TMI Blog2018 (5) TMI 1175X X X X Extracts X X X X X X X X Extracts X X X X ..... transferred value of trademark and the goodwill and projected the resulting figure as a consideration for transfer of goodwill. If the assessee’s adoption of the sum of ₹ 15.67 lakhs as valuation for goodwill was not backed by any material or data on the record, the substitution adopted by the Assessing Officer suffered from greater vice. There was no basis for him to believe that the trademark and goodwill must value at the same level. This Court in case of Parle International Limited [2016 (8) TMI 658 - GUJARAT HIGH COURT] has frowned upon the Assessing Officer discarding the disclosed consideration in an agreement by doubting its genuineness without there being any supporting material on record. - R/Tax Appeal No. 1530 of 2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cannot be computed and collected. The second contention of the assessee was that the goodwill was transferred for a consideration of ₹ 15.67 lakhs, as per the agreement between the assessee-company and Coca Cola Company. The price indicated in such transfer cannot be substituted by the Assessing Officer on any consideration. The assessee also explained why value in question was adopted. The Assessing Officer rejected the assessee s first contention of non tax-ability of such gain arising out of transfer of goodwill. He also did not accept assessee s valuation of ₹ 15.67 lakhs assigned to the goodwill. He noted that the trademark was valued at nearly twenty times the value of goodwill. In his opinion, since the receipt due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain to the extent of only ₹ 15,67,000/= as against ₹ 164.59 lakhs worked out by the Assessing Officer ? Learned counsel Shri M.R Bhatt for the Department contended that the assessee had deliberately under-valued the goodwill since the gain arising out of transfer of such asset was exigible to capital gain tax as compared to trademark where no tax was leviable. The assessee had not supported its valuation of goodwill at ₹ 15.67 lakhs with any material. The Assessing Officer in absence of any other clarification accepted the average of the proceeds out of transfer of trademark and goodwill. The CIT [A] and Tribunal committed an error in disturbing the order of Assessing Officer. On the other hand, learned advocat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cquisition. The Assessing Officer having rejected the assessee s contention based on judgment of the Supreme Court in case of CIT v. BC Srinivasa Setty [Supra], the issue does not seem to have been carried further by the assessee before the higher authorities. In any case, the question of cost of acquisition in such a case is provided under sub-section [2] of Section 55 of the Income-tax Act, 1061 [ the Act for short]. In the present case, however, we are concerned with the valuation of such goodwill. It is undoubtedly true that pursuant to an agreement between the assessee as a transferor and Coco Cola Company as a transferee company, the assessee s assets in the present case intangible assets, such as trademark, technical knowhow, g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent between the transferor and transferee in such a situation cannot be lightly tampered with. The Assessing Officer in addition to having discarded such valuation, adopted a rather simplistic method of substitution of book mean of the transferred value of trademark and the goodwill and projected the resulting figure as a consideration for transfer of goodwill. If the assessee s adoption of the sum of ₹ 15.67 lakhs as valuation for goodwill was not backed by any material or data on the record, the substitution adopted by the Assessing Officer suffered from greater vice. There was no basis for him to believe that the trademark and goodwill must value at the same level. This Court in case of Parle International Limited [Supra] has fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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