TMI Blog2020 (2) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... COURT] . Also, support his drawn from the judgments of the Hon ble High Court of Bombay in the case of Grasim Industries Ltd. Vs. CIT [ 2010 (2) TMI 4 - BOMBAY HIGH COURT] and CIT Vs. Gabriel India Ltd [ 1993 (4) TMI 55 - BOMBAY HIGH COURT] . Accordingly, not being able to persuade ourselves to subscribe to the view taken by the Pr.CIT that the order passed by the A.O under Sec. 143(3), dated 23.12.2016 was erroneous insofar it was prejudicial to the interest of the revenue, we set aside his order and restore the order passed by the A.O. - Decided in favour of assessee. - ITA No.3081 & 3082/Mum/2019 (Assessment Year: 2014-15 & 2015-16) - - - Dated:- 11-12-2019 - Shri S. Rifaur Rahman, Accountant Member And Shri Ravish Sood, Judicial Member Appellant by: S/shri V. Chand ra Sekhar, Harshad Shah, A.Rs Respondent by: Shri T. Kipgen, CIT, DR ORDER PER RAVISH SOOD, JM The captioned appeals filed by the assessee company are directed against the respective orders passed under Sec. 263 of the Income Tax Act, 1961 (for short Act ) by the Principal Commissioner of Income Tax-8, Mumbai (for short Pr.CIT ), dated 30.03.2019 for A.Y. 2014-15 and A.Y. 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary deliberations assessed the loss of the assessee company at Rs. (-)36,75,90,370/-, vide his order passed under Sec. 143(3), dated 23.12.2016. 4. The Pr.CIT after culmination of the assessment proceedings called for the records of the assessee. On a perusal of the records, it was observed by the Pr.CIT that during the year under consideration there was a merger of a company that is M/s Premier Finance and Trading Company Limited with the assessee company. As observed by him, the assessee had claimed depreciation on goodwill amounting to ₹ 36,32,27,725/-, which was accepted by the A.O while framing the assessment. Observing, that the aforesaid claim of the assessee prima facie warranted an in depth enquiry under the Proviso 5 of Sec. 32(1) of the Act, which however was not done by the A.O, the Pr.CIT was of the view that the same had thus rendered the order passed by the A.O as erroneous insofar it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act. On the basis of his aforesaid observations, the Pr.CIT, vide a show cause notice under Sec. 263, dated 14.03.2019, therein called upon the assessee to justify its entitlement toward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (for short A.R ) for the assessee at the very outset of the hearing of the appeal submitted that as the assesses claim of depreciation on goodwill was examined by the A.O in the course of the assessment proceedings, and was only after necessary deliberations accepted by him, therefore, the Pr.CIT had exceeded his jurisdiction and sought a review of the order under Sec. 263 of the Act. In support of his contention that now when the A.O had while accepting the assesses claim of depreciation on goodwill , had taken a possible view, therefore, the jurisdiction of the Pr.CIT to revise the said order under Sec. 263 was ousted, the Ld. A.R relied on the judgment of the Hon ble Supreme Court in the case of Malabar Industrial Company (2000) 243 ITR 83 (SC) and CIT Vs. Max India Limited (2007) 295 ITR 282 (SC). Also, reliance was placed by the Ld. A.R on the judgment of the Hon ble High Court of Bombay in the case of CIT Vs. Gabriel India Limited (1993) 203 ITR 108 (Bom). Further, the Ld. A.R in order to fortify his aforesaid contention had also relied on the order of the ITAT D Bench, Mumbai in the case of Shri Narayan Tatu Rane Vs. ITO Ward-27(1)(1), Mumbai [ITA No. 2690 2691/Mum/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. As is discernible from the records, the Hon ble High Court of Bombay vide its order dated 20.09.2013 had sanctioned the scheme of amalgamation u/ss. 391 to 394 r.w.s. 94/97 and Schedule X of the Companies Act, 1956 between M/s Premier Finance Trading Company Limited (hereinafter referred to as amalgamating company ) and the assessee company. As per the scheme of amalgamation the assets and liabilities of the amalgamating company viz. M/s Premier Finance Trading Company Limited were transferred to and stood vested with the assessee company from the appointed date i.e. 01.04.2013. As the amalgamation was accounted for under the Purchase Method prescribed by Accounting Standard 14 , accordingly the assets and liabilities of the amalgamating company were taken over at their fair values. On a perusal of the Notes forming part of the financial statements of the assessee company for the year under consideration, we find, that the assets and liabilities which were acquired by it on amalgamation, and also the treatment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss accounts; (ii) copy of scheme of amalgamation as approved by court; (iii) separate balance sheet with profit loss account as on the date of merger of both the amalgamated company; (iv) balance sheet with profit loss account as on the date of merger of the merged company; and (v) details of assets acquired on amalgamation. It is the claim of the assessee, that as the A.O had enquired about the eligibility of the assessee towards claim of depreciation on goodwill and had after necessary deliberations finding the same to be in order had accepted the same, therefore, the Pr.CIT was not vested with any jurisdiction under Sec. 263 to dislodge the aforesaid view so taken by the A.O. Also, as observed by us hereinabove, it is the claim of the assessee that no infirmity emerges from its claim of depreciation on goodwill which was well in conformity with the provisions of Sec. 32(1) of the Act. 9. We have given a thoughtful consideration to the issue before us and find substantial force in the claim of the assessee. As observed by the Hon ble Supreme Court in the case of CIT, Kolkata Vs. Smifs Securities Limited (2012) 348 ITR 302(S.C) goodwill is an asset under Explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oodwill . Also, the Hon ble Apex Court had not found any infirmity with the view taken by the lower authorities that the excess consideration paid by the assessee over and above the value of net assets acquired of the amalgamating company i.e. M/s YSN Shares Securities Pvt. Ltd. was to be considered as the value of goodwill arising on amalgamation. 10. We find that the assesees claim of depreciation on goodwill in the case before us falls within the four corners of the judgement of the Hon ble Supreme Court in the case of CIT, Kolkata Vs. Smifs Securities Limited (2012) 348 ITR 302(S.C). As is discernible from the Notes forming part of the financial statements of the assessee company before us, the excess consideration of ₹ 145,29,10,901/- paid by the assessee company over the value of net assets acquired of M/s Premier Finance Trading Company Private Limited (amalgamating company) had been considered as goodwill arising in the process of amalgamation. On a perusal of the order passed by the Pr.CIT under Sec. 263 of the Act, we find, that he had held the order passed by the A.O as erroneous for two fold reasons viz. (i) that, as per Proviso 5 to Sec. 32(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in process of amalgamation is also fortified by the order of a coordinate bench of the Tribunal viz. ITAT, Pune Bench A , Pune in the case of The Cosmos Co-op Bank Limited Vs. Dy.CIT, Circle 7, Pune [ITA No. 460 461/PN/2012, dated 23.01.2014]. Be that as it may, in our considered view, as the A.O in the course of the assessment proceedings had examined the assesees entitlement towards claim of depreciation on goodwill , and had only after necessary deliberations finding the same to be in order had accepted the same, therefore, the Pr.CIT in exercise of the powers vested with him under Sec. 263 of the Act, was divested of his jurisdiction for seeking dislodging of the aforesaid possible, or infact a balanced and a reasonable view taken by the A.O. Our aforesaid observation that a possible view arrived at by the A.O after necessary deliberations cannot be dislodged by the CIT/Pr.CIT in exercise of revisional jurisdiction under Sec. 263 is fortified by the judgments of the Hon ble Supreme Court in the case of Malabar Industrial Company (2000) 243 ITR 83 (SC) and CIT Vs. Max India Ltd (2007) 295 ITR 282 (SC). Also, support his drawn from the judgments of the Hon ble High Court o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justice and equity. 13. Briefly stated, the assessee company had e-filed its return of income for A.Y. 2015-16 on 27.09.2015, declaring a total loss of Rs. (-) 175,34,59,933/-. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act. 14. The A.O after necessary deliberations assessed the loss of the assessee company at Rs. (-)27,15,92,700/-, vide his order passed under Sec. 143(3), dated 31.03.2017. 15. The Pr.CIT after culmination of the assessment proceedings called for the records of the assessee. On a perusal of the records, it was observed by the Pr.CIT that the A.O while framing the assessment had failed to examine the assesses claim for depreciation of ₹ 36,32,27,725/- on goodwill arising on amalgamation of M/s Premier Finance Trading Company Ltd. (amalgamating company), in light of Proviso 5 of Sec. 32(1) of the Act. Observing, that the order passed by the A.O under Sec. 143(3), dated 31.03.2017 was erroneous insofar it was prejudicial to the interest of the revenue, the Pr.CIT had set aside his order and directed him to reframe the assessment keeping in view the proviso to Sec. 32(1) and disallow the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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