M/S Capita India Private Limited v. Kotwal, Jj

Priya Soparkar IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.221 OF 2017 The Pr.Commissioner of Income Tax-9 … Appellant V/s. M/s Capita India Private Limited … Respondent --- Mr.Tejveer Singh for the Appellant.Mr.Madhur Agrawal i/by Mr.Atul Jasani for the Respondent. --- CORAM : AKIL KURESHI AND SARANG V. KOTWAL, JJ. DATE : APRIL 22, 2019. P.C.:- 1.Revenue has filed this appeal against the judgment of the Income Tax Appellate Tribunal. Following question is presentedfor our consideration:- “Whether on the facts and circumstances of thecase and in law, the order of the ITAT has erred inrestricting itself to the technicality and theapplicability of provisions of sec.69C withoutexamining as to whether writing of goodwill hasresulted in siphoning of funds or not?” Priya Soparkar 2.Brief facts are as under:- The respondent-assessee is a private limited company.During the period relevant to the assessment year in question i.e.assessment year 2010-11, the assessee had acquired a unit onslump sale basis. The sale consideration included sum of Rs.44.22crores by way of goodwill. In its account book the assessee hadwritten off the said goodwill amount of Rs.44.22 crores. However,by claiming deduction under Section 10A of the Income Tax Act,1961, the assessee had arrived at a total profit by adding theportion of the goodwill. The Assessing Officer objected to this andheld that the entire exercise was a colourbale device to avoid tax.He made additions by invoking Section 69C of the Act. TheTribunal by impugned judgment deleted such additions observinginter-alia that the goodwill written off has been added back andadjusted. It was under Section 10A of the Act, which the assesseewas undoubtedly entitled to. Quite apart from not finding anyerror in the view of the Tribunal, we are surprised how AssessingOfficer invoked Section 69C of the Act. This provision would beapplicable where the assessee had incurred any expenditure andhe offers or no explanation for such expenditure or part thereof or Priya Soparkar the explanation offered by the assessee is not satisfactory. In the present case, the assessee has made payments through cheque,at the time of execution of the agreement. The Assessing Officerhas not doubted the source of such payment. In the result,Appeal is dismissed. (SARANG V. KOTWAL, J.) (AKIL KURESHI, J.)….