered the Section 92B completely as the recording of goodwill in the books of accounts by the assessee as a result of demerger of assets and liabilities of its AE (TVIL-IBO) has a clear bearing on the assets of the assessee and thus is clearly an international transaction as per Section 92B of the Income Tax Act, 1961. 4. Ld. Authorized Representative for respondent/assessee submitted that the penalty was for non-disclosure of goodwill was set aside by Ld. CIT(A) for cogent reasons. 5. From examination of record in light of aforesaid rival contention, it is crystal clear that Ld. CIT(A) in para No. 4.1 to 4.8 reproduced as under: "4.1 These grounds of appeal have been taken up by the appellant against levy of penalty of Rs. 3,80,13,460/-u/s 271AA of the Act. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der the expression 'any other business or commercial right of a similar nature' as intangible asset in the case of Smifs Security Ltd vs CIT. It was noted by the AO that as per explanation (e) of section 92B, the demerger and creation of the entity-TPV India was a business reorganization and hence, falls under the purview of international transaction. 4.2 The appellant submitted during the appellate proceedings that the appellant company was established in India on June 24, 2013 as a subsidiary of M/s Top Victory Investments Limited, Hong Kong (hereinafter referred to as "TVIL HK" or the "TPV Group"). Pursuant to the order issued by Hon'ble High Court of Punjab and Haryana dated March 09, 2015, the operations of TVIL-IBO (Indian Branch Office of "TVII. IIK") were demerged with the Appellant with effect from April 01, 2014. Submission of the appellant is summarized as under:- (i) As per the scheme of arrangement between the two entities, the assets & liabilities of TVIL-IBO were transferred to the appellant with effect from April 01, 2014 at the written down value (WDV) of assets and liabilities appearing in the books of TVIL-IBO as on date. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ual matrix of the case, it is observed that as per the scheme of arrangement between the appellant and M/s TVIL (Indian branch office of "TVIL HK") as approved by Hon'ble Punjab and Haryana High Court, the assets & liabilities of M/s TVIL IBO were transferred to the appellant with effect from April 01, 2014 at the written down value (WIDV) of assets and liabilities appearing in the books of TVIL-IBO as on date. In order to give effect to demerger as approved by Hon'ble Punjab and Haryana High Court, the appellant recognized goodwill amounting to Rs. 1,90,06,73,197/- (difference of asset and liabilities of M/s TVILIBO) in its books. The goodwill was accounted for in the schedule of fixed assets (balance sheet) and was amortized subsequently in phased manner during the F.Ys 2014-15, 2015-16 and 2016-17. Further, the amount of goodwill charged to the P&L account during the current year was added back in the computation of income. During the course of assessment proceedings, it was inferred by the AO that the appellant had acquired goodwill upon merger and the same, being international transaction, was not disclosed in form 3CEB as per the provision of section 92B of the Act. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ant from M/s TVIL-IBO. Thus, there was no international transaction on this account in terms of provisions of section 928 of the Act. 4.6 Further, it is noted from the perusal of Form No. 3CEB that Form No. 3CEB was prepared after examining the financial accounts along with notes to the accounts and records of the appellant. Moreover, the accounting of goodwill in the books of the appellant was revenue neutral since out of goodwill of Rs. 190Cr, goodwill amounting to Rs. 150Cr was amortized by charging the same to P&L account during the current year and the amount charged to the P&L account was added back in the computation of income. Moreover, the appellant has disclosed all material facts and particulars to the accountant for the preparation in Form 3CEB rws 92E of the Act and thus, has made complete and bona fide disclosure about the above facts, Further, the AO, while making the assessment in the case of the appellant for the year under consideration, did not make any adverse inference on the issue of goodwill while assessing the income. The AO has relied upon the decision of Hon'ble Supreme Court of India in the case of M/s Smifs Securities Ltd vs CIT(supra). Howe....