ACIT Vs Ammann India Pvt Ltd (Supreme Court of India)
The case concerns reassessment proceedings initiated under the Income Tax Act, 1961 for Assessment Year (AY) 2018–19 and the subsequent challenge to those proceedings. The petitioner sought relief under Article 226 of the Constitution of India requesting that the notice issued under Section 148 and the order passed under Section 148A(d) dated 26 March 2024 be quashed.
The petitioner had received a notice under Section 148A(b) dated 6 March 2024 asking it to explain why a notice under Section 148 should not be issued for AY 2018–19. The reasons recorded stated that the assessee had filed its return of income on 30 November 2018 declaring total income of ₹55,65,96,580. The case was selected for complete scrutiny through CASS and an assessment order under Section 143(3) read with Sections 143(3A) and 143(3B) was passed on 13 March 2021 determining the total assessed income at ₹58,23,80,090 after making additions of ₹2,41,03,000 relating to royalty expenses and donation.
Read High Court Judgment in this case: Ammann India Private Limited Vs ACIT (Gujarat High Court)
During examination of financial statements and the tax audit report, the Assessing Officer observed that the assessee had reported intangible assets of ₹53,17,57,633 and claimed depreciation at 25%, amounting to ₹13,29,39,408. The intangible asset was stated to have been created during FY 2013–14 upon acquisition of Gujarat Apollo Industries Ltd. The officer also referred to earlier proceedings in AY 2014–15 where the Transfer Pricing Officer had made an upward adjustment of ₹116.32 crore. Based on directions issued by the Dispute Resolution Panel under Section 144C(5), depreciation of ₹29,08,15,170 on goodwill had been disallowed. According to the Assessing Officer, goodwill could only be recorded to the extent reflected in the books of Gujarat Apollo Industries Ltd prior to acquisition. The recording of goodwill of ₹1,16,32,60,681 by the assessee was therefore considered inconsistent with the provisions of the Act, and the depreciation claim was treated as a violation of the Act. On this basis, the officer indicated that income of ₹13,29,39,408 had escaped assessment.
