Case Law Details
Real Eco-Energy Limited Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that depreciation on goodwill duly available as goodwill has been taken into account while determining the face value of the shares which is treated as consideration in the scheme of amalgamation.
Facts- Post filing of original return, assessee filed revised return declaring business loss and capital gain. The assessee company viz. Hillock Agro Foods (India) Limited had applied for a scheme of demerger of its flour/agro division into Deep Vandana Trade link Pvt. Ltd. and reorganization of share capital of assessee company viz. Hillock Agro Foods (India) Ltd. and amalgamation of Real Realty Management Co. Pvt. Ltd. with assessee company viz. The scheme was approved by High Court of Gujarat vide order dated 01.11.2012 with appointed date as on 01.07.2010.
As per scheme of agreement, the amalgamation and demerger is effective from 07.02.2013. 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. AO 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. Being aggrieved, the present appeal is preferred.
Conclusion- Held that the goodwill was integral part of the amalgamation scheme and, therefore, the valuation itself could not be doubted by the Assessing Officer when it has been properly sanctioned and approved by the company as well as by the High Court. The reference of Hon’ble Apex Court in the case of Smifs Securities Limited (supra) is applicable in the present case as the assessee is eligible for claiming depreciation on goodwill as goodwill has been taken into account while determining the face value of the shares which is treated as consideration in the scheme of amalgamation. Hence, appeal of the assessee is allowed.
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