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TMI Blog2025 (1) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... abilities of Industrial Solid Waste business unit of CBTPL were transferred and vested with the assessee. Whereas, post-merger, CBTPL continued with the business of Municipal Solid Waste Management. In support of such contention, the assessee had furnished the scheme of Amalgamation, minutes of board meeting of CBTPL as well as the details of assets and liabilities appearing in the books of CBTPL before demerger. Thus, from the aforesaid facts, it is very much clear that in course of assessment proceeding, the A.O. had enquired in detail regarding the claim of depreciation on goodwill. Facts on record clearly demonstrate that allegation of transfer of trade receivable of Municipal Solid Waste Division to the assessee is totally unfounded and rather contrary to the facts and materials on record. In contrast, the Board Resolution of CBTPL and other facts and materials, clearly establish that the trade receivable pertaining to Municipal Waste Division, was never transferred to the assessee under the scheme of Amalgamation. Thus, in our considered opinion, ld. PCIT has completely misconceived the facts while exercising jurisdiction u/s. 263 of the Act harbouring a wrong notion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he documentary evidences, the A.O. ultimately completed the assessment u/s. 143(3) of the Act vide order dated 15.04.2021, determining the total income at Rs. 3,07,74,710/-, after making couple of statutory disallowances u/s. 43B and 36(1)(va) of the Act. 5. After completion of assessment as aforesaid, ld. PCIT, in exercise of powers u/s. 263 of the Act, called for and examined the assessment records of the assessee. While doing so, he was of the view that the assessment order is erroneous and prejudicial to the interest of the Revenue due to the following reasons. Ld. PCIT observed that as per records, the assessee had issued shares to CBTPL and net liabilities over assets were considered as 'Goodwill', which amounted to Rs. 15,48,23,374/-. The goodwill so generated was capitalized and depreciation @ 25% amounting to Rs. 3,87,05,844/- was claimed by the assessee. However, ld. PCIT observed, as per record of CBTPL, trade payable of Rs. 80,31,286/- and trade receivable of Rs. 9,46,42,705 (net trade receivable being Rs. 8,66,11,419/-), also pertains to the undertaking taken over by the assessee. He was of the view, non-consideration of trade receivable has resulted in excess claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject matter of proceedings u/s. 263 of the Act, since relates to Municipal Solid Waste Division, was never transferred to the assessee. In this context, ld. Counsel drew our attention to copy of Board Resolution dated 19.12.2023 and the book value of net of assets of CBTPL immediately before demerger as on 31.03.2017. Thus, he submitted, under pure misconception of facts, ld. PCIT has wrongly invoked jurisdiction u/s. 263 of the Act, though, in reality, the assessment order is neither erroneous, nor prejudicial to the interest of the Revenue. Thus, he submitted, the order passed u/s. 263 of the Act, being invalid, should be quashed. 9. The learned Departmental Representative ('ld. DR' for short) strongly relied upon the observations of the ld. PCIT. 10. We have considered rival submissions and perused the materials on record. There cannot be any doubt that the exercise of jurisdiction u/s. 263 of the Act is with reference to claim of depreciation on goodwill. As discussed earlier, in terms with a scheme of Amalgamation sanctioned by NCLT, the assessee acquired the assets and liabilities of CBTPL w.e.f 31.03.2017. The part of assets acquired under the scheme of Amalgamat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed undertaking (in INR) Book value of demerged undertaking (in INR) Comments Assets: Fixed Assets 2,29,54,536 Non-current investments 25,000 Long-term loans and advances 62.500 Short-term loans and advances 3,65,06,230 INR 3,32,70,700 classified as Long- term loans and advances in RSS books Cash and bank balances 79,305 Trade receivables 9,46,42,705 Liabilities: Long-term borrowings (1,75,00,000) Short-term borrowings (6,87,76,297) INR 20,76,100 reclassified as Long term borrowings in RSS books Deferred tax liabilities (net) (80,842) Long-term provisions (1,93,641) Short-term provisions (34,90,236) (8,06,603) Trade payables (80,31,286) Other current liabilities (9,41,93,262) INR 82,63,786 reclassified as Shortterm borrowings in RSS books Net Assets 8,31,21,183 (12,19,23,074) 13. Whereas, as per the minutes of meeting of Board of Directors of CBTPL held on 29.12.2017, a copy of which is placed in the paper book, it is quite evident that only the Industrial Solid Waste Division was transferred to the assessee as per scheme of Amalgamation/arrangement approved by NCLT. On a careful scrutiny of Board Resolution of CBTPL, kept i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,65,85,535 14. Thus, facts on record clearly demonstrate that allegation of transfer of trade receivable of Municipal Solid Waste Division to the assessee is totally unfounded and rather contrary to the facts and materials on record. In contrast, the Board Resolution of CBTPL and other facts and materials, clearly establish that the trade receivable pertaining to Municipal Waste Division, was never transferred to the assessee under the scheme of Amalgamation. Thus, in our considered opinion, ld. PCIT has completely misconceived the facts while exercising jurisdiction u/s. 263 of the Act harbouring a wrong notion that the trade receivable relating to Municipal Waste Division has been transferred to the assessee. At this stage, it is relevant to observe, on carefully going through the impugned order of the ld. PCIT, it can be seen that in course of proceeding u/s. 263 of the Act, the assessee, in fact, had attempted to remove the factual misconception in the mind of the revisionary authority. It is further relevant to observe, ld. PCIT was also partially convinced with the submissions of the assessee, which is evident from his observations made in paragraph 6.1.1 of the impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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