TMI Blog2022 (2) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted by the AO and action of disallowing the expenses is without any basis. - Appeal of revenue dismissed. - ITA No. 369/Bang/2019 - - - Dated:- 14-2-2022 - SHRI GEORGE GEORGE K , JUDICIAL MEMBER AND MS. PADMAVATHY S , ACCOUNTANT MEMBER Assessee by : None Revenue by : Shri Muzaffar Hussain , CIT ( DR ) ORDER Per Padmavathy S , Accountant Member This appeal by the Revenue is directed against the order of the CIT(A)-3, Bengaluru dated 14/12/2018 passed u/s. 250 of the Income-tax Act (the Act) for the assessment year 2012-13. 2. The Revenue raised the following grounds before us. 1. The order of the learned CIT(A) is opposed to law and facts of the case. 2. On the facts and in the circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a company engaged in the business of wholesale distribution of books, mobiles, media, computers, gaming consoles and other related accessories. The assessee company filed its e-return of income for the asst. year 2012-13 on 30/09/2012 declaring a loss of ₹ 1,12,88,65,061/-. The case was selected for scrutiny u/s. 143(2) and the order passed by the AO dated 30/03/2015 making various additions as given below thereby assessing the loss at ₹ 78,65,94,969/-. i) Addition of capital expenditure in the form of intangibles - ₹ 29,08,28,372/-. ii) Disallowance of depreciation claimed on assets sold as part of slump sale - ₹ 3,99,89,130/- iii) Disallowance u/s. 40(a)(i) ₹ 1,14,52,590 4. Aggrieved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not the normal business practice. The AO concluded that the assessee followed predatory pricing in order to create marketing intangibles and brand. Having come to the conclusion that the assessee is doing this entire transaction to create intangible assets, the AO went on to calculate the valuation of such intangible. The AO took the database for the wholesalers dealing in consumer and electronic goods which yielded a result that the average gross profit margin ought to be @ 19.90% whereas the assessee is making-11.99%. Applying this % on the presumption if the assessee had not followed the predatory pricing the AO arrived at the sale price. The difference between the actual sale price and the presumptive sale price was considered as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Private Ltd. for AY 2015-16 (ITA No. 202/Bang/2018) on the identical issue under consideration here held that the action of the Revenue cannot be sustained, as the Revenue has disregarded the book results and has presumed that the assessee had incurred expenditure in creating intangibles assets/brand or goodwill is without any basis. The Tribunal held that the loss declared by the assessee in the return of income should be accepted by the AO and action of disallowing the expenses is without any basis. 12. We also noticed that the revenue has filed a MP against the said order on the grounds that (i) That the assess had failed to invite the attention of the Hon'ble Tribunal to the agreements entered into between the assessee and M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not the basis on which the assessment and the addition challenged before the Tribunal were made by the AO and confirmed and enhanced by the CIT(A). Even in the allegation in the MA is that the Assessee has failed to place the documents now sought to be filed before Tribunal by the Revenue. The conclusions drawn by the Tribunal which have been extracted in Paragraph-5 of this order, will hold good and these documents will have no impact on the conclusions drawn by the Tribunal. Therefore, there exists no relevancy of these documents now sought to be filed with regard to the issue that was decided by the Tribunal. The revenue cannot seek to raise a totally new basis of assessment in an MA and on a possibility of existence of a hidden transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the Tribunal on a possible hidden transaction which requires examination after lifting the corporate veil when there those were neither the basis of assessment by the AO or CIT(A) or the Tribunal. 14. In the result, the MA is dismissed. 14. The main ground raised by the revenue is that the MP filed by the revenue against the order of the Tribunal in assessee's own case referred above is pending adjudication and that the judgment on the MP would have an impact in the current appeal. We have considered the fact that the Tribunal has dismissed that MP stating that the MP filed by the revenue is devoid of merits and is liable to dismissed. 15. Therefore, respectfully following the binding decision of the coordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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