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2023 (4) TMI 384 - AT - Income TaxDepreciation on the goodwill - slump sale to subsidiary company - assessee company has valued goodwill on Discounted Cash Flow Method [DCF] - As per AO assessee overvalued the valuation of goodwill - transaction of sale of slump sale to subsidiary company is not regarded as transfer within the meaning of Section 47(iv) and the discounted cash flow method to value the goodwill was found by the AO to be erroneous - As per AO figures adopted for free cash flow are imaginary when compared to the actual figures of cash flow upto F.Y. 2014-15 - HELD THAT:- AO has completely ignored the commercial prudence of an assessee relating to valuation of an asset. Determination of fair market value has to be as per prescribed methodology and even the AO has accepted the discounted cash flow method as appropriate method for valuation of goodwill. Valuation is done on the basis of information and material available on the date of valuation and projection of future Revenue. Merely because performance did not match projections, valuation cannot be challenged, as such approach is not only irrational but lacks material foundation since the valuation is intrinsically based on projections which can be affected by various factors. One must not forget that valuation is not an exact science and, therefore, cannot be done with arithmetic precision and such technical and complex problem should be left to the consideration and wisdom of experts in the field of accountancy. Due Diligence Report of the assessee company was provided by Price Waterhouse Cooper, a well known global accounting firm, which shows that the market value of goodwill was acceptable by an independent third party. Revenue has challenged that transaction of sale of slump sale to subsidiary company is not regarded as transfer within the meaning of Section 47(iv) of the Act. But, we find that in the hands of TIEL, while framing the assessment order u/s 143(3) for A.Y 2012-13 AO has accepted income from long term capital gain for slump sale of business, thereby accepting the transfer u/s 47(iv). See cases TRIUNE ENERGY SERVICES PRIVATE LIMITED [2015 (11) TMI 1218 - DELHI HIGH COURT] and SMIFS SECURITIES LTD. [2012 (8) TMI 713 - SUPREME COURT] - Ground raised by the Revenue is dismissed.
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