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TMI Blog2025 (2) TMI 306X X X X Extracts X X X X X X X X Extracts X X X X ..... he individual value of the assets, which are duly reflected in the schedule to the Slump Sale Agreement as well as in the valuation report. Therefore, the entire basis on which the reasons recorded is dehors the basic concept of Slump Sale which the petitioner and the acquisition of the injectable unit by the petitioner from its holding Company as a going concern for Rs. 554 crore. The reasons recorded pertaining to the submission made by the holding Company of the petitioner before the Settlement Commission so as to disallow the depreciation claimed by the petitioner on such submission of accommodation entry for purchase of the capital assets on the WDV of such capital assets, it would be without any basis as the claim of depreciation made by the petitioner has nothing to do with the WDV reflected in the books of accounts of M/s. Claris Lifesciences Pvt. Ltd. as the petitioner is entitled to depreciation on the basis of the valuation made by the expert valuer of each of the assets forming part of the sale consideration of the Rs. 55 crore and the balance is treated as a goodwill upon which the depreciation was allowed by the AO at the rate of 25% during the course of the regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MAT) on the Book Profit of Rs. 43,28,88,179/- amounting to Rs. 80,084,313/-. 6. The respondent Assessing Officer conducted a detailed scrutiny by issuing notice under section 142 (1) dated 18.8.2017 calling for various details relating to amalgamation/ demerger, intangible assets, additional depreciation, tax audit report etc. The petitioner filed detailed replies from time to time and after considering the same, the Assessment Order dated 22.12.2017 was passed under Section 143 (3) of the Act. 7. The respondent Assessing Officer thereafter issued impugned notice for reopening on 26.3.2021. The petitioner filed its return of income in compliance to the notice under Section 148 on 20.04.2021, which was similar to the original return file and sought reasons recorded for opening of the file, which were provided on 12.5.2021. 8. The reasons recorded by the Assessing Officer are mainly on the three counts which can be summarized as under:- (I) The petitioner company (M/s. Claris Injectable Limited, which is now known as Baxter Pharmaceuticals India Pvt. Ltd. acquired injectable business from its holding company M/s. Claris Lifescience Limited on Slump Sale basis for value of Rs. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and CWIP of Rs. 96.94 crore as per the information received with regard to the admission of the said Company to the effect that the said amount pertains to accommodation entries of capital asset purchases and therefore, the resultant depreciation would not be allowable to the petitioner, it was submitted that the petitioner purchased the injectable unit of the M/s. Claris Lifesciences Private Limited as a going concern for Slump Sale price of Rs.554 crore after obtaining the valuation report of a renowned valuer, who has physically verified each assets for the valuation purpose, which is duly reflected in the Agreement for Slump Sale, which contains the detailed schedule of the plant and machinery transferred to the petitioner in the Slump Sale. It was contended that the purchase of business undertaking assets acquired by the petitioner while purchasing the business undertaking are genuinely in existence and the same were certified and valued by the expert valuer and therefore, the allegation contained in the reasons recorded to that effect that WDV of the assets and deduction claimed in respect of depreciation allowance and deduction under Section 32 AC, which were earlier owned b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. S.N. Soparkar for the petitioner invited the attention of the Court to the page 36 of the paper book to point out that the additional depreciation was claimed by the petitioner on additions made between 1.10. 2014 to 31.3.2015 amounting to Rs. 1,499,371,846/- and as such assets were purchased by the assessee after acquiring the injectable unit and after 30th September 2014, additional depreciation though allowable at 20% has claimed only 10% of the amount of addition amounting to Rs. 149,937,185/-. The reference was also made to the detailed working of such claim made by the petitioner in the reply filed in the objection raised at page 196 of the Paper Book to point out that the Assessing Officer has mixed up the issue of regular depreciation at the rate of 7.5%, which was claimed by the assessee on the amount of cost of machineries acquired on Slump Sale basis and the additional depreciation at the rate of 10% on cost of eligible machineries after acquiring the business on Slump Sale basis. 16. With regard to the reasons for reopening in relation to the assets, which are said to be not in existence in view of the order passed by the Settlement Commission under 245D (4) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned notice is made as per the reasons recorded being the income escaped from the assessment is the income which is taxed under Section 115JB is concerned, there would not be any taxable income after proposed addition. It was therefore submitted that the Assessing Officer therefore could not have assumed the jurisdiction to issue the impugned notices. 19. It was further submitted that so far as the depreciation on goodwill and additional depreciation on the assets acquired after 1.11.2014 are concerned, both the issues are considered by the Assessing Officer during the regular course of assessment and therefore, there is a mere change of opinion while issuing the impugned notice for reopening. So far as the contention of the respondent Assessing Officer for the issue of claiming depreciation and additional depreciation on the assets which were alleged to be not non-existence, it was submitted that the Assessing Officer, in absence of any material available on record from which the requisite belief could be formed having rational connection or live link with the formation of such belief, could not have assumed the jurisdiction. 20. It was therefore submitted that the impugned noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision in case of Peass Industrial Engineers (P.) Ltd. Vs. Deputy Commissioner of Income Tax reported in (2016) 72 taxmann.com 302 (Gujarat). Referring to the above decisions of this Court, wherein the reliance was placed on the decision of the Hon'ble Apex Court in the case of Asst. CIT Vs. Rajesh Jhaveri Stock Brokers (P.) Ltd. (2007) 291 ITR 500 and Raymond Woolen Mills Ltd. Vs. ITO (1999) 236 ITR 34 SC and Phul Chand Bajrang Lal Vs. ITO reported in (1993) 203 ITR 456 and other similar decisions, it was submitted that once the Assessing Officer has specific and reliable information having reasonable belief, it would not be open to go into the sufficiency of the reasons for forming the belief. It was further submitted that the Court may look at the view taken by the Assessing Officer and can examine whether the material available on record from which the requisite belief has been formed having rational connection or live link with the formation of such belief. It was therefore submitted in the facts of the case that when the Assessing Officer is having information that the seller M/s. Claris Lifesciences Pvt. Limited had submitted before the Settlement Commission of availing ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ines 'Slump Sale' as under:- "(42C)"slump sale" means the transfer of one or more [undertaking, by any means,] for a lump sum consideration without values being assigned to the individual assets and liabilities in such [transfer]. Explanation 1.--For the purposes of this clause, "undertaking" shall have the meaning assigned to it in Explanation 1 to clause (19AA). Explanation 2.--For the removal of doubts, it is hereby declared that the determination of the value of an asset or liability for the sole purpose of payment of stamp duty, registration fees or other similar taxes or fees shall not be regarded as assignment of values to individual assets or liabilities. [Explanation 3.--For the purposes of this clause, "transfer" shall have the meaning assigned to it in clause (47);]" 26. From the above definition, it is clear that the Slump Sale means transfer of one or more undertaking for a lumpsum consideration without values being assigned to the individual assets and liabilities. Therefore, the petitioner has purchased the entire injectable unit on Slump Sale basis for Rs.55 crore without values being assigned to individual assets and liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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