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TMI Blog2024 (12) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... on on Goodwill by the assessee was not examined by the AO and no query/information was sought from the assessee. Such being the facts, we are of the considered view that PCIT has rightly invoked its jurisdiction u/s 263 of the Act and initiated the revisionary proceedings. PCIT has also directed the AO to verify whether the transferor company has declared profits on the transfer and paid taxes on the same. PCIT has given its findings on the merits of the claim of Depreciation on Goodwill. Once the assessment order passed under section 143(3) r.w. section 144B of the Act has been set aside for de novo adjudication on limited issue, pursuant to the impugned order passed u/s 26 such observations are irrelevant at this stage and the AO should decide the issue of claim of Depreciation on Goodwill as per law. We order accordingly. Thus, we uphold the invocation of revisionary proceedings u/s 263 of the Act by the learned PCIT. Accordingly, the grounds raised by the assessee are dismissed. - Shri Om Prakash Kant, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Ms. Khevana Gandhi For the Revenue : Mr. R.A. Dhyani, CIT-DR ORDER PER SANDEEP SINGH KARHAI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the value of international transactions entered into by the assessee, the Assessing Officer ( AO ) vide order dated 24/09/2021 passed under section 143(3) r.w. section 144B of the Act concluded the assessment by accepting the return of income filed by the assessee. 5. Subsequently, the learned PCIT issued show cause notice under section 263 of the Act on the basis that during the year under consideration, the assessee claimed depreciation on Goodwill upon acquisition of business of Vernallis Systems Pvt. Ltd., Chennai on a slump sale basis under Business Transfer Agreement for a total consideration of Rs. 72,69,50,000/- and treated the consideration paid in excess of the value of assets as Goodwill. The learned PCIT, vide aforesaid show cause notice, alleged that the assessee has claimed depreciation to the extent of 25% on intangible asset recognized as Goodwill in its books, which aspect was not examined by the AO while passing the assessment order under section 143(3) r.w. section 144B of the Act and failure to examine the aforesaid aspect has resulted in under assessment of income to the extent of Rs. 16,95,64,200/-. Accordingly, the assessee was asked to show cause as to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xes on the same and accordingly re-assess the income after giving an opportunity of being heard to the assessee. Being aggrieved, the assessee is in appeal before us. 9. During the hearing, the learned Authorized Representative ( learned AR ) by referring to the notices issued during the assessment proceedings under section 143(2) and section 142(1) submitted that a specific query was raised by the AO, during the assessment proceedings, in respect of intangible assets acquired by way of slump sale. The learned AR submitted that all the notices were duly responded to and necessary details, as called for, were furnished by the assessee before the AO and after consideration of same, vide assessment order passed under section 143(3) r.w. section 144B of the Act the claim of Depreciation on Goodwill was allowed by the AO. Thus, the learned AR submitted that the aspect of the claim of Depreciation on Goodwill was duly examined by the AO during the assessment proceedings and it is not a case where the claim of the assessee was allowed without making any inquiry during the assessment proceedings. 10. On the contrary, the learned Departmental Representative ( learned DR ) by vehemently rely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of purchase (d) Amount paid (e) Mode of payment (f) Source of payment. 13. Further, vide notice dated 15.09.2021 issued under section 142(1) of the Act, the AO sought the following information from the assessee in respect of Goodwill purchased under the Business Transfer Agreement: - 1. It is seen that during the year under consideration you had purchased Goodwill of Rs. 72,69,50,000/- as per Business Transfer Agreement and stamp duty was also paid on the same amount whereas the Goodwill has been recorded at Rs. 67,82,56,801/- in your books of account. Kindly explain such difference. 2. As regard to source of payment for purchasing goodwill, it is seen that you had issued 623 shares @ Rs. 2,66,000/- per share. Kindly provide the valuation report of the equity share and furnish the following detail:- S.No. Name and address PAN No. of equity share Nominal value per equity share NAV per share Premium Received per share Total amount received 14. We find that all the notices were duly responded to by the assessee and the details as sought were furnished during the assessment proceedings. On the basis of the aforesaid notices issued under section 143(2) and section 142(1) of the Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. 16. From the perusal of the provisions of clause (a) and clause (b) of the aforesaid explanation, it is evident that in case the assessment order is passed without making inquiries or verification which should have been made or the assessment order has been passed allowing any relief without inquiring into the claim of the assessee, then the said assessment order shall be deemed to be erroneous insofar as it is prejudicial to the interest of the Revenue. From the perusal of the material placed on record by the assessee, it is discernible that the aspect of the claim of Depreciation on Goodwill by the assessee was not examined by the AO and no query/information was sought from the assessee. Such being the facts, we are of the considered view that the learned PCIT has rightly invoked its jurisdiction under section 263 of the Act and initiated the revisionary proceedings. 17. We find that vide impugned order, the learned PCIT has also directed the AO to verify whether the transferor company has declared profits on the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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