S. C. Johnson Pvt. Ltd Vs DCIT (ITAT Delhi)
ITAT Delhi deleted MAT addition on goodwill amortisation in SC Johnson case, noting it was recorded under a court-approved scheme and fully disclosed in audited accounts.
ITAT Delhi holds reassessment invalid in SC Johnson Pvt Ltd case citing change of opinion, mechanical approval, and lack of fresh material.
Delhi Bench of the Income Tax Appellate Tribunal (“ITAT”) delivered a common order in three connected appeals filed by S.C. Johnson Pvt. Ltd., engaged in manufacturing and trading of insect control and air care products, relating to Assessment Years (AYs) 2006-07, 2007-08, and 2008-09. The central dispute in AY 2006-07 concerned the validity of reassessment proceedings initiated under Section 147 of the Income-tax Act, 1961, while AY 2007-08 dealt with adjustments to book profits on account of goodwill amortisation following an amalgamation.
AY 2006-07: Reassessment Challenge
The assessee had originally filed its return on 30 November 2006 declaring nil income after claiming deductions under Sections 80IB and 80IC. The case was scrutinised under Section 143(3) and an assessment order was passed on 24 December 2009. Later, reassessment proceedings were initiated under Section 147 by issuing a notice under Section 148 on 17 November 2011, based on the claim that prior period expenses of ₹3.45 crore had been wrongly debited in FY 2005-06 instead of FY 2006-07.
