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TMI Blog2011 (3) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... ders passed by the Assessing Officer in the subsequent assessment year 2001-02 onwards as per which the Assessing Officer has accepted the exclusive method regularly followed by the assessee and no adjustment has been made in this regard. This would show that the method adopted by the assessee showing the closing stock in the aforesaid manner has been consistently followed and has been accepted by the Department. For all these reasons, in so far as this aspect is concerned, no question of law arises. The arguments heard in detail on other question of law which pertains to accepting the valuation of assets of the five vendor companies." 2. This order makes it clear that though various questions of law are proposed, in respect of other questions raised, this court was of the opinion that substantial question of law does not arise. The question on which the arguments were heard namely which pertains to accepting the valuation of assets of five vendor companies, following question has been raised in the appeal : "Whether the learned Income-tax Appellate Tribunal erred in law and on the merits in directing the Assessing Officer to accept the valuation of assets a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturing of aerated drinks only after the assets of these units were acquired by the assessee. The Commissioner of Income-tax (Appeals) held that the Assessing Officer was justified in deciding the value of the assets acquired by the assessee from the seller-bottling company and disallowed the part of depreciation. 6. Still aggrieved, the assessee filed second appeal before the Income-tax Tribunal. This time the assessee succeeded as the Tribunal has allowed the appeal of the assessee by holding that the acquisition of specified assets shown by the assessee was duly supported by the relevant agreement as well as report of the registered valuer and the action of the Assessing Officer in distributing and refusing the same without any evidence in support was not sustainable. The Tribunal has, thus directed the Assessing Officer to accept the valuation of the different assets acquired by the assessee from the five vendor companies as shown in the relevant agreement and supported by the valuation reports. It is this order of the Tribunal which is in appeal before us. 7. Before we deal with the respective submissions of the learned counsel on the either sid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o any specific criterion and life of assets has been determined arbitrarily based on the estimates only. Further, the replacement values of the assets taken by the valuer had not been linked with the original cost to the seller. Going by these considerations, he increased the value of land by 50 per cent. on estimated basis, reduced the value of bottles and crates by 50 per cent. and reduced the cost of acquisition of plant and machinery by 25 per cent. The Commissioner of Income-tax (Appeals) while confirming the aforesaid order of the Assessing Officer found the following determinative factors : (i) Before the assessee acquired these units from the five companies, their businesses were in running condition and they were working as franchisee of the assessee. Thus when these functioning units were acquired, acquisition of goodwill of those units cannot be denied. (ii) Since these units were taken in working condition, it can be presumed that the assessee paid something as compensation to these units to stop manufacturing of aerated drinks. (iii) Likewise, as the seller bottling companies had paid compensation to their employees, it can be presumed that some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets was the actual cost and the assessee as per the provisions of section 43(6) of the Act it was rightly adopted for the purpose of claiming depreciation. Like-wise, there was no question of making payment of non-compete fees, inasmuch as these five companies were not in a competing business but in fact were the franchisees of the assessee itself. Therefore, there was no threat of any competition to the assessee from these companies. 9. After hearing the learned counsel for the parties, we are of the opinion that the approach of the Tribunal in addressing the issues was in accordance with law and has come to a correct conclusion. It is not in dispute that specified lump sum consideration is paid for acquisition of specified assets by the assessee to the vendor companies. This consideration is paid as stipulated in the agreements entered into between the parties. The Assessing Officer or the Commissioner of Income-tax (Appeals) assumed certain things which were non-existing. It was assumed that some consideration for goodwill must have been paid or the payments to the employees of the vendor companies must have been borne by the assessee. There was neither any material t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the average life of the machinery as well as the depreciation thereof on the basis of actual use having been duly considered by the valuer to determine the valuation. We find that the method adopted by the valuer for the purpose of valuation of plant and machinery was a well-recognised and well-accepted method and there was no material defect or deficiency pointed out therein to doubt or dispute the same. Similarly, the plinth area method adopted by the valuer for the valuation of the building again was well-recognized method and no defect whatsoever was pointed out by the authorities below in the method so adopted. Even the valuation of plastic crates and glass bottles was done by the valuer on the basis of condition and quality of plastic crates and glass bottles available at the plant and the basis so adopted by the valuer being fair and reasonable, there was no justifiable reason to find fault with the same. As regards the valuation of land and building, the learned counsel for the assessee has pointed out before us that the agreement for transfer thereof being an immovable property was duly registered on payment of requisite stamp duty and the valuation shown was accepted by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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