9911796707
TMI Blog2017 (5) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... Elevators Pvt. Ltd. In July 2006, the petitioner entered into an agreement, in terms of which, the petitioner, while retaining the manufacturing division, sold its sale and service divisions to Otis Elevators Company (India) Ltd, for a lump-sum consideration. That pursuant to the aforsesaid, the said Trio Elevators Pvt. Ltd. was renamed to Alps Technologies Pvt. Ltd. - petitioner herein. That therefore, the petitioner pursuant to the aforesaid transaction engaged in the business of manufacture and sale of equipment, components and parts which are in turn used in the manufacture of elevators. 2.02. That thereafter the assessee filed return of income on 23/10/2007 for A.Y. 2007-08. That on the very same day, the assessee sought to rectify certain errors in the computation of income and consequently uploaded the corrected income tax return in form ITR-6, inter-alia treating the gains on Slump Sales as a Long Term Capital Gain in accordance with the provisions of section 50(C) of the Act. 2.03. That pursuant to the aforesaid, notice dated 22/9/2008 under section 143(2) of the Act was issued to the petitioner and the hearing was scheduled on 1/10/2008. Pursuant to the aforesaid hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year under consideration, the petitioner assessee received a notice dated 29/3/2014. 2.09. That the A.O. issued notice under section 148 of the Act by which A.O. sought to reopen the assessment for the A.Y. 2007-08 alleging inter-alia that there are reasons to believe that the income chargeable to tax has escaped assessment for A.Y. 2007-08. 2.11. That on receipt of the notice under section 148 of the Act on 29/3/2014, vide communication dated 29/4/2014 the assessee sought for reasons for reopening. 2.12. At this stage, it is required to be noted that according to the petitioner along with the communication / letter dated 29/4/2014, the assessee did file return (original return), however specifically did not state that the said return is pursuant to the notice under section 148 of the Act. 2.13. That vide communication dated 1/5/2014 the A.O. informed the petitioner assessee that as held by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. Versus Income Tax Officer and others, reported in (2003) 259 ITR 19 (SC), proper course of action for the assessee is to file return of income and then seek reasons for issuing notice. Thus, the petitioner assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 142(1) of the Act the assessee was called upon to show cause as to why the gain arising on appreciation of goodwill and trademark should not be taxed as Short Term Capital Gain instead of Long Term Capital Gain. It is submitted that in the notice under section 142(1) of the Act, it was alleged that the transaction was not a Slump Sale but sale of goodwill and trademark. It is submitted that however, in the reasons recorded which is reproduced while disposing of the objections, the assessment is sought to be reopened on the ground that though the assessee had shown to have sold only marketing division on slump sale basis, however, there was no separate marketing division and therefore, the entire story about sale of marketing division has been fabricated only to reduce the instance of taxation, which the assessee would have suffered on sale of trademark, which would have been otherwise fully taxed at 30% as business income / short term capital gain. 4.04. Mr.Mihir Joshi, learned Senior Advocate appearing on behalf of the petitioner has further submitted that the reasons recorded to reopen the assessment for A.Y. 2007-08 were never supplied to the petitioner assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including trademark and goodwill. It is submitted that subsequently on the basis of the information provided by the learned CIT(A) (I), Ahmedabad, considering the appellate proceedings in the case of Trio Elevators Company (India) Ltd. for A.Y. 2010-11 (transferee Company) in which the transferee had claimed depreciation on the trademark to the extent of Rs. 21,09,375/- which was disallowed by the A.O. and consequently the learned CIT(A) draw attention of the A.O. that the assessee had no separate marketing division and therefore, what was sold by the assessee was goodwill and trademark and the income on such transaction / sale of trademark and goodwill was required to be treated as short term capital gain and could not have been treated as sale of business on slump sale basis, the A.O. was justified in reopening the assessment beyond the period of 4 years. 5.02. Now, so far as the submission on behalf of the petitioner that the petitioner was not served with the reasons recorded to reopen the proceedings for A.Y. 2007-08 is concerned, Mr.Bhatt, learned counsel appearing on behalf of the revenue has submitted that as such as per the law laid down by the Hon'ble Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is requested to dismiss the present petition. 6.00. At the outset, it is required to be noted and it is not in dispute that assessment for A.Y. 2007-08 is sought to be reopened beyond the period of 4 years (according to the petitioner in the present case beyond the period of six years) from the relevant assessment year. Therefore, considering the proviso to section 147 of the Income Tax Act, unless and until there is any failure on the part of the assessee in not disclosing true and correct facts necessary for the purpose of assessment, A.O. is not justified in reopening the assessment. 6.01. In the present case A.O. has sought to reopen the assessment for A.Y. 2007-08 beyond the period of 4 years and the reasons recorded for reopening the assessment read as under :- "On the basis the information received from the O/o. CIT(A)-I, Ahmedabad vide letter dated 28/03/2014, it is found that during the course of appellate proceedings in the case of M/s. Trio Elevators Co. (India) Ltd. for A.Y. 2010- 11, the party had claimed depreciation on trade marks to the extent of Rs. 21,09,375/- which had been disallowed by the A.O. In the earlier year similar disallowance made by the AO had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,302 (goodwill) @ 10%. therefore, the undersigned has reason to believe that the income chargeable to tax for the yer under consideration has escaped assessment, as per the provisions of section 147 of the I.T. Act." Therefore, it appears that solely on the basis of information received from the office of CIT(A) (I), Ahmedabad vide its letter dated 28/3/2014, assessment for A.Y. 2007-08 is sought to be reopened and the A.O. has doubted the transaction in favour of Trio Elevators Company (India) Ltd. which was treated and considered as slump sale. The A.O. has sought to reopen the assessment for A.Y. 2007-08 by observing that the assessee did not disclose true and correct facts necessary for the assessment inasmuch as the assessee did not disclose that there was no separate marketing division and as such what was sold was the entire business and therefore, the entire story about the sale of marketing division only has been fabricated only to reduce the instance of taxation which the assessee would have suffered on sale of trademark, which would have been otherwise fully taxed at 30% as business income / short term capital gain. Therefore, what is required to be considered is, whet ..... 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