TMI Blog2021 (3) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... ussion to the legal findings and not substantiated his decision with any material to come to the conclusion. As per law it is required to carry out the required investigation and verification of the facts to tax the real income. In the light of the above facts and judicial findings, we direct the ld. CIT(A) to consider the claim of the assessee on merit after verification/examination of the material to be produced by the assessee with reference to claim of goodwill arsied on account of amalgamation of companies. Therefore, we restore this issue to the file of ld. CIT(A) for adjudicating the impugned issue of claim of depreciation on goodwill afresh on merit after examination as per the direction laid down in the decision of Zydus Wellness Ltd. [ 2017 (10) TMI 373 - GUJARAT HIGH COURT] . Disallowance on account of delay payment of employee contribution towards PF ESIC - not crediting the amount on or before due date as prescribed u/s. 36(1)(va) - HELD THAT:- Hon ble Jurisdictional High Court of Gujarat in the case of CIT vs. Amoli Organics P. Ltd [ 2013 (11) TMI 971 - GUJARAT HIGH COURT] held that assessee was entitled to make payment within grace period under the provident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer to allow depreciation on Goodwill as claimed by the assesse. 2. In confirming the disallowance of ₹ 19,65,397/- on account of delay payments of Employee's Contribution. 3. The fact in brief is that return of income showing deemed income u/s. 115JB of ₹ 31,08,52,427/- was filed on 30th Nov, 2013. The case was subject to scrutiny assessment and notice u/s. 143(2) of the Act was issued on 5th Sep, 2014. The assessment u/s. 143(3) of the Act was finalized on 23rd March, 2016 and total income was determined at ₹ 21,14,65,778/-. The remaining facts are discussed while adjudicating the grounds of appeal of the assessee as under:- Ground No. 1 (Claim of deprecation on goodwill) 4. The Assessing Officer has completed the assessment under section 143(3) of the Act on 23-03-2016. The assessee submitted before the ld. CIT(A) that Assessing Officer had not at all discussed its claim of goodwill arising on account of amalgamation of its subsidiary company in the assessment order in spite of that fact that its claim of depreciation on account of amalgamation was made vide letter dated 20th January, 2016 during the course of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the sides and perused the material on record. During the course of assessment proceedings, the assessee has claimed depreciation on goodwill arised on amalgamation of Fame India Ltd. into Inox Leisure Ltd. The Assessing Officer has not made any reference or discussion to the impugned claim of depreciation on goodwill in spite of the fact that the assessee has made detailed submission during the course of assessment vide letter dated 20th 2016 reproduced as under:- The claim for depreciation on goodwill arising on amalgamation was not made in the return of income filed by the appellant company. However, the claim for the same was made during the course of assessment proceedings and detailed submissions in this regard were made by the company during the course of assessment proceedings vide letter dated 20:1.2016 as under: 20th January 2016 Asst Commissioner of Income lax - Cir.l(2), Room 103, Aaykar Bhavan, Race Course, Baroda 390007 Sir, PAN NO. AAACI6063J A.Y.2013-14 Sub: Claim of goodwill in respect of amalgamation of Fame India Limited alongwith its subsidiaries into Inox Leisure Limited Assessment of captioned assessment year in un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is enclosed as Annexure 1. 11) Subsequently under a composite Scheme of Amalgamation (Scheme) (Annexure 2) under Section 391 to 394 of the Companies Act, 1956, FAME, along with its subsidiaries (Fame Group), was amalgamated into INOX as per Hon'ble High Court of Gujarat Order dated 12 March 2013 read with Order dated 20 March 2013 (Annexure 3) and Bombay High Court Order dated 10 May 2013 (Annexure 4) with an appointed date being 1 April 2012 is with effect from lst April 2012. (copy of the orders alongwith copy of the scheme are enclosed) 12) Accordingly, all the movable and immovable properties including plant and machinery, equipments, furniture, fixtures, vehicles, stocks and inventory, leasehold assets and other properties, etc. and all the debts, liabilities, duties and obligations including contingent liabilities of the Transferor Companies, as on the Appointed Date vested in the Company with effect from 1 April, 2012 (the appointed date). Accordingly a summary of Gross Assets and Liabilities taken over is enclosed as Annexure 5. 13) Pursuant to the Scheme, shareholders of erstwhile FAME were entitled to 5 shares of INOX for every 8 shares held by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shares issued to outside shareholders 10,130,636 Face value of shares issued to outside shareholders - 4C to ₹ 10/- 101,306,360 5 Excess of cost of acquired shares and Face value of shares issued to outside sharp holder over net assets received in amalgamation - (5) = (4-3) 323,103,102 6 Depreciation on Goodwill allowable under Income Tax Act. 25% 80,775,776 Reconciliation with the financials Total Goodwill as above 323,103,105 Less: Cost Of Fame shares, carried in the balance sheet 1,834,841,705 Credit 1,511,741,603 Reserves and Surplus of Fame India - taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goodwill because of which market worth of assessee-company stood increased - Accordingly, assessee's claim was allowed - Whether since revenue could not rebut factual findings recorded by authorities below, impugned order passed by them was to be upheld - Held, yes [Para 8] [In favour of assesses] 17) Accordingly Goodwill amounting to ₹ 32,31,03,102/-arises on amalgamation of Fame group with Inox on the basis of the actual cost incurred and consideration paid as above. 18) It will be appreciated that the above working of Goodwill is on the conservative basis i.e, excluding face value of shares issued to I8T in lieu of shares held by Inox in erstwhile Fame India Limited. However, these shares known as treasury shares in accounting parlance are in capital field and when sold to outsiders, profit or Inss is in the capital field. In short, by crediting treasury shares fresh shares are not required to be issued but existing shares are transferred. However the effect remains the same that is in both the cases consideration received towards transfer of treasury shares or issue of fresh equity shares the proceeds are on account of capital account. Therefore, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealt with this issue in the assessment order. In the submissions made before the assessing officer, we have relied on the decision of the Hon'ble Supreme Court in the case of Smifs Securities Ltd. (348 IIP, 302) wherein the Supreme Court has held that that goodwill in the form of difference between consideration paid and the cost of net assets acquired from the amalgamating Company was an asset under Explanation 3(b) of Section 32(1) of the Income Tax Act, and therefore eligible for depreciation under the Act. Headnote: Section 32 of the Income-tax Act, 1961 -Depreciation - Allowance/Rate of -Assessment year 2003-04 -Whether 'goodwill' is an asset under Explanation 3(b) to section 32(1) - Held, yes - During relevant assessment year, one 'Y' Ltd. Amalgamated with assessee-company - According to assesses, excess consideration paid by it over value of net assets acquired of 'Y1 ltd. amounted to goodwill on which depreciation was to be allowed - Authorities below recorded a finding that assets and liabilities of 'Y1 Ltd. were transferred to assessee for a consideration; that difference between cost of an asset and amount paid constituted goodwil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idering the detailed submission of the assessee, the ld. CIT(A) has dismissed the claim after taking presumptuous view that as per his understating the claim of depreciation on goodwill was not permitted under the existing law. It is observed that ld. CIT(A) has not made any discussion or reference to the material furnished by the assessee in support of its claim of goodwill arised on account of amalgamation of erstwhile Fame India Ltd. The Hon ble High Court of Gujarat in the case of Pr. CIT vs. Zydus Wellness Ltd held that in view of ratio laid down by Hon ble Supreme Court in CIT Vs. Smith Securities Ltd. (2012) 348 ITR 302 that assessee was to be allowed deprecation on goodwill. In the case of Pr. CIT Vs. Zydus Wellness Ltd. (2017) 87 taxmann.com 82 (Guj), the assessee had not raised a claim however during the course of assessment proceedings, the assessee presented a revised computation which included the assessee s claim of depreciation of ₹ 7.19 crores on the goodwill expanded at the time of amalgamation of the companies. The Assessing Officer has disallowed the claim on two grounds firstly that the claim was not made in the original return nor did the assessee file th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of Gujarat in the decision of Zydus Wellness Ltd. supra. Accordingly, the appeal of the assessee is allowed for statistical purposes. Ground No. 2 (Disallowance of ₹ 19,65,397/- on account of delay payment of employee contribution) 7. The assessee has disallowed the claim of employee s contribution towards PF ESIC for not crediting the amount on or before due date as prescribed u/s. 36(1)(va) after following the Hon ble Jurisdictional High Court of Gujarat in the case of CIT vs. Gujarat State Road Transport Corporation. The ld. CIT(A) has dismissed the appeal of the assessee. 8. Heard both the sides and perused the material on record. During the course of appellate proceedings before us, the ld. counsel has brought to our notice that Hon ble Jurisdictional High Court of Gujarat in the case of CIT vs. Amoli Organics P. Ltd. (2014) 41 taxmann.com 49 (Guj) held that assessee was entitled to make payment within grace period under the provident fund act and if within that grace period employees contribution have been deposited by the assessee, it cannot be said that assessee has not deposited the amount within due date prescribed under the provident fund act. F ..... X X X X Extracts X X X X X X X X Extracts X X X X
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