Itxa/1099/2007 Of Commissioner Of Income Tax, Central I, Mumbai v. M/S. Birla Global Finance Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1099 OF 2007 The Commissioner of Income Tax,Central-I.....AppellantV/S.M/s. Birla Global Finance Ltd.....Respondent * * * * Mr. Vimal Gupta, Advocate for the appellant. Mr. J.D. Mistry a/w. Mr. Atul K. Jasani, Advocate for the respondent. CORAM :- J.P. DEVADHAR, & SMT. R.P. SONDURBALDOTA, JJ. 17 June, 2011. P.C. :- 1. Whether the ITAT was justified in setting aside the order passed by the CIT under Section 263 of the Income Tax Act, 1961 is the question raised in this Appeal. 2. The assessee company is a Non-Banking Finance Company and is engaged in the business of asset financing, merchant banking and other financial related activities. M/s. Sun Life Assurance Company of Canada approached the assessee company to join its hands as a joint * 2 *ITXA.1099.200717June2011 venture partner to carry on business and services in the financial sector in India under the brand name of both the companies, that of Sunlife, as well as, Birla. As per the agreement, Sunlife of Canada had to make payment to the assessee by way of goodwill in consideration of the facilities made available by the assessee to the Canadian company. Accordingly, Sunlife, Canada made payments on account of goodwill totalling to Canadian Dollars 1.58 crores equivalent to Rs.40.45 crores. The assesee offered the goodwill amounts for taxation as long term capital gains. 3. The assessment was initially completed under Section 143(1)(a) of the Act. Later on, the case was taken up for scrutiny and an assessment order was passed under Section 143(3) read with Section 144 of the Income Tax Act, wherein, the long term capital gains offered by the assessee was accepted and the assessment was completed accordingly. Thereafter, the Commissioner of Income Tax invoked the provisions under Section 263 of the Income Tax Act, 1961 and by the impugned order directed the Assessing Officer to re-do the assessment de-novo after carrying out requisite enquiries as are deemed necessary to find out the nature of the payments made by Sunlife Assurance Company, Canada to the assesseee. On appeal filed by the assessee, the ITAT by the impugned order has set aside the order passed by the CIT under Section 263 of the Income Tax Act, 1961. Hence, this Appeal.4. The ITAT in paragraphs-20 to 23 of its order has recorded a finding of fact that the Assessing Officer by his detailed order has arrived at a conclusion that the assessee had made full disclosure regarding goodwill received by the assesseee and it is impossible to state that the Assessing Officer has not considered the question of goodwill while completing the assessment. The Tribunal has recorded a finding of fact that the Assessing Officer had gone through the nature of the scheme of joint venture partnership and came to the conclusion that as per the joint venture agreement, the Canadian company had paid the goodwill amount. The Tribunal has recorded a finding of fact that the Assessing Officer had examined the Books of Accounts, the mode of receipt and accounting treatment of the payments. The Tribunal accordingly held that the decision of the Assessing Officer was based on due application of mind and therefore, the decision of the Commissioner of the Income Tax in invoking Section 263 was merely based on change of opinion, which is not sustainable in law. In view of the aforesaid finding of fact recorded by the Tribunal, we find no reason to entertain the appeal. The same is dismissed. [SMT. R.P. SONDURBALDOTA, J] [J.P. DEVADHAR, J] * 4 * ITXA.1099.200717June2011