Real EcoEnergy Ltd. v. ITO - Taxpublishers.in

Case Laws Analysis
REFERRED ITO v. Purbanchal Power Co. Ltd. 2014 TaxPub(DT) 3537 (Kol-Trib)
REFERRED ITO v. Purbanchal Power Co. Ltd. 2014 TaxPub(DT) 3537 (Kol-Trib)
REFERRED CIT v. Smifs Securities Ltd. 2012 TaxPub(DT) 2430 (SC)
REFERRED Ashwin Vanaspati Industries v. CIT 2002 TaxPub(DT) 1116 (Guj-HC)

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The Tax Publishers2023 TaxPub(DT) 1176 (Ahmedabad SMC Bench) IN THE ITAT, AHMEDABAD SMC BENCH, SUCHITRA KAMBLE, J.M. Real Eco-Energy Limited, v. ITO, ITA No.1209/Ahd/2019 A.Y. 2013-14 22 February 2023 Assessee by: Tushar Hemani, Sr. Advocate & Revenue by: P.B. Parmar, AR : Shri Ramesh Kumar, JCIT ORDER This appeal is filed by the Assessee against order dated 12-6-2019 passed by the CIT(A)-9, Ahmedabad for the Assessment Year 2013-14. The Assessee has raised the following grounds of appeal :-- 1. The learned Commissioner (Appeals) has erred in law and on facts in confirming the action of assessing officer of making a disallowance under section 32 of the Act of Rs.32,60,276 being depreciation on goodwill. 2. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and principles of natural justice and therefore deserves to be quashed. 3. The learned Commissioner (Appeals) has erred in law and on facts of the case in confirming action of the learned assessing officer in levying interest under section234A/B/C of the Act. 4. The learned Commissioner (Appeals) has erred in law and on facts of the case in confirming action of the learned assessing officer in initiating penalty under section 271(1)(c) of the Act. 3. The assessee company filed original return of income for assessment year 2013-14 on 30-9-2013 declaring total income of Rs. nil. The return of income was selected for scrutiny and notice under section 143(2) of the Income Tax Act, 1961 was issued on 4-9-2014. In response to the notices issued, the learned Authorised Representative of the assessee attended the assessment proceedings from time to time and filed the details. The assessing officer observed that the details regarding nature of business, share holding, details of amalgamation and demerger of the assessee company, unsecured loans, expense, depreciation, deduction, TDS compliance etc. were called for and the same was submitted by the assessee. The assessing officer further submitted that the assessee company filed original return of income on 30-9-2013 declaring total income of Rs. nil after the set off of brought forward losses against current year income of Rs.15,05,936 i.e. business income of Rs.14,47,916 and capital gain of Rs.58,020. Thereafter the assessee company filed revised return of income dated 10-10-2014 declaring current year loss of Rs.17,54,340 i.e. business loss of Rs.18,12,360 and capital gain of Rs.58,020. The assessee company viz. Hillock Agro Foods (India) Limited had applied for scheme of demerger of its flour/agro division into Deepvandana Tradelink Pvt. Ltd. and reorganisation of share capital of assessee company viz. Hillock Agro Foods (India) Ltd. and amalgamation of Real Reality Management Co. Pvt. Ltd. with assessee company viz. Hillock Agro Foods (India) Ltd. on 13-4-2011 and 2011 filed petition on 16-5-2011. The scheme was approved by Honble High Court of Gujarat vide order dated 01-11-2012 with appointed date as on 1-7-2010 and the assessee company field copy of High Court order with Registrar of Companies on 07-2-2013. As per scheme of agreement, the amalgamation and demerger is effective from 7-2-2013. As per the scheme of amalgamation, the name of assessee company viz. Hillock Agro Foods (India) Ltd. was changed to Real Realty Management Company Limited. Since the scheme is effective from 07-2-2013, the effect has been given in financial year 2012-13 i.e. assessment year 2013-14. The assessing officer disallowed the scheme of goodwill and depreciation on goodwill to the extent of Rs.2,50,14,091 as thereby observing that no goodwill has actually arisen as the consideration paid does not exceed the assets received. The assessing officer further made disallowance of goodwill on deferred tax liability to the extent of Rs.1,25,95,905. The assessing officer also made disallowance of depreciation of Rs.32,60,276 thereby stating that the depreciation claimed on goodwill will be disallowed as no goodwill has actually arisen. The assessing officer further rejected the slump sale of the Agro Foods Division. The assessing officer further directed that the assessee was required to furnish copy of ITR, computation of income, assessment order if any in respect of set off of losses for assessment year 2005-06 which were not considered as no details were filed during the course of assessment for assessment year 2012-13. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2023 TaxPub(DT) 1176 (Ahmedabad SMC Bench)

IN THE ITAT, AHMEDABAD SMC BENCH,

SUCHITRA KAMBLE, J.M.

Real Eco-Energy Limited, v. ITO,

ITA No.1209/Ahd/2019

A.Y. 2013-14

22 February 2023

Assessee by: Tushar Hemani, Sr. Advocate &

Revenue by: P.B. Parmar, AR : Shri Ramesh Kumar, JCIT

ORDER

This appeal is filed by the Assessee against order dated 12-6-2019 passed by the CIT(A)-9, Ahmedabad for the Assessment Year 2013-14.

The Assessee has raised the following grounds of appeal :--

1. The learned Commissioner (Appeals) has erred in law and on facts in confirming the action of assessing officer of making a disallowance under section 32 of the Act of Rs.32,60,276 being depreciation on goodwill.

2. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and principles of natural justice and therefore deserves to be quashed.

3. The learned Commissioner (Appeals) has erred in law and on facts of the case in confirming action of the learned assessing officer in levying interest under section234A/B/C of the Act.

4. The learned Commissioner (Appeals) has erred in law and on facts of the case in confirming action of the learned assessing officer in initiating penalty under section 271(1)(c) of the Act.

3. The assessee company filed original return of income for assessment year 2013-14 on 30-9-2013 declaring total income of Rs. nil. The return of income was selected for scrutiny and notice under section 143(2) of the Income Tax Act, 1961 was issued on 4-9-2014. In response to the notices issued, the learned Authorised Representative of the assessee attended the assessment proceedings from time to time and filed the details. The assessing officer observed that the details regarding nature of business, share holding, details of amalgamation and demerger of the assessee company, unsecured loans, expense, depreciation, deduction, TDS compliance etc. were called for and the same was submitted by the assessee. The assessing officer further submitted that the assessee company filed original return of income on 30-9-2013 declaring total income of Rs. nil after the set off of brought forward losses against current year income of Rs.15,05,936 i.e. business income of Rs.14,47,916 and capital gain of Rs.58,020. Thereafter the assessee company filed revised return of income dated 10-10-2014 declaring current year loss of Rs.17,54,340 i.e. business loss of Rs.18,12,360 and capital gain of Rs.58,020. The assessee company viz. Hillock Agro Foods (India) Limited had applied for scheme of demerger of its flour/agro division into Deepvandana Tradelink Pvt. Ltd. and reorganisation of share capital of assessee company viz. Hillock Agro Foods (India) Ltd. and amalgamation of Real Reality Management Co. Pvt. Ltd. with assessee company viz. Hillock Agro Foods (India) Ltd. on 13-4-2011 and 2011 filed petition on 16-5-2011. The scheme was approved by Honble High Court of Gujarat vide order dated 01-11-2012 with appointed date as on 1-7-2010 and the assessee company field copy of High Court order with Registrar of Companies on 07-2-2013. As per scheme of agreement, the amalgamation and demerger is effective from 7-2-2013. As per the scheme of amalgamation, the name of assessee company viz. Hillock Agro Foods (India) Ltd. was changed to Real Realty Management Company Limited. Since the scheme is effective from 07-2-2013, the effect has been given in financial year 2012-13 i.e. assessment year 2013-14. The assessing officer disallowed the scheme of goodwill and depreciation on goodwill to the extent of Rs.2,50,14,091 as thereby observing that no goodwill has actually arisen as the consideration paid does not exceed the assets received. The assessing officer further made disallowance of goodwill on deferred tax liability to the extent of Rs.1,25,95,905. The assessing officer also made disallowance of depreciation of Rs.32,60,276 thereby stating that the depreciation claimed on goodwill will be disallowed as no goodwill has actually arisen. The assessing officer further rejected the slump sale of the Agro Foods Division. The assessing officer further directed that the assessee was required to furnish copy of ITR, computation of income, assessment order if any in respect of set off of losses for assessment year 2005-06 which were not considered as no details were filed during the course of assessment for assessment year 2012-13.