TaxTMI 
TaxTMI 
2026 (9) TMI 2024
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.... of the case are that the assessee had filed its return of income on 30.10.2016, declaring total income of the INR 32434079/-. The case of the assessee was selected for scrutiny under CASS and notice u/s 143(2) was issued on 17.07.2017. The AO observed that during the year under appeal, assessee has made payment for acquisition of the division of CA (India) Technology Pvt. Ltd. in terms of Business Transfer Agreement executed on 25.02.2015 and a sum of INR 12,41,99,990/- was claimed as goodwill being paid in excess of the value of assets taken over. The AO was of the view that the assessee has since purchased the assets on slump sale, tax has to be deducted in terms of section 50(2) r.w.s. 194-IA of the Act which has not been done and therefore, the disallowance of INR 3,37,88,962/- was made. The AO further held that the amount claimed as goodwill is nothing but unexplained expenditure and made the addition u/s 69C of the Act for the same. Besides this, depreciation claimed on such goodwill was disallowed by observing in para 9 of the order that there was no amalgamation nor merger nor any takeover of the going concern and it is further observed by the AO that the seller company wa....
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....unning business and on a Slump Sale (as defined hereinafter) basis, the Business (as defined hereinafter) including all the intangible assets relating to the Business and any and all rights related thereto, past, present and future and whether or not registered; C. Seller has agreed to sell and transfer to the Purchaser and the Purchaser has agreed to purchase and acquire from Seller, the Business (as defined hereinafter), for the consideration and subject to the terms, conditions and provisions set forth hereunder; and D. The Parties hereby wish to record in writing their understanding as under." 8.1. Ld. AR drew our attention to page 109 of the Paper Book containing Schedule IV of BTA i.e. list of products which were purchased by the assessee. The same is reproduced herein below:- PRODUCTS PERTAINING TO SELLER Products # Product Name Description Version Release Date Support Status I CA ARCserve(r) Backup CA ARCserve(r) Backup provides high performance backup with data deduplication, centralized management, and granular restore - for physical and virtual servers. r11.5 9/6/2005 EOS Jan 31, 2011 r12 2/7/2008....
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....w our attention to Schedule-1 of the BTA containing complete description of the assets of the seller transferred to the assessee and further states that the Schedule-2 of BTA contains the details of employees which were taken over by the assessee company. Ld. AR thus submits that the assessee has taken over the software division of M/s CA (India) Technologies Pvt. Ltd. on slump sale basis and therefore, the excess payment made over the value of assets taken over was claimed as goodwill. 10.1 With respect to the slump sale, ld.AR relied upon the judgment of Hon'ble Jurisdictional High Court in the case of Triune Projects Pvt. Ltd. vs DCIT in ITA No.448/2016. Ld. AR further submits that assessment u/s 143(3) was completed in the case of the assessee for AY 2015-16, wherein it was observed that the assessee has entered into the Agreement for purchasing of goods and running business of M/s CA (India) Technologies Pvt. Ltd. on slump sale basis. Therefore, taking a divergent view in the year under appeal is contrary to the facts already accepted by the Revenue. Ld. AR further submits that assessee has since acquired the assets under slump sale and took over the immovable assets as wel....
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....duced herein above is having most importance for the purpose of examination of fact whether the licenses and permits attached to the said division were actually transferred to the assessee or not. From the perusal of clause 2.1.4, it is clear in absolute terms that all the licenses and permits were transferred which are described as products in Schedule-4 of the BTA reproduced herein above and also at page 43 & 44 of the appellate order. 13. It is further observed that ld. CIT(A) has made incorrect observations at page 44 of the order that the assessee has not transferred any tangible assets like license and permits, data and records and as per the Schedule 1, the assets transferred were only computer server. It appears that the ld. CIT(A) has misunderstood the products sold by the assessee which are in the nature of computer software stored in the server and all the licenses and permits attached to such software were since transferred to the assessee company therefore, it cannot be said that the assessee has not purchased any intangible assets. Further, ld. CIT(A) at page 44 of the order has observed that only random employees were selected and random computers were purchased. ....
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....ore us, ld. CIT DR vehemently supported the order of AO on this issue and submits that claim of the assessee was that it had acquired running business of M/s CA (India) Technologies Pvt. Ltd. as a going concern under slump sale and therefore, it attracts provisions of section 194IA and since no TDS was deducted therefore AO has rightly invoked the provision of section 40(a)(ia) of the Act and made the disallowance. Ld. CIT DR submits that while deleting the disallowance, ld. CIT(A) has held that only part business was purchased and no immovable assets were acquired therefore, provision of section 194-IA are not applicable. Ld.CIT DR thus, submits that order of AO deserves to be uphold. 19. On the other hand, ld.AR for the assessee vehemently supported the order of ld. CIT(A) and submits that the assessee has acquired assets in the shape of computers etc. and no immovable property was acquired therefore, the provision of section 50(2) r.w.s. 194-IA of the Act are not applicable. He therefore, requested for the confirmation of the order of ld. CIT(A). 20. Heard the contentions of both the parties at length and perused the material available on record. In the instant case while ....
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....IA of the Act are not applicable. To this extent, we confirmed the order of ld. CIT(A). 22. Once the provision of section 194I(A) are not applicable and it is held that the assessee was not required to deduct tax at source and the payments made at the time of acquisition of running business of data and protection software division of M/s CA (India) Technologies Pvt. Ltd., the provision of section 40(a)(ia) of the Act cannot be invoked and accordingly, we hold that no disallowance could be made under this section. In view of above discussion and facts of the case, we uphold the order of ld. CIT(A) in deleting the disallowance made by invoking the provisions of section 40(a)(ia) of he Act. Accordingly, Ground of appeal No.1 raised by the Revenue is dismissed. 23. Ground of appeal Nos. 2 & 3 of the Revenue are with respect to the deletion of addition of INR 12,41,99,990/- made u/s 69C by holding that the payment made in excess of the assets acquired as unexplained expenditure. 24. Before us, ld. CIT DR for the Revenue vehemently supported the order of AO and submits that no prudent businessman would make the payments in excess of assets acquired and thus, it is an unexplained....