9911796707
TMI Blog2015 (6) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase consideration by way of the impugned refund would retain the same character as the original amount. Therefore, we find no justification on the part of the Assessing Officer to treat the said sum as a revenue receipt. The plea setup by the Revenue that the aforesaid refund was on account of certain items, namely, Stock obsolescence; Doubtful account receivable; EMI; Export incentive; Warranty reserve; and, Immovable property (not usable), etc. which are revenue assets. According to the Assessing Officer, such items are revenue assets and therefore, any receipt therefrom is to be understood as a revenue receipt is unacceptable because the aforesaid items have not been entered the revenue account of the assessee, namely, Profit & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd true disclosure of the material facts before the Assessing Officer at the time of original assessment under section 143(3). ii. The Ld. CIT(A) erred in upholding the initiation of reassessment proceedings which was based on mere change of opinion; iii. The Ld. CIT(A) erred in upholding the initiation of reassessment proceedings in absence of additional facts or Tangible Material . Your Appellant prays that such reassessment proceedings be treated null and void. Ground 2: Without prejudice to ground 1, the Ld. CIT(A) has erred in confirming the AO's re-assessment order taxing the receipt of INR 21,138,400 as revenue receipt. Your Appellant prays that such addition be deleted. The Appellant craves leave to add, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slump sale whereby assessee paid a lump-sum of ₹ 64.40 crores without values being assigned to individual assets and liabilities. In the assessment year 2004-05, the lump-sum consideration of ₹ 64.40 crores was allocated by assessee to various assets on the basis of the Valuation Report from independent valuers and the excess of purchase consideration over and above the net value of assets (i.e. after netting of liabilities) taken over from KWIL was treated as goodwill. On these facts, there is no dispute. Subsequently, it transpires that the assessee raised certain objections with KWIL and sought reduction in the value of purchase consideration. As a consequence, assessee and KWIL reached a settlement vide a settlement agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EMI (INR) 3,396,877 Export incentive (INR) 25,884,348 Export duty claim (INR) 14,631,201 Warranty reserve (INR) 29,185,888 Immovable property (not usable) (INR) 740,000 7. The Assessing Officer was of the view that the compensation received by the assessee i.e. ₹ 2,11,38,400/- represented reduction in the purchase consideration was a revenue receipt and that the action of the assessee in reducing it from the amount of Goodwill recorded is not in order. 8. Before the Assessing Officer, the assessee submitted that the settlement agreement was ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2 of the original Business Purchase agreement. The said clause provided that the assessee could review and raise objections with the seller on the purchase consideration within a specified period. In terms of the said clause, assessee had pointed out to the seller i.e. KWIL, its objection with regard to the various items and sought a reduction in the purchase consideration. As a consequence, by settlement agreement dated 09.03.2005, both the parties agreed that the originally agreed purchase price of ₹ 64.40 crores was liable to be adjusted on account of the objection raised by the assessee and as a consequence assessee received a refund of ₹ 2,11,38,400/- from KWIL. The Ld. Representative pointed out that the said item was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 2,11,38,400/- as a partial refund of the business purchase consideration on account of certain objections raised by the assessee. The aforesaid amount was accordingly reduced by the assessee from the amount of Goodwill recorded in the books of account. The Assessing Officer and the CIT(A) have differed with the assessee as according to them the said refund was revenue in nature and therefore it was to be assessed as a revenue receipt. We are unable to appreciate the aforesaid stand of the income-tax authorities. It is quite clear that upon acquisition of the mining and construction business of KWIL, the total consideration paid was capitalized. Therefore, any reduction in the purchase consideration by way of the impugned refund would re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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