DCIT CC 8(2), MUMBAI, MUMBAI vs. ECHJAY INDUSTRIES PRIVATE LIMITED, MUMBAI

PER OM PRAKASH KANT, AM

These two appeals by the Revenue are directed against two separate orders, both dated 30.06.2025, passed by the Ld.
Commissioner of Income-tax-50, Mumbai [in short ‘the Ld. CIT(A)’]
for assessment years 2018-19 and 2020-21 respectively. As common issue in dispute is involved in both these appeals, therefore, same were heard together and disposed off by way of this consolidated order for the sake of convenience.

e up the appeal for assessment uced as under:
n the facts and in the circumstances of law, the Ld.CIT(A) was justified in allo u/s 32 of the Income Tax Act, 1961, on sing out of a Scheme of Amalgama the Hon, ble Gujarat High Court, where s created solely as a result of accoun and did not represent any self-generate y acquired intangible asset?
n view of the sixth proviso to Section 32(
Tax Act, 1961, the assessee being d company, was entitled to claim deprecia l, when the amalgamating compa had not claimed or were not eligible to c tion on goodwill and therefore, the WDV oks?
n the facts and in the circumstances of law, the Ld.CIT(A) erred in holding ated in the hands of the amalgam virtue of excess consideration over book v bilities qualifies as an intangible asset eli ion, despite there being no goodwill in amalgamating companies.
n the facts and in the circumstances of n law, the claim of depreciation of 5/
on goodwill amounting
820/- was allowable to the asses when the said goodwill did not have business value or use, and was cre accounting entry without any actual usiness advantage acquired?
acts of the case are that the ass anufacturing of automobile ind r consideration, the assessee total income of Rs.113,81,75,36
e assessee claimed depreciation
Echjay Industries Pvt. Ltd.
2
. 5436 & 5437/MUM/2025
t year 2018-19. f the wing n the ation such nting ed or (1) of the ation anies claim was f the that mated value igible n the f the Rs.
to ssee, e an eated cost sessee company dustry products.
filed return of 60/-. In the said on the goodwill however in the asses
Act, 1961 (in short ‘t depreciation and asse
4. Upon appeal, th the material facts and that the assessee wa out of amalgamation, to grant such allowan of raising grounds as 5. We have heard the relevant materia pursuant to a duly companies merged consideration paid ov so taken over was assessee. The claim upon the authoritat
Court in CIT v. Sm wherein it was cat
“intangible asset” wit
The Assessing Office
The Ld. CIT(A), on th the facts, accounting including reliance up
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ITA No.

ssment completed u/s 143(3) of the Act’), the Assessing Officer essed the total income at Rs.1,2
he Ld. CIT(A), after elaborate c d the law declared by various ju as entitled to depreciation on , and accordingly directed the A nce. Aggrieved, the Revenue is in s reproduced above.
rival submissions of the parti als on record. It emerges from y sanctioned scheme of ama with the assessee. The ver the book value of the asset recognized as goodwill in the of depreciation on such goodw tive pronouncement of the Ho ifs Securities Ltd. [(2012) 348
tegorically held that goodwill thin the meaning of Section 32( er, however, disregarded the s he other hand, after an exhaus g treatment, and the governing pon the decision of the Hon’bl
Echjay Industries Pvt. Ltd.
3
. 5436 & 5437/MUM/2025
f the Income-tax disallowed said
25,22,14,014/-.
consideration of udicial fora, held goodwill arising
Assessing Officer n appeal by way ies and perused the record that algamation, five excess of the ts and liabilities e books of the will was founded on’ble Supreme
ITR 302 (SC)], constitutes an (1)(ii) of the Act.
said contention.
stive analysis of legal principles, le Bombay High

Court in CIT v. Adit
(Bom)], concluded th depreciation. The re merit reproduction, r
“6.18 I have learned A/R placed before case the Trib cases compile order in AMD said order. Th
(i) the appell amalgamation has been dul the valuation been valued
Standards lai the values of value basis a value basis; respect of sw professionals; amalgamation value of ass companies did the surplus of book value by appellant has depreciation income. Almo with one aspe followed, the basis, the ass over on amal and the con
Transferee co transferor com goodwill was time of amalg on such goodw
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ITA No.

tya Birla Nuvo Ltd. [(2017) 246
hat the assessee was rightly e elevant observations of the Ld read thus:
carefully considered the facts of the cas on all aspects involved, gone through th me by the A/R and the law analysis on f bunals and Courts have rendered - es ed shown in a table given in the Bangalo
D India Private Limited under Paragraph he following facts observed from the recor ant has followed the legal procedures n of the companies; (ii) the Scheme for am ly sanctioned by the hon'ble Gujarat Hig n of assets and liabilities of all the com on "Purchase" basis as stipulated by the id by the Institute of Chartered Accounta the movable properties have been on the and immovable properties on Governme that the consideration worked out and wap of shares were made and appro
; that upon accounting in effect n, the consideration value paid was in e sets and liabilities taken over; that th d not have the "goodwill" in its books of a f consideration over the value of assets t y the appellant was treated as 'goodwill'
s claimed depreciation, that the appellant allowance in the books as well in it ost every decision considered above is i ect that, given the legal procedures for am valuation of assets and liabilities are sets and liabilities of Transferor compani lgamation by the Transferee company a nsideration paid (by way of share is ompany) is surplus over the said book mpanies which is accounted as goodwi s not existing with the Transferor comp gamation, the assessee will be entitled to will.
Echjay Industries Pvt. Ltd.
4
. 5436 & 5437/MUM/2025
6 Taxmann 202
entitled to such d. CIT(A), which se, heard the e documents facts of each specially the ore Tribunal's h 30.9 of the rds produced required for malgamation gh Court; (iii) mpanies have e Accounting ants of India; e fair market ent guidance the ratio in oved by the tuating the excess of the he transferor account; that taken over at on which the t has claimed ts Return of in agreement malgamation on purchase ies are taken at book value ssue by the value of the ill, that such panies at the depreciation

r, the hon'ble juri ictional Bombay High
Engineering India Limited and Aditya Bir upra also in favour of the appellant.
w of the above discussions and humbly f edence, I direct the AO to allow dep it is decided in principle that the appella on goodwill is allowable, the Ld. AO is e WDV as per law and based on that c on goodwill and accordingly ome.”
Ld. CIT(A) found as a matter o n had been sanctioned by the H sets and liabilities was unde in conformity with account sideration over book value wa in the books of the transferor duly claimed in accordance with ses, the Ld. CIT(A) directed that income recomputed accordingly the Learned
Departmental of the Assessing Officer but co estion stands squarely covered b dictional High Court in Aditya rn follows the dictum of the H ities Ltd. (supra).
Echjay Industries Pvt. Ltd.
5
. 5436 & 5437/MUM/2025
h court in the rla Novu Ltd., following the preciation on ant's claim of s directed to calculate the recompute of record that—
Hon’ble Gujarat
Court; ertaken on the ting standards; as accounted as companies; and h law.
t depreciation be y.
Representative ould not dispute by the judgment
Birla Nuvo Ltd.
Hon’ble Supreme

rival submissions of the parti ls on record. The facts are undi ed. The principle of stare decisis the juri ictional High Court s must bow to its authority. Th a) declares, in terms too clear to ed on amalgamation constitute preciation under Section 32(1)( in Aditya Birla Nuvo Ltd. (supra ng that excess consideration o amation, being the reflection ntage, assumes the character of in dispute involved in this ca the assessee by the binding p gh Court in the case of Adi we do not find any infirmity in sue in dispute and we uphold the Revenue are accordingly dis
Year 2020-21, the issue of d m the same amalgamation stan ur decision in the present year, aim is allowable and the appeal s.
Echjay Industries Pvt. Ltd.
6
. 5436 & 5437/MUM/2025
ies and perused isputed, and the s obliges judicial t has spoken, he ratio of Smifs admit of doubt, es an intangible
(ii). The Hon’ble a) has reaffirmed over net assets of commercial f goodwill.
ase is squarely precedent of the itya Birla Novu the order of the d the same. The smissed.
depreciation on nds on identical we hold mutatis l of the Revenue

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

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ITA No.

oth the appeals of the Revenue a ced in the open Court on 30/
-
AJAGOPAL)
(OM PRAK
MEMBER
ACCOUNTA ded to :

BY ORDER

(Assistant Re

ITAT, Mu

Echjay Industries Pvt. Ltd.
7
. 5436 & 5437/MUM/2025
are dismissed.
10/2025. KASH KANT)
ANT MEMBER
R, gistrar) umbai