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2014 (11) TMI 589 - HC - Income TaxDetermination of value of goodwill – matter remitted back after the report from DVO - Held that:- The Tribunal rightly noted that the assessee company transferred its Unit II to its 100% subsidiary viz. E.D.O.P. for a consideration of ₹ 4,65,90,306/- out of which ₹ 1,60,00,000/- was claimed as the value of goodwill - expected super profits method of valuation of goodwill is an accepted method - the Registered Valuers of the assessee adopted the method of “expected super profits” which was in consonance with the accepted methods of accountancy and principles of law - The AO rejected the detailed report without any cogent reasons and proceeded to value the goodwill by adopting the method which is contrary to the accepted principles of accountancy and the settled principles of law - the AO Accepted the report of the Registered Valuers in the original order without referring this issue of valuation to the Departmental Valuation Officer and even when the case was restored to him by the CIT u/s. 263, he did not refer the case to the Departmental Valuation Officer and adopted his own method and arrived at erroneous conclusions - the value of goodwill determined by the Registered Valuers viz. M/s. S.I. Mogul & Co., ₹ 1,60,00,000/- being based on accepted method of accountancy and settled principles of law – the order of the Tribunal is upheld – Decided against revenue. Addition on technical know-how deleted – Held that:- The know-how was generated in the course of day to-day business operations of the assessee company. It did not separately pay for acquiring this capital asset – the Tribunal tightly recorded that the technical know how is obviously a capital asset - The price realised on sale of capital asset would be a capital receipt - The only facts certain expenses for calender years 1968 and 1969 of research section had been allowed as deduction - It is not brought on record by the ITO as to what was the nature of those expenses which had been allowed and what amount has been allowed - there was no cost of this asset and it could not be therefore liable to capital gain tax - the goodwill which was assessed by the valuer in scientific method - There was no substitute opinion by any competent officer – the order of the Tribunal is upheld – Decided against revenue.
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