TaxTMI 
TaxTMI 
2026 (8) TMI 1767
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....00 thereon by invoking the provisions of section 154 of the Act. 5. The brief facts of this case are that the assessee, a private limited company, offers financial intermediation services, including financial advisory and brokerage services. For the relevant assessment year, it filed its income tax return reporting a loss of Rs.44,02,701.00 only. The assessment was completed under section 143(3) of the Act. The assessing officer disallowed the purchase of goodwill for Rs.65,00,000 and calculated the total income at Rs.20,97,299.00 only. 5.1 The AO later noticed that, while the cost of goodwill had been disallowed the depreciation claimed on that goodwill had mistakenly been allowed in the assessment framed under section 143(3) of the Act. Recognizing this error apparent on record, the AO issued an order under section 154 of the Act, disallowing depreciation of Rs.16,25,000 on goodwill. Aggrieved by the rectification order, the assessee preferred an appeal before the Ld. CIT(A). 5.2 The assessee before the Ld. CIT(A) argued that the AO made a mistake in issuing the rectification order under section 154 of the Act by disallowing depreciation of Rs.16,25,000 on goodwill. Asse....
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....tion 143(3) of the Act was not part of the appeal arising from the rectification order passed under section 154 of the Act. Therefore, the assessee requested that the orders of the lower authorities be quashed and the assessee's appeal be accepted. 8. The Ld. DR, on the contrary, vehemently supported the decisions of the lower authorities and submitted that the AO had correctly invoked the provisions of section 154 of the Act. He contended that the goodwill of Rs.65,00,000 had already been disallowed by the AO in the assessment order passed u/s 143(3) of the Act, which was not challenged by the assessee. The present appeal arises only from the rectification order passed u/s 154 of the Act and, therefore, the correctness of the disallowance of goodwill made in the original assessment proceedings could not be examined in the present proceedings. The Ld. DR further submitted that once the goodwill stood disallowed in the assessment order, its Written Down Value became Nil and, consequently, the assessee was not entitled to depreciation of Rs.16,25,000 thereon. Thus, the allowance of such depreciation constituted a mistake apparent from the record, which was rightly rectified by....
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....on of Rs.16,25,000 on goodwill under the provisions of the Act. Thus, the amount of Rs.65,00,000 debited to the Profit & Loss Account has already been added back by the assessee while computing its taxable income. Despite this, the AO again added the same amount while completing the assessment u/s 143(3) of the Act, thereby resulting in a double addition, as categorically found by the Ld. CIT(A). 9.4 At this stage, it would be relevant to reproduce the operative portion of the order passed by the AO u/s 154 of the Act, which reads as under: "Goodwill paid of Rs. 65 lakhs disallowed. Hence WDV as on 01/04/2016 is Nil. Depreciation of Rs. 16,25,000/- disallowed." 9.5 A plain reading of the aforesaid order reveals ambiguity regarding the exact nature of the rectification carried out by the AO. The words "Goodwill paid of Rs. 65 lakhs disallowed" appearing in the rectification order give an impression that the goodwill of Rs.65,00,000 was itself disallowed by the AO while passing the order u/s 154 of the Act. On the other hand, the Ld. CIT(A) has proceeded on the premise that the goodwill had already been disallowed in the original assessment order passed u/s 143(3) of t....
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....aining to earlier assessment years. 12. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). 13. Before the Ld. CIT(A), the assessee submitted that it was entitled to the set-off of brought forward business losses aggregating to Rs.51,64,509 pertaining to AYs 2008-09 to 2015-16. It was contended that the AO failed to consider and allow the eligible brought forward losses while determining the taxable income, resulting in an incorrect computation of income and consequential tax demand. The assessee, therefore, prayed that the eligible brought forward business losses be allowed to be set off in accordance with the provisions of the Act. 13.1 However, we find that the Ld. CIT(A), while disposing of the appeal, did not adjudicate the aforesaid ground raised by the assessee regarding the set-off of brought forward business losses. No finding was recorded by the Ld. CIT(A) either on the availability or eligibility of the losses claimed by the assessee. 14. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. 15. The Ld. AR before us submitted that the AO erred in not allowing the set-off of brought forward business losses amounting t....