CAPITA INDIA P.LTD, MUMBAI V. ASST CIT 9(2)(1), MUMBAI

ITA 2810/MUM/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3388 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 12-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAYASAGAR
• Assessee Lawyers: A V SONDE
• Keywords: Unexplained expenditure; Business income; Earning of tax free income; Additional evidence
• Section: 69C; 142(1); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI AMIT SHUKLA , JM AND SHRI RAJESH KUMAR , AM ./ I.T.A. NO. 2350 AND 2810 /MUM / 2015 ( / ASSESSMENT YEAR S : 2009 - 10 AND 2010 - 11 ) CAPITA INDIA PRIVATE LIMITED, PLANT 6, GODREJ AND BOYCE COMPLEX, PIROJSHAHNAGAR, LBS MARG, VIKROLI WEST, MUMBAI - 400079 / VS. ASSTT. COMMISS IONER OF INCOME TAX - 9(2)(1) (ERSTWHILE DCIT 5(1), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ./ PAN : AABCE7046A ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI A V SONDE / RESPONDENT BY : SHRI DAYASAGAR / DATE OF HEARING : 6 .1.2016 / DATE OF PRONOUNCEMENT : 23. 3. 2016 / O R D E R PER RAJESH KUMAR , AM : THESE TWO APPEALS ARE FILED BY THE A SSESSEE AGAINST THE SEPARATE ORDER S OF LD. CIT(A) DATED 27.2.2015 FOR AY 2009 - 10 AND DATED 11.3.2014 FOR AY 2010 - 11. SINCE ISSUE INVOLVED IN THESE CASES IS COMMON AND THEREFORE, THESE APPEALS ARE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDAT ED ORDER FOR THE SAKE OF CONVENIENCE. 2. SINCE THE GROUNDS OF APPEAL IN BOTH THE APPEALS ARE COMMON EXCEPT FOR THE FIGURES, THEREFORE, WE REPRODUCE THE GROUNDS OF APPEAL TAKEN IN ASSESSMENT YEAR 2009 - 10. ITA NO.2350/ MUM/20 15 AND 2850/M/2015 2 1. THE FOLLOWING GROUND / S UB - GROUND OF APP EAL ARE INDEPENDENT OF, AND STRICTLY WITHOUT PREJUDICE TO ONE ANOTHER: I. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 16 ['C I T(A)'] ERRED IN CONFIRMING THE ADDITION OF RS.66,87,55,158 UNDE R SECTION 69C OF THE ACT MADE BY THE ASSESSING OFFICER. 2. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.66,87,55,158 / - UNDER SECTION 69C OF THE ACT EVEN THOUGH THE ASSESSING OFFIC ER HAD NEITHER GRANTED ANY OPPORTUNITY NOR ISSUED ANY SHOW CAUSE NOTICE TO THE APPELLANT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR SUBMITTING THE APPELLANT'S CONTENTIONS FOR NON - APPLICABILITY OF SECTION 69C OF THE ACT. 3. BASED ON THE FACTS AN D CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE ADDITIONAL EVIDENCE FILED BY THE APPELLANT IN SUPPORT OF ITS CONTENTIONS FOR NON - APPLICABILITY OF SECTION 69C OF THE ACT. 4. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CJT(A) ERRED IN UPHOLDING AO'S CONTENTION THAT THE APPELLANT HAD ADOPTED COLOURABLE DEVICE FOR TAX AVOIDANCE WITHOUT PROVIDING ANY SPECIFIC FINDING IN THE APPELLATE ORDER TO THIS EFFECT. 5. BASED ON THE FACTS AND CIRCUMS TANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT PASSING A SPEAKING ORDER AND MERELY CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER. 3. THE ISSUE RAISED IN TH IS APPEAL RELATES TO CONFIRMATION OF ADDITION OF RS.66,87,55,158 / - BY TH E LD.CIT(A) AS MADE BY THE AO UNDER SECTION 69C OF THE ACT WITHOUT GIVING ANY OPPORTUNITY OR SHOW CAUSE NOTICE TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND A LSO NOT CONSIDERING THE EVIDENCE FILED BY THE ASSESSEE TO PROVE THAT THE PROVISIONS OF SECTION 69C WERE NOT APPLICABLE AND WRITING OF F GOODWILL WAS NOT COLORABLE DEVICE TO EVADE ANY TAX LIABILITY. ITA NO.2350/ MUM/20 15 AND 2850/M/2015 3 4. FACTS OF THE CASE ARE THAT THE ASSESSEE E - FILED ITS RETURN OF INCOME ON 30.9.2009 DECLARING TOTAL INCOME AT RS.47,23,270/ - . THE RETURN WAS PR OCESSED UNDER SECTION 143(1) AND SELECTED FOR SCRUTINY UNDER CASS. THE STATUTORY NOTICE S U/S 143(2) AND 142(1) W ERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF BUSINESS P ROCESS O UTSOURCING SERVICES/IT ENABL ED SERVICES (ITES). DURING THE YEAR, THE ASSESSEE HAVING FOUR OPERATING UNITS OF IT ENABLED O UTSOURCING S ERVICES IN RESPECT OF WHICH THE ASSESSEE HAD CLAIMED EXEMPTION U/S 10A OF THE ACT. THESE UNITS WERE LOCATED AT 5 TH FLOOR, LOGITECH PARK, TOW ER - I, PHASE - II, M V ROAD, SAKI NAKA, ANDHERI - (E), MUMBAI - 400072. DURING THE YEAR THE COMPANY HAD ACQUIRE D BUSINESS UNDERTAKING PPMS PERTAINING TO ACTIVITY OF CUSTOMER CONTACT CENTRE SERVICES AND BACK OFFICE SERVICES FOR MATURED LIFE AND PENSIONS BUSIN ESS AT A TOTAL PURCHASE CONSIDERATION OF RS.86.69 CRORES WHICH WAS DULY STATED BY WAY OF NOTE IN THE SCHEDULE - 16 NOTES TO ACCOUNTS TO THE BALANCE SHEET. AS PER THE AGREEMENT, THE ASSESSEE ACQUIRED NET ASSETS OF RS.20,11,63,000/ - AGAINST THE PURCHAS E PRICE OF RS. 86,69,18,000/ - AND CONSEQUENTLY THE DIFFERENCE BETWEEN THE PURCHASE CONSIDERATION AND ASSET SO ACQUIRED OF RS.66,87,55,000/ - WAS TREATED AS GOODWILL. IN PAR A 1 AND 13 OF THE SCHEDULE 16 OF NOTES TO THE ACCOUNT OF THE BALANCE - SHEET, TH E COMPANY STATED THAT THE COMPANY HAS IMPAIRED THE ENTIRE GOODWILL RECOGNIZED PURSUANT TO THE BUSINESS PURCHASE AGREEMENT WITH PPMS AS SAME BEING OF NOT OF ANY REALIZABLE VALUE (RECOVERABLE VALUE). THE IMPAIRMENT LOSS REPRESENTS WRITE OFF OF GOODWILL DURING THE YEAR AND WAS CHARGED TO THE PROFIT AND LOSS ACCOUNT. AT THE TIME OF FILING OF THE RETURN, THE GOODWILL WAS ADDED BACK TO THE PROFIT AS PER PROFIT AND LOSS ACCOUNT IN RESPECT OF VIKHROLI UNIT AND THE SAID PROFITS WERE CLAIMED TO BE EXEMPT U/S 10A OF THE ACT. D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED FROM THE COMPUTATION OF THE TOTAL INCOME THAT THE ASSESSEE ADDED ITA NO.2350/ MUM/20 15 AND 2850/M/2015 4 BACK THE SUM OF RS.66,87,55,000/ - TO THE NET PROFIT OF RS.17,47,00,000/ - IN THE VIKHROLI UNIT (2), AND THU S ARRIVED AT A BUSINESS INCOME AT RS.86,96,91,077/ - FROM THE NEW UNIT AND CLAIMED THE SAME AS EXEMPT U/S 10A OF THE ACT. THE ASSESSEE WAS CALLED UPON TO JUSTIFY THIS CLAIM OF WRITING OFF OF GOODWILL BY ISSU ING A SHOW CAUSE NOTICE AS TO WHY THE SAME SHO ULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE . IN RESPONSE ASSESSEE FILED ITS EXPLANATION AND JUSTIFICATION HOWEVER, T HE AO ADDED THE AMOUNT OF GOODWILL DURING THE YEAR TO THE INCOME OF THE ASSESSEE U/S 69C OF THE ACT BY REJECTING THE CONTENTION OF THE ASSESSEE THAT THE GOODWILL ARISING OUT OF ACQUISITION OF BUSINESS OF CUSTOMER CONTACT CENTRE SERVICES AND BACK OFFICE SERVICES FOR MATURED LIFE AND PENSIONS BUSINESS LOCATED AT VIKHORI ON SLUMP SALE BASIS IS NOTHING BUT A ADJUSTMENT ENTRY TO WIP E OUT THE AMOUNT OF GOODWILL WHICH HAS NO VALUE AND IS TAX NEUTRAL . THE LD. CIT(A) UPHELD THE ADDITION BY HOLDING AS UNDER : 2.4 AFTER CAREFUL PERUSAL OF THE ASSESSMENT ORDER AND WRITTEN SUBMISSIONS OF THE A/R OF THE APPELLANT IT HAS BEEN OBSERVED THA T VIDE GROUNDS OF APPEAL NO.1, THE APPELLANT COMPANY HAS CHALLENGED THE ACTION OF THE AO OF MAKING ADDITION OF RS.66,87,55,158/ - ON ACCOUNT OF GOODWILL WRITTEN OFF IN THE BOOKS OF ACCOUNTS. ACCORDING TO THE DETAILED FINDINGS OF THE AO THERE ARE NUMBER OF REASONS WHICH HAS BEEN REPRODUCED FROM (A) TO (G) IN PARA 33 UNDER THE HEAD OBSERVATION BY THE AO AND OUR SUBMISSIONS THE APPELLANT HAS ADOPTED A COLOURABLE DEVICE AND THE APPELLANT COMPANY HAS SIPHONED OF AN AMOUNT OF RS. 66.87 CRORES. HENCE, HE HAS MA DE AN ADDITION U/S 69C OF THE INCOME TAX ACT,1961. THE A/R OF THE APPELLANT HAS ALSO GIVEN PARAWISE REPLY TO THE OBJECTIONS RAISED BY THE AO SIMPLY BECAUSE THE FACT THAT THE GOODWILL ACQUIRED BY THE APPELLANT COMPANY HAS BEEN WRITTEN OFF BY DECLARING I T AS IMPAIRED ON 31.3.2009 WHICH MAKES IT A COLOURABLE TRANSACTION. HENCE, THE ADDITION MADE BY THE AO IS CONFIRMED AN THE GROUND OF APPEAL NO.1 IS DISMISSED ITA NO.2350/ MUM/20 15 AND 2850/M/2015 5 5. THE LD. AR SUBMITTED BEFORE US THAT THE ASSESSEE DURING THE YEAR, ACQUIRED THE BUSINESS OF THE COMPANY PERTAINING TO THE ACTIVITY AND CUSTOMER CONTACT CENTRE SERVICES AND BACK OFFICE SERVICES FOR A CONSIDERATION OF RS.86,69,18,000/ - IN SLUMP S ALE . THE BOOK VALUE OF THE ASS ET SO ACQUIRED WAS RS.20,11,63,000/ - AND THE DIFFERENCE BETWEEN T HE PURCHASE CONSIDERATION AND THE BOOK VALUE OF THE NET ASSET S WAS TREATED AS GOODWILL ON ACQUISITION. S INCE THE SAID VA LUE OF GOODWILL HAD NO VALUE, THE ASSESSEE AFTER DULY DISCLOSING THE FACT OF IMPAIRMENT OF GOODWILL IN PARA 1 AND 13 OF THE SCHEDULE 16 OF NOTES TO THE ACCOUNT OF THE BALANCE - SHEET WROTE OFF THE SAID AMOUNT BY CHARG ING THE SAME TO THE PROFIT AND LOSS ACCOUNT . W HILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE IN RESPECT OF VIKHROLI UNIT(2) , T HE GOODWILL WRITTEN OF F OF RS.66,87,55,000/ - WAS ADDED BACK TO THE NET PROFIT OF RS.17 , 47 ,00,000/ - AND ACCORDINGLY ADJUSTED NET PROFIT OF RS.86,96,91,077/ WAS CLAIMED AS EXEMPT U/S 10A OF THE ACT. IT WAS ARGUED BY THE LD.AR BEFORE US THAT THE ASSESSEE MADE ACQUISITION OF BUSINESS VIDE AGR EEMENT DATED 20.12.2007 FROM PRUDENTIAL PROCESS MANAGEMENT SERVICES INDIA PRIVATE LIMITED HAVING I T S OFFICE AT PRUDENTIAL CENTRAL AVENUE, HIRANANDANI BUSINESS PARK, POWAI, MUMBAI - 400076 COPY OF WHICH IS PLACED AT PAGES 32 TO 67 OF THE ASSESSEES PAPER BOOK AND THE PAYMENT WAS MADE ON 1.10.2008 FROM THE CITY BANK OF THE COMPANY WHICH IS PLACED AT PAGE 25 OF THE PAPER BOOK AND PAYMENT RECEIPT AT PAGE 141 OF THE PAPER BOOK . THE LD. AR VEHEMENTLY SUBMITTED THAT THE PROVISIONS OF SECTION 69C WERE NO T APPLICABLE TO THE FACTS OF THE ASSESSEES CASE AS THE SOURCES OF PAYMENT WAS FULLY EXPLAINED AND THE PAYMENT WAS MADE FROM THE BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH CITY BANK IN MUMBAI. THE AMOUNT OF GOODWILL WRITTEN OFF WAS FIRST CHARGED TO PRO FIT AND LOSS ACCOUNT OF THE ASSESSEE AND THEN ADDED BACK TO THE NET PROFIT OF THE VIKHROLI UNIT(2) FOR THE PURPOSE OF CLAIMING EXEMPT ION U/S 10A. THUS, THE ASSESSEE HAD NOT EVADE D ANY TAX ITA NO.2350/ MUM/20 15 AND 2850/M/2015 6 BY WRITING OFF GOODWILL WHICH WAS ONLY AN ADJUSTMENT ENTRY AND MOR E SO WHEN THE PROFIT OF THE VIKH ROLI UNIT WAS EXEMPT U/S 10A OF THE ACT. THE OBSERVATIONS OF THE AO THAT THE SAID TRANSACTION WAS A SHAM TRANSACTION AND OF SUSPICIOUS NATURE WAS TOTALLY WR O NG AND WITHOUT ANY BASIS AS THE BUSINESS OF ANOTHER COMPANY WAS P URCHASED IN SLUM P SALE FOR A CONSIDERATION OF RS.86.69 CRORES ACQUIRING THE ASSETS TO THE TUNE OF RS.20,11,63,000/ - AND THE DIFFERENCE WAS DEBITED TO THE GOODWILL ACCOUNT WHICH WAS PAID THROUGH THE BANK MAINTAINED BY THE ASSESSEE WITH CITY BANK. SIMILARLY, THE OBSERVATIONS OF THE LD. CIT(A) THAT THE SAID TRANSACTION WAS COLOURABLE TRANSACTION WAS ALSO WRONG. THE LD. COUNSEL FINALLY PRAYED THAT THE ADDITION AS MADE BY THE AO U/S 69C AND CONFIRMED BY THE LD. CIT(A) BE DELETED BY SETTING ASIDE T HE ORDER OF LD. CIT(A). 6. THE LD. DR HEAVILY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 7 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE ASSESSEE HAD ACQUIRED AN GOING CONCERN UNDER THE SLUM P SALE FROM PRUDENTIAL PROCESS MANAGEMENT SERVICES INDIA PRIVATE LIMITED FOR A TOTAL CONSIDERATION OF RS.86.69 CRORES RELATING TO ACTIVITY OF CUSTOMER CONTACT CENTRE SERVICES AND BACK OFFICE SERVICES FOR MATURED LIFE AND PENSIONS BUSINESS AND THE ASSETS ACQUIRED ARE DETAILED BELOW : DESCRIPTION AMOUNT (INR, 000) FIXED ASSETS 261,678 CURRENT ASSETS, LOANS AND ADVANCES 21,013 DEFERRED TAX ASSETS 5,805 SUB - TOTAL 288,496 CURRENT LIABILITIES AND PROVISIONS (86,531) SECURED LOANS (802) SUB - TOTAL (87,333) NET ASSETS ACQUIRED 201,163 PURCHASE CONSIDERATION 866,918 GOODWILL ON ACQUISITION 668755 ITA NO.2350/ MUM/20 15 AND 2850/M/2015 7 THUS, THE DIFFERENCE BETWEEN THE NET ASSETS ACQUIRED AND THE PURCHASE CONSIDERATION WAS TREATED AS GOODWILL . T HE PAYMENT FOR THE PURCHASE OF EXISTING BUSINESS WAS MADE BY CHEQUE V IDE AGREEMENT DATED 20.12.2007 AND COPY THE BANK STATEMENT AND ACKNOWLEDGE RECEIPT HAVE ALSO SEEN IS PLACED IN THE PAPER BOOK BEFORE US . THE ASSESSEE, DURING THE YEAR WROTE OFF THE ENTIRE GOODWILL IN THE PROFIT AND LOSS ACCOUNT BY WAY OF JOURNAL ENTRY IN THE ACCOUNT AND ALSO DISCLOSURE WAS MADE IN THE FINANCIAL ACCOUNTS IN SCHEDULE 1 6 NOTES OF ACCOUNT WHICH FOR THE SAKE OF READY REFERENCE IS REPRODUCED AS UNDER : B. BUSINESS PURCHASE AGREEMENT W ITH PRUDENTIAL PROCESS MANAGEMENT SERVICES INDIA PRIVATE LIMITED (PPMS) IN DECEMBER 2007, THE COMPANY HAD ENTERED INTO A PURCHASE AGREEMENT WITH PRUDENTIAL PROCESS MANAGEMENT SERVICES INDIA PRIVATE LIMITED ('PPMS'), WHEREIN PPMS HAD AGREED TO SELL ITS B USINESS UNDERTAKING ENGAGED IN BUSINESS OF CUSTOMER CONTACT CENTRE SERVICES AND BACK OFFICE SERVICES FOR MATURED LIFE AND PENSIONS BUSINESS AS A SLUMP SALE ON AN 'AS IS WHERE IS' BASIS, FOR A CONSIDERATION OF RS. 869,918. THE ACQUISITION WAS EFFECTIVE O CTOBER 1, 2008. THE TOTAL CONSIDERATION OF RS. 869,918 HAS BEEN ALLOCATED TO ASSETS AND LIABILITIES ACQUIRED FROM PPMS AS UNDER: DESCRIPTION DESCRIPTION FIXED ASSETS 261,678 CURRENT ASSETS, LOANS AND ADVANCES 21,013 DEFERRED TAX ASSETS 5 ,805 SUB - TOTAL 288,496 CURRENT LIABILITIES AND PROVISIONS (86,531) SECURED LOANS (802) SUB - TOTAL (87,333) NET ASSETS ACQUIRED 201,163 PURCHASE CONSIDERATION 866,918 GOODWILL ON ACQUISITION 668,755 ITA NO.2350/ MUM/20 15 AND 2850/M/2015 8 IN ACCORDANCE WITH ACCOUNTING ST ANDARD ON ACCOUNTING ON FIXED ASSETS (AS - 10) AND ACCOUNTING STANDARD ON INTANGIBLE ASSETS (AS - 26) THE BALANCE AMOUNT OF RS 668,755 HAS BEEN ALLOCATED TO GOODWILL. THE SAID GOODWILL HAS NO RECOVERABLE / REALIZABLE VALUE AND HENCE HAS BEEN T REATED AS FUL LY IMPAIRED AND HAS BEEN WRITTEN OFF AS AT THE YEAR END. WHILE FILING THE RETURN OF INCOME IN THE STATEMENT OF COMPUTATION OF TOTAL INCOME, THE ASSESSEE ADDED BACK THE SAID GOODWILL TO THE PROFITS OF VIKHROLI(2) OF RS.17.47 C R ORES AND THUS ARRIVED AT A TOTAL PROFIT OF RS.86,96,91,077/ - WHICH WAS CLAIMED AS EXEMPT INCOME U/S 10A OF THE ACT. THE AO ADDED THE SAME UNDER SECTION 69C OF THE ACT BY SUSPECTING THE TRANSACTION IN COLOURABLE DEVICE USED TO SIPHON OFF THE MONEY FROM THE COMPANY . A PROVI SION S OF SECTION 69C OF THE ACT IS REPRODUCED BELOW: 69C. WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR : PROVIDED THAT, NOTWITHSTANDING ANYTHING CONT AINED IN ANY OTHER PROVISION OF THIS ACT, SUCH UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE THE INCOME OF THE ASSESSEE SHALL NOT BE ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME NOW THE QUESTION BEFORE US IS , AS TO WHETHER THE WRITING OFF THE GOODWILL HAS RESULTED IN THE SIPHON ING OF FUND S OF THE COMPANY AND COVERED U/S 69C OF THE ACT . OUR ANSWER IS NEGATIVE. WE ARE IN AGREEMENT WITH THE SUBMISSIONS OF LD.AR THAT WRITING OFF THE GOODWILL DURING THE YEAR HAS NOT RESULTED IN ANY KIND OF TAX EVASION AS IT IS UNDISPUTED TACT THE ASSESSEE HAS PURCHASED THE ONGOING BUSINESS FOR A CONSIDERATION OF RS.86.69 CRORES , AND BOUGHT ASSET THE WORTH RS.21 .12 CRORES ON SLUMP SALE AND ITA NO.2350/ MUM/20 15 AND 2850/M/2015 9 TRANSFERRING THE DIFFERENCE AMOUNT TO GOODWILL ACCOUNT THERE IS NO COLOURAB LE TRANSACTION AND NOTHING HAS BEEN BROUGHT ON RECORD THAT MONEY HAS BEEN SIPHONED TO AC HIEVE ANY BENEFIT OR TO GIVE ANY BENEFIT TO THE SELLER PARTY . FURTHER THE P AYMENT OF THE SAID ACQUISITION WAS MADE BY CHEQUE THROUGH THE BANK ACCOUNT OF THE ASSESSE E MAINTAINED WITH THE CITY BANK, MUMBAI . EVEN OTHERWISE, THE GOODWILL WRITTEN OFF HAS BEEN ADDED BACK AND THE ADJUST ED IN THE PROFIT WHICH WAS CLAIMED AS EXEMPT U/S 10A OF THE ACT , WHICH THE ASSESSEE WAS UNDISPUTED LY ENTITLED TO . W E ARE , THEREFOR E , OF THE CONSIDERED OPINION THAT THE FINDING OF THE LD.CIT(A) AND THAT OF THE AO ARE NOT CORRECT ON FACTS AND ARE WITHOUT ANY BASIS. FURTHER ADDITION MADE UNDER THE PROVISIONS OF SECTION 69C OF THE ACT IS ALSO NOT CORRECT AS SECTION 69C CAN ONLY BE INV OKED ONLY WHEN THE SOURCE OF ANY INVESTMENT WAS NOT EXPLAINED WHICH IS CLEAR FROM THE LANGUAGE USED IN THE SECTION 69C REPRODUCED ABOVE. THUS, THE ORDER OF LD.CIT(A) SUFFERS FROM SERIOUS FACTUAL AND LEGAL INFIRMITY AND CANNOT BE SUSTAINED. ACCORDINGL Y , THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.66,87,55,158/ - ITA NO.2810/MUM/2015 8 . THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY OUR DECISION IN ITA NO.2350/MUM/2015 IN WHICH WE HAVE DECIDED THE SIMILAR ISSUE ON IDENTICAL FACTS IN FAVO UR OF THE ASSESSEE AND THEREFORE OUR DECISION IN ITA NO.2350/M/2015 WOULD , MUTATIS MUTANDIS , APPLY TO THIS CASE ALSO. ACCORDINGLY, WE ALLOW THE APPEAL OF THE ASSESSEE. ITA NO.2350/ MUM/20 15 AND 2850/M/2015 10 9 . IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 23RD MARCH, 2016. . 23 RD MARCH, 2016 SD SD ( /AMIT SHUKLA) ( /RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 23 /0 3 /2016 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLA NT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI