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2015 (6) TMI 753 - AT - Income TaxReopening of assessment - taxing the receipt of INR 21,138,400 as revenue receipt - Held that:- As in the current assessment year, assessee received a sum of ₹ 2,11,38,400/- as a partial refund of the business purchase consideration on account of certain objections raised by the assessee. The aforesaid amount was accordingly reduced by the assessee from the amount of Goodwill recorded in the books of account. It is quite clear that upon acquisition of the mining and construction business of KWIL, the total consideration paid was capitalized. Therefore, any reduction in the purchase consideration by way of the impugned refund would retain the same character as the original amount. Therefore, we find no justification on the part of the Assessing Officer to treat the said sum as a revenue receipt. The plea setup by the Revenue that the aforesaid refund was on account of certain items, namely, Stock obsolescence; Doubtful account receivable; EMI; Export incentive; Warranty reserve; and, Immovable property (not usable), etc. which are revenue assets. According to the Assessing Officer, such items are revenue assets and therefore, any receipt therefrom is to be understood as a revenue receipt is unacceptable because the aforesaid items have not been entered the revenue account of the assessee, namely, Profit & Loss Account inasmuch as they have not been considered as an item of expense in the preceding assessment year of 2004-05. Therefore, any refund or adjustment in purchase consideration, even if in relation to the aforesaid assets, would not be an item of the Profit & Loss Account of the assessee. Thus, action of the assessee in treating the same as a capital receipt and reducing it from the amount recorded as Goodwill earlier is in order. - Decided in favour of assessee.
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