TMI Blog2023 (4) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... g to valuation of an asset. Determination of fair market value has to be as per prescribed methodology and even the AO has accepted the discounted cash flow method as appropriate method for valuation of goodwill. Valuation is done on the basis of information and material available on the date of valuation and projection of future Revenue. Merely because performance did not match projections, valuation cannot be challenged, as such approach is not only irrational but lacks material foundation since the valuation is intrinsically based on projections which can be affected by various factors. One must not forget that valuation is not an exact science and, therefore, cannot be done with arithmetic precision and such technical and complex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to subsidiary company is not regarded as transfer within the meaning of Section 47(iv) of the Income-tax Act, 1961 [the Act, for short] and the discounted cash flow method to value the goodwill was found by the Assessing Officer to be erroneous. 3. Briefly stated, the facts of the case are that the assessee company is engaged in organization and promotion of Indian and abroad events, expositions, fairs, exhibitions, seminars, conference, publications of magazines and such other events. 4. During the course of scrutiny assessment proceedings and on perusal of financial statements, the Assessing Officer came to know that the assessee company entered into a Business Transfer Agreement [BTA] on 23.12.2011 with The Indian Express Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court in the case of McDowel Co. Ltd 154 ITR 148, the Assessing Officer, while disallowing the claim of depreciation on goodwill, held that the assessee has used colourable devices to claim depreciation on goodwill. Accordingly, addition of Rs. 1,62,87,624/- was made. 11. The assessee strongly agitated the matter before the ld. CIT(A) and reiterated is claim of deprecation. 12. After considering the facts and submissions, and after drawing support from the BTA, the ld. CIT(A) was convinced that the assessee has acquired business for a consideration of Rs. 19,85,22,900/-. 13. The ld. CIT(A) further found that the assessee has furnished all the details at the assessment stage itself. The ld. CIT(A) was not conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate method for valuation of goodwill. 17. In such a method, valuation is done on the basis of information and material available on the date of valuation and projection of future Revenue. Merely because performance did not match projections, valuation cannot be challenged, as such approach is not only irrational but lacks material foundation since the valuation is intrinsically based on projections which can be affected by various factors. 18. One must not forget that valuation is not an exact science and, therefore, cannot be done with arithmetic precision and such technical and complex problem should be left to the consideration and wisdom of experts in the field of accountancy. 19. Due Diligence Report of the assessee company w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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