TMI Blog2018 (10) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed the rectification order passed by the Assessing Officer by holding that the order passed by AO is within the scope of section 154. CIT(A) correctly confirmed the order of the AO. Allowance of brought forward losses and unabsorbed depreciation - Held that:- The assessee has not filed any material to substantiate that the losses /unabsorbed depreciation of the amalgamation company ascertained as per provisions of section 72AB of the Act. Therefore, we find that the ld. CIT(A) rightly confirmed the order of the Assessing Officer by observing that the entitlement of allowance of such losses in the hands of the said bank (amalgamated bank) or its eligibility to be carried forward under the provisions of section 72 was not proved. Therefore, we find that the ld. CIT(A) rightly considered the issue and confirmed the order of the Assessing Officer. Liability undertaken by the assessee by paying over and above the asset value has to be considered as payment for acquiring commercial rights - Held that:- We find that the assessee has not paid any consideration to acquire the Palakollu Bank, the assessee has not shown any depreciation schedule in the amounts towards goodwill / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligible for deduction under sec. 35DD of the Act, assessee being a cooperative bank. Accordingly, the Assessing Officer has rectified the order passed under sec. 143(3) dated 31/01/2013 and disallowed claim of the assessee of ₹ 57,81,212/- under sec. 35DD of the Act, by order dated 18/01/2016. 3. On appeal before the ld. CIT(A), it was submitted that there is no mistake apparent on record, therefore, the Assessing Officer cannot rectify the order passed under sec. 143(3) of the Act by invoking section 154 of the Act. 4. Alternatively, it was submitted that assessee may be allowed claim under sec. 32(1)(ii) of the Act. 5. The ld. CIT(A) after considering the explanation of the assessee has observed that assessee has made a claim under sec. 35DD of the Act on account of acquisition of Palakollu Cooperative Bank. Apparently, the provisions of section 35DD are applicable only to the Indian Companies and the assessee being a co-operative society, engaged in banking activity, and not being an Indian Company would not be prima-facie eligible for deduction under sec. 35DD of the Act, therefore, he confirmed the action of the Assessing officer for invocation of section 154 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u Cooperative Bank as expenditure under section 35DD, amounting to ₹ 57,81,212/-, same is allowed by the Assessing Officer under section 143(3) dated 31/03/2013. Subsequently, the Assessing Officer noticed that as per the provisions of section 35DD, only assessee who is an Indian Company is eligible for deduction, as the assessee is not Indian Company, deduction under section 35DD needed to be disallowed and notice under section 154 was issued and after considering the explanation given by the assessee, he rectified the order passed under section 143(3) dated 31/03/2013 and disallowed claim made under section 35DD dated 08/01/2016. On appeal, ld.CIT(A) confirmed the order of the Assessing Officer by observing that the assessee is not an Indian Company and therefore, prima-facie, there is a mistake apparent on record committed by the Assessing Officer in allowing claim originally made under section 143(3) of the Act and the same is rectified subsequently in accordance with the provisions of section 154 of the Act. 14. The first objection raised by the ld. counsel for the assessee is that the order passed by the Assessing Officer is not within the purview of section 154 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer has to see whether claim is eligible or not, but without examining, allowed the same. Therefore, by considering again rectification order under section 154 of the Act is passed. Therefore, the case law relied on by the assessee has no application to the facts of the present case. So far as another case law relied on in the case of Mepco Industries Ltd. (supra) relates to whether subsidy received by the assessee is to be treated as a revenue receipt or a capital receipt. Under these circumstances, the Hon'ble Supreme Court has held that the Government grants different types of subsidies to the entrepreneurs, nature of the subsidy has to be examined on the facts of each case. This exercise cannot be undertaken under section 154. Further, this is a case of change of opinion, therefore, the Department has erred in invoking section 154 of the Act. In the present case, the Assessing Officer has allowed claim of the assessee on the basis of inapplicable provisions of the Act, therefore, facts of the case in hand are different than the facts of judgment of the Hon'ble Supreme Court, therefore the same has no application in the present case. 18. So far as anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has not paid any consideration for acquisition of Palakollu Bank and only has taken accumulated losses. He further observed that the assessee has not shown any amounts towards the goodwill in the depreciation schedule. The ld. CIT(A) by following the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Smifs Securities Ltd. [348 ITR 302 (SC)] has considered and observed that the amount paid in excess to the net asset acquired would constitute goodwill and on which depreciation can be considered. He also considered the decision of the ITAT Hyderabad Bench in the case of SKS Micro Finance Ltd., in turn which is followed the above Supreme Court judgement and observed that the excess price paid over and above the value of the net asset was held to be goodwill. We find that the assessee has not paid any consideration to acquire the Palakollu Bank, the assessee has not shown any depreciation schedule in the amounts towards goodwill /commercial rights. Therefore, it cannot be considered that the assessee has acquired goodwill/commercial rights. Therefore, we find no infirmity in the order passed by the ld. CIT(A). In the similar circumstances, the coordinate bench ..... X X X X Extracts X X X X X X X X Extracts X X X X
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