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2016 (8) TMI 658 - GUJARAT HIGH COURT

2016 (8) TMI 658 - GUJARAT HIGH COURT - TMI - Penalty levied u/s.271(1)(c) - Valuation of Goodwill - ITAT deleted penalty levy - Held that:- It is an undisputed fact that all transactions were supported by duly executed legal Agreements, having been acted by both the parties. Under the circumstances, the Revenue had no right or legal justification to doubt its genuineness, particularly when, there was no material on record to support the stand of Revenue. - In the case of Mangalore Ganesh Be .....

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O. 1906 of 2008 With TAX APPEAL NO. 1605 of 2009 - Dated:- 8-8-2016 - MR. KS JHAVERI AND MR. G.R.UDHWANI, JJ. FOR THE APPELLANT : MR NITIN K MEHTA, ADVOCATE FOR THE OPPONENT : MR SN SOPARKAR, SR. ADVOCATE WITH MR. MONAAL J. DAVAWALA AND MRS SWATI SOPARKAR, ADVOCATES ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. In all these Tax Appeals, the assessee is the same and therefore, they are decided by this common judgment. 2. Tax Appeal Nos.1905/2008 and 1906/2008 have been filed against t .....

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₹ 47,02,500/- which was shown in the agreement and ₹ 4,70,25,000/- being 30% of the value of ₹ 15,67,50,000/- ? 2. Whether the Appellate Tribunal has correctly appreciated the facts available on record so as to delete the addition sustained by the CIT(A), being addition on account of goodwill of ₹ 47,02,500/- which was shown in the agreement and ₹ 4,70,25,000/- being 30% of the value of ₹ 15,67,50,000? Tax Appeal No. 1906 of 2008 Whether the Appellate Tribunal .....

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2,38,44,898/- levied u/s.271(1)(c) of the Act, when the quantum additions made were confirmed ? 4. For the purpose of this judgment, Tax Appeal No.1905/2008 is taken as the lead matter. 5. Briefly stated, the facts are that the assessee herein is a closely held company and is a wholly owned subsidiary of another company, named, Parle (Exports) Ldt. It forms part and parcel of Parle Group of companies. During the year relevant to A.Y. 1994-95, the assessee sold its business relating to manufactu .....

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, Goodwill and restrain on use of Technical Knowhow. The assessment u/s.143(3) of the Act was finalized on 31.03.1997 determining total income at ₹ 12,83,17,670/- as against the returned income of ₹ 3,11,66,030/- . 6. Against the order of assessment, the assessee filed appeal before the CIT(A). Vide order dated 25.07.1997, the CIT(A) allowed the appeal of assessee in part. Being dissatisfied with the said order, the Department preferred appeal before the Tribunal. Vide order dated 04 .....

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appeal of Revenue. Hence, these Tax Appeals. 8. We have heard learned counsel for both the sides and perused the documents on record. 9. Mr. Nitin Mehta, learned Standing Counsel for the Revenue, submitted that in view of the amended provisions of Section 55(2), capital gains on the transfer of Goodwill becomes chargeable to tax. The assessee had not given the basis of the valuation of Goodwill though the assessee was specifically asked for by the A.O. The A.O., therefore, was of the opinion th .....

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g deicions: (a) Smt. Vindoor Bai v. Controller of Estate Duty, Kanpur, [1981] 132 ITR 421. (b) McDowell and Co. Ltd. v. Commercial Tax Officer, [1985] 154 ITR 148. (c) Continental Construction Ltd. v. Commissioner of Incometax, [1992] 195 ITR 81. 10. Mr. S.N. Soparkar, learned Senior Advocate appearing for the assessee, submitted that the CIT(A) seriously erred in modifying the effect of the three Agreements, which were, actually, entered into between two unaccounted parties at arms length and t .....

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no legal right to transfer them or surrender them with the result that any such alleged transfer / surrender will be inoperative in law. 10.2 In support of his submissions, learned Senior Counsel Mr. Soparkar placed reliance upon the following decisions: (a) Vodafone International Holdings B.V. v. Union of India and another, [2012] 341 ITR 01 (SC). (b) Mangalore Ganesh Beedi Works v. Commissioner of Incometax, Mysore, [2015] 378 ITR 640 (SC). 11. We have heard learned counsel for both the sides .....

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