“going concern”

Judicial DoctrinesSlump SaleSlump Sale477 judgments

The decision most relied on for going concern is Areva T&D India Ltd. v. DCIT (345 ITR 421), cited in 97 judgments on BharatTax.

Leading authorities on going concern

Areva T&D India Ltd. v. DCIT

345 ITR 421 · 2012 · High Court

citing judgments

Business contracts and commercial rights of similar nature qualify as intangible assets under Section 32(1)(ii) and are eligible for depreciation. The decision also affirms that goodwill is an intangible asset eligible for depreciation.

Triune Energy Services (P.) Ltd. v. DCIT

65 Taxmann.com 288 · 2016 · High Court

citing judgments

When a business is purchased as a going concern, the consideration paid in excess of the value of its tangible assets is classified as goodwill, which is an intangible asset eligible for depreciation without needing a separate valuation.

Harshad J.Choksi v. CIT, Bombay City- VII

25 Taxmann.com 567 · 2012 · High Court

citing judgments

The conditions for claiming a bad debt deduction under Section 36(1)(vii) read with Section 36(2) are not fulfilled if the assessee fails to provide details of the parties associated with the debts or evidence that these amounts were offered to tax in earlier years. An alternate claim for loss under Section 28 is denied without evidence substantiating the loss in the relevant assessment year.

L.Ve. Vairavan Chettiar v. CIT

72 ITR 114 · 1969 · High Court

citing judgments

A business concern can still be considered to be carrying on its business even if there are long intervals of inactivity, provided it is kept alive, retains its registered office, and holds meetings. It is not necessary for a business to have work constantly to be considered in existence.

Everest Kanto Cylinders Ltd. v. DCIT

34 Taxmann.com 9 · 2013 · High Court

citing judgments

Depreciation is allowable on goodwill, even if it's considered an intangible asset representing future profits, following the Supreme Court's decision in CIT v. SMIFS Securities Ltd.

Bharat Hari Singhania v. CWT

19 SOT 612 · 2008 · High Court

citing judgments

While the case involves a reference to "fresh tangible material", "valuation of shares", "going concern", and "indexed cost of acquisition", the provided passages do not clearly articulate the specific holding of Bharat Hari Singhania v. CWT.

Mahindra & Mahindra Ltd. v. DCIT, 313 ITR (AT) 263 (SB)

110 ITD 59 · 2008 · ITAT

citing judgments

The Assessing Officer cannot improve his assessment by adopting a new theory during reassessment proceedings.

CIT v. Southern Petrochemical Industries Corporation Ltd.

291 ITR 362 · 2007 · High Court

citing judgments

Depreciation is allowable on standby machinery that is kept ready for use, even if not actually put to use due to reasons such as raw material paucity. This is permissible as long as the business is a going concern.

Judgments citing going concern

M/S. Deepali Company Privae Limited, Bangalore vs. Income Tax Officer, Ward- 2(1)(2), Bangalore

In the result, the appeal filed by assessee stands dismissed

ITA 585/BANG/2020[2016-17]Status: DisposedITAT Bangalore21 Jun 2022AY 2016-17

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiassessment Year : 2016-17 M/S. C. Krishniah Chetty & Co. Pvt. Ltd., The Income Tax (Earlier Known As :Deepali Co. Officer, Pvt. Ltd.) Ward – 2 (1)(2), 35, Commercial Street, Bangalore. Bangalore – 560 001. Vs. Pan: Aaacd5120H Appellant Respondent : Shri Narendra Sharma, Assessee By Advocate : Smt. Priyadarshini Revenue By Basaganni, Addl. Cit (Dr) Date Of Hearing : 01-06-2022 Date Of Pronouncement : 21-06-2022 Order Per Beena Pillaipresent Appeal Is Filed By Assessee Against Order Dated 03.0.2020 Passed By Ld.Cit(A)-2, Bangalore For A.Y. 2016-17 On The Following Grounds Of Appeal: “1.1 On The Facts & Circumstances Of The Case, The Learned Commissioner Of Income Tax Erred In Not Allowing Business Loss For The Year Of Rs. 114,66.766/- On The Ground That The Business Of The Assessee Company Is Closed & There Are No Receipts From Operation Of Business.

For Respondent: Shri Narendra Sharma

Section 143(2)Section 24Section 72

property and carry forward of loss to the future years amounting to Rs.76,26,766/-. 5. The Ld.AR submitted that, the assessee is a going concern, and the business activity has not been closed and there was only a temporary lull in its activity. He submitted that the lull ... Lawrence D’Souza reported in (2011) 203 Taxman 200, wherein it was held that, expenses incurred to keep the business as going concern, even in the absence of any income, should be allowed as deduction. The Ld.AR further placed reliance on following decisions of Coordinate Bench of this Tribunal

Jenam Enterprises P. Ltd., Mumbai vs. The Asstt. CIT, Range-6(3)(2), Mumbai

In the result, the appeal filed by the assessee is partly allowed

ITA 387/MUM/2021[2016-17]Status: DisposedITAT Mumbai17 Jun 2022AY 2016-17

Bench: Shri M. Balaganesh () & Shri Pavan Kumar Gadale () Assessment Year: 2016-17

For Appellant: NoneFor Respondent: Mr. S.N. Kabra, DR

Section 143(2)Section 143(3)Section 36Section 36(1)Section 36(1)(iii)Section 41(1)

make payment and are outstanding for more than two years without any material evidence/basis. But the fact remains that the assessee company is a going concern and the assessee is in the business and the liability is enforceable on the assessee by the creditors. Therefore, we considering the facts

Gea Process Engineering (India) P.Ltd, Gujrat vs. ITO, Mumbai

ITA 4338/MUM/2015[2008-09]Status: DisposedITAT Mumbai16 Jun 2022AY 2008-09

Bench: Shri Baskaran Br & Shri Kuldip Singhassessment Year: 2008-09 Dcit, M/S. Gea Process Circle- 2(2)(1), Engineering (India) Pvt. Room No.545, Ltd., Aayakar Bhavan, Vs. Savli Road, M.K. Road, P.O. Dumad, Mumbai - 400020 Baroda, Gujarat- 391740 Pan: Aaacl0566H (Appellant) (Respondent)

For Appellant: Shri Sunil M. Lala, A.RFor Respondent: Shri Rajesh Mishra, D.R

Section 2(24)Section 36Section 36(1)(va)Section 43B

expression "goodwill" subsumes within it a variety of intangible benefits that are acquired when a person acquires a business of another as a going concern. 14. In CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294/5 Taxman 1 (SC), the Supreme Court had explained that:— ITA No.4155/M/2015 ... well established that 'goodwill' is an intangible asset, which is required to be accounted for when a purchaser acquires a business as a going concern by paying more than the fair market value of the net tangible assets, that is, assets less liabilities. The difference in the purchase consideration

DCIT Cir 2(2)(1), Mumbai vs. Gea Process Engineering ()I) P.Ltd, Gujrat

ITA 4155/MUM/2015[2008-09]Status: DisposedITAT Mumbai16 Jun 2022AY 2008-09

For Appellant: Shri Sunil M. Lala, A.RFor Respondent: Shri Rajesh Mishra, D.R

Section 2(24)Section 36Section 36(1)(va)Section 43B

M/S I & B Seeds Private Limited, Bangalore vs. Deputy Commissioner of Income Tax Circle-3(1)(1), Bangalore

In the result, the appeal filed by the assessee is allowed

ITA 3415/BANG/2018[2015-16]Status: DisposedITAT Bangalore15 Jun 2022AY 2015-16

Bench: Shri Chandra Poojari & Shri George George K.Assessment Year: 2015-16

For Appellant: Shri Nitish Ranjan, A.RFor Respondent: Shri Sankar Ganesh K, D.R

Section 43(1)

Page 9 of 26 company engaged in R&D with Mr Praveen Noojibail having full controlling interest) on 1/11/2014 and 30/03/2015 respectively as a going concern by way of a Business Transfer Agreements (BTA) and paid Rs. 18.60 crores to Indus Seeds and Rs. 40 lakhs to M/s.Sasya Gentech Private ... expression "goodwill" subsumes within it a variety of intangible benefits that are acquired when a person acquires a business of another as a going concern." 11.6 In the present case, as per the Business Transfer Agreements, apart from the Tangible Assets and other assets which are transferred (as referred

ACIT 13 (3)(2), Mumbai vs. M/S Vega Chemicals Pvt Ltd, Mumbai

In the result, appeal is partly allowed

ITA 750/MUM/2019[2013-14]Status: DisposedITAT Mumbai14 Jun 2022AY 2013-14

Bench: Shri M Balaganesh & Shri Pavan Kumar Gadaleacit – 13(3)(2) Vs. M/S Vega Chemicals Room No. 229/2019, Pvt Ltd 2Nd Floor, Aayakar C-404, Gokuldham, Bhavan, Mk Road, Dindoshi Mumbai-400020. Goregaon (W), Mumbai-400063 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaecv1029M Appellant .. Respondent Assessee By : Mr.Aditya Ramchandra.Ar Revenue By : Mr.S.N.Kabra.Dr Date Of Hearing 23.05.2022 Date Of Pronouncement 22.06.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm: The Revenue Has Filed The Appeal Against The Order Of The Commissioner Of Income Tax (Appeals)-21 Mumbai Passed U/S 143(3) & 250 Of The Act. The Revenue Has Raised The Following Grounds Of Appeal:

For Appellant: Mr.Aditya Ramchandra.ARFor Respondent: Mr.S.N.Kabra.DR

Section 143(1)Section 143(2)Section 143(3)Section 44A

turnover and the information was called for. The assessee company has taken over the proprietary concern in the month of November as a going concern and there is a possibility that the expenses before October 2012 could not have been provided. The A.O is of the opinion that the percentage ... compared to percentage of expenses to turnover in the assessee company. Since, the nature of business is almost similar and is carried on the going concern, such a huge increase in percentage of expenses is considered excessive and made addition of Rs. 1,82,49,887/-. (ii)The AO made

Ibm India Private Limited, Bengaluru vs. Assistant Commissioner of Income Tax, Circle- 3(1)(1), Bengaluru

In the result the appeal filed by the assessee stands partly allowed for statistical purposes

ITA 584/BANG/2020[2006-07]Status: DisposedITAT Bangalore13 Jun 2022AY 2006-07

For Appellant: Shri Ajay Rotti, CA

Section 143(3)Section 147Section 250Section 29Section 36(1)(vii)Section 50B

present facts of the case, the Ld.CIT.DR submitted that the issue in respect of sale of its division by assessee as a going concern for a lump sum consideration has not been verified and considered by the Ld.AO. He placed reliance on Explanation 1 to section ... Ld.AO to issue the notices under section 147 of the Act. In the present facts, the sale of assessee’s business as a going concern formed part of the Notes to the Accounts. Schedule 19 para 21(a) reads as under: “The Company has incurred Rs.14,021(000) being sales

Vasant Investment Corporation Limited, Mumbai vs. ITO, Ward 3(3)(4), Mumbai

In the result, the appeal is allowed

ITA 1478/MUM/2020[2016-17]Status: DisposedITAT Mumbai09 Jun 2022AY 2016-17

Section 143(3)Section 194A

Cases 657 that business is not confined to being busy; in many businesses long intervals of inactivity occur. ..."The concern is still a going concern though a very quiet one." After elaborate survey of judicial precedents on the issue, their Lordships concluded, in the light of, as noted above

M/S. Te Connectivity India Private Limited (Successor in Interest to Tyco Electronics Systems India Private Limited), Bangalore vs. Commissioner of Income Tax, Appeals -14, Ltu, Bangalore

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 720/BANG/2021[2013-14]Status: DisposedITAT Bangalore01 Jun 2022AY 2013-14

Bench: Shri Chandra Poojari & Shri George George K.Assessment Year: 2013-14

For Appellant: Shri Sumeet Khurana, A.RFor Respondent: Shri Sankar Ganesh K., D.R

Section 234Section 234B

Energy Trade and Export business vide business transfer agreement dated September 23. 2010 with Raychem RPG Private Limited (`RRI.; or 'the purchaser') on a going concern basis and the sale was with effect from September 23. 2010. 4. The Learned CIT(A) has erred in not appreciating the fact ... transfer of its business through agreements dated 23.9.2010 with Raychen RPG Private Limited for the sale of energy trade and export business on going concern basis. The Ld. CIT(A) observed that the A.O. had taken certain receipts as income based on reconciliation with Form 26AS statement and the corresponding

M/S. Te Connectivity Services India Private Limited, Bangalore vs. Assistant Commissioner of Income Tax, Circle-7(1)(1), Bangalore

In the result, the appeal by the assessee is partly allowed for statistical purposes

ITA 300/BANG/2021[2016-17]Status: DisposedITAT Bangalore26 May 2022AY 2016-17

Bench: Shri Chandra Poojari & Smt. Beena Pillaiit(Tp)A No.300/Bang/2021 Assessment Year : 2016-17

For Appellant: Shri Sriram Sheshadri & Ms. Amulya K., CAsFor Respondent: Dr. Manjunath Karkihalli, CIT(DR)(ITAT), Bengaluru

Section 143(3)

amortisation, and such margin is acceptable to the Revenue. Given that the Appellant is merely continuing the said business post acquisition as a going concern, the margin of the Appellant for the purpose of benchmarking ought to be computed in the same manner as that of TECGSSIPL. Cable & Wireless Networks

M/S. Macrotech Developers Ltd (Successor to Ajitnath Hi-Tech Builders Pvt. Ltd), Mumbai vs. Deputy Commissioner of Income Tax, Central Circle 7(3), Mumbai

In the result, both the appeals filed by the assessee are allowed

ITA 5022/MUM/2019[2014-15]Status: DisposedITAT Mumbai23 May 2022AY 2014-15

Bench: Shri M Balaganesh () & Shri Pavan Kumar Gadale ()

Section 143(2)Section 143(3)Section 36(1)(iii)

rely on the judicial decisions and commercial expediency explained by the Ld.AR that the assessee’s business activities as a going concern and the construction projects are in progress. Any delay in project construction activities due to financial crunch will increase the overheads of the projects. Accordingly, we set aside

M/S. Macrotech Developers Ltd (Successor to Ajitnath Hi-Tech Builders Pvt. Ltd), Mumbai vs. Deputy Commissioner of Income Tax, Central Circle 7(3), Mumbai

In the result, both the appeals filed by the assessee are allowed

ITA 5021/MUM/2019[2013-14]Status: DisposedITAT Mumbai23 May 2022AY 2013-14

Bench: Shri M Balaganesh () & Shri Pavan Kumar Gadale ()

Section 143(2)Section 143(3)Section 36(1)(iii)

Assistant Commissioner of Income Tax Range- 9(1)(1), Mumbai vs. M/S.Abhishek Millennium Contracts Private Limited, Mumbai

In the result, the present appeal is dismissed

ITA 5568/MUM/2018[2011-12]Status: DisposedITAT Mumbai23 May 2022AY 2011-12

For Appellant: Shri Sashi TulsiyanFor Respondent: Shri Mehul Jain

Section 143(1)Section 143(3)Section 147Section 250Section 28

submission of the assessee is considered. The assessee‘s emphasis is on its contention that there being sale of business as ―on-going concern" basis, generating goodwill, which is capital in nature, it had treated and taxed the proceeds as Long Term Capital Gains. However, this contention of the assessee

Tmf Holding Ltd., Mumbai vs. Pr. CIT -1, Mumbai

ITA 1628/MUM/2020[2015-16]Status: DisposedITAT Mumbai22 Apr 2022AY 2015-16

Bench: Shri S. Rifaur Rahman, Hon'Ble & Shri Pavan Kumar Gadale, Hon'Bletmf Holdings Ltd., V. Pr.Cit – 1 {Formerly Known As Tata Motors Finance Ltd.,} 3Rd Floor, Room No. 330 10Th Floor, 106 A & B Aayakar Bhavan, M.K. Road Maker Chamber-Iii Mumbai - 400020 Nariman Point, Mumbai Pan: Aacct4644A (Appellant) (Respondent) Shri Nikhil Tiwari Assessee By : Department By : Shri S.N. Kabra

For Appellant: Department byFor Respondent: Shri S.N. Kabra

Section 115JSection 143(3)Section 14ASection 263Section 47

Business and used vehicle financing business to its wholly owned subsidiary Tata Motors Finance Solutions Pvt. Ltd. by passing a special resolution as a going concern on a slump sale basis. The agreed total consideration for slump sale of ₹.6350,00 lakhs against the net assets value ... consideration, the company transferred its vehicle financing portfolios MGB (Manufacturer Guaranteed Business) and UVFB (Used Vehicle Financing Business) under a slump agreement on a going concern basis to TMFSL. The sale is effective on 31/03/2015. As a result of the slump sale, TMFL had recognised a gain of Rs.74

Perfect Thread Mills Ltd, Mumbai vs. ITO WD 8(2)(4), Mumbai

In the result, appeal filed by the assessee is allowed

ITA 349/MUM/2011[2007-08]Status: DisposedITAT Mumbai24 Feb 2022AY 2007-08

Bench: S. Rifaur Rahman, Hon'Ble & Shri Amarjit Singh, Hon'Ble&

For Appellant: Department by Shri Mehul Jain

Nath Paul & Sons vs. Deputy CIT [2005] 278 ITR 240 where it was held that on the sale of firm’s business as a going concern the amount paid to banks to have the charge lifted was treated the expenses in relation to transfer. 3. The appellant craves leave

DCIT 10 (2)(2), Mumbai vs. M/S Maharashtra Electronic Corporation Ltd, Mumbai

In the result, appeal filed by the revenue is dismissed

ITA 8051/MUM/2019[2011-12]Status: DisposedITAT Mumbai21 Feb 2022AY 2011-12

Bench: Shri Laliet Kumar, Hon'Ble & Shri S. Rifaur Rahman, Hon'Bledcit – 10(2)(2) V. M/S. Maharashtra Electronics Room No. 216-A Corporation Limited Aayakar Bhavan, M.K. Road Plot No. Am-3, Midc Cross Road “A” Marol Industrial Area, Andheri (E) Mumbai - 400020 Mumbai - 400093 Pan: Aaacm4980A (Appellant) (Respondent) Shri R.C. Jain Assessee By : Department By : Shri Achal Sharma

For Appellant: Department byFor Respondent: Shri Achal Sharma

Section 143(1)Section 143(3)Section 271(1)(c)Section 274Section 57

wind up its operations. MELTRON has stopped the operations and productions from 1st April 2005. Financial statements of MELTRON have been prepared on “going concern” principle. The net worth of the corporation as on 31.03.2011 has been completely eroded. Based on the order of the Board for Industrial and Financial

M/S Futuristic Diagnostic Imaging Centre Private Limited, Bangalore vs. The Income Tax Officer Ward-2(3)(4), Bangalore

In the result the appeal filed by assessee stands dismissed

ITA 259/BANG/2019[2014-15]Status: DisposedITAT Bangalore18 Feb 2022AY 2014-15

For Appellant: Shri G. Venkatesh, AdvocateFor Respondent: Shri Mathivanan .M, CIT DR

Section 234Section 51

Madras, as per the Scheme of Demerger approved EML demerging with M/s. EHPL, transferring the real estate division of EML to EHPL as a going concern. As on 31.03.2010, the assessee company has shown the land in question as stock in trade and the same was later converted as Fixed

M/S. Medi Assist Insurance Tpa Pvt Ltd, Bangalore vs. Deputy Commissioner of Income Tax, Circle-12(1), Bangalore

In the result, the appeal filed by assessee stands dismissed

ITA 1933/BANG/2018[2011-12]Status: DisposedITAT Bangalore15 Feb 2022AY 2011-12

Bench: Shri B R Baskaran & Smt. Beena Pillaiassessment Year : 2011-12 M/S. Medi Assist Insurance Tpa Pvt. Ltd., The Dy. Commissioner Of Tower ‘D’, 4Th Floor, Ibc Income-Tax, Knowledge Park, 4/1 Bannerghatta Vs. Circle - 4(1)(2), Main Road, Bengaluru. Bengaluru-560 029. Pan –Aaccm 8044 P Appellant Respondent Assessee By : Shri Sudhir Prabhu, C.A Revenue By : Shri Sumeer Singh Meena, Cit(Dr) Date Of Hearing : 10.01.2022 Date Of Pronouncement : 15.02.2022 O R D E R Per Beena Pillaithis Appeal By The Assessee Is Directed Against The Order Of The Cit(A)- 4, Bangalore Dated 22/3/2018 For The Asst. Year 2011-12 For Computing The Short Term Capital Gain At Rs.7,80,38,353/-. 2. The Assessee Raised The Following Grounds Before Us “(I) On The Facts & Circumstances Of The Case & In Law The Learned Dcit & Cit(A) Erred In Computing The Short Term Capital Gain At Rs.7,80,38,353/- By Adding The Negative Net-Worth Instead Of Restricting The Same To Nil As Deeded Cost, Since Cost Cannot Be A Negative Value Page 2 Of 19

For Appellant: Shri Sudhir Prabhu, C.AFor Respondent: Shri Sumeer Singh Meena, CIT(DR)

Section 142(1)Section 50B

transfer of one or more undertakings. Thus where an undertaking or a unit or a division of an undertaking is transferred as a going concern as a whole, profits or gains arising from such slump same is chargeable to tax as capital gains arising from the transfer of long term

Intelligrape Software Pvt. Ltd., New Delhi vs. DCIT, Circle-12(2), New Delhi

In the result, the appeal of the assessee is allowed

ITA 9042/DEL/2019[2015-16]Status: DisposedITAT Delhi28 Jan 2022AY 2015-16

Bench: Sh. A. D. Jain, Vice-Dr. B. R. R. Kumarita No. 9042/Del/2019 : Asstt. Year : 2015-16 Intelligrape Software Pvt. Ltd., Vs Dcit, C/O Sanjiv Sapra & Associates Llp, Ca, Circle-12(2), C-763, New Friends Colony, New Delhi New Delhi-110025 (Appellant) (Respondent) Pan No. Aabci9247F Assessee By : Sh. Sanjiv Sapra, Fca Revenue By : Sh. Umesh Takyar, Sr. Dr Date Of Hearing: 28.10.2021 Date Of Pronouncement: 28.01.2022

For Appellant: Sh. Sanjiv Sapra, FCAFor Respondent: Sh. Umesh Takyar, Sr. DR

Section 56Section 56(2)(vii)Section 56(2)(viib)

appropriate rate of return to arrive at the net present value of the net cash flows. The valuation has been carried out on a going concern basis presuming that the company will continue its business operation in the current financial year and will continue to do business in the foreseeable

ACIT, Jammu vs. Sh Vikramaditya Singh, Jammu

In the result, all the fours appeals filed by the Revenue are dismissed and the three Cross Objections as well as the ground as per Rule 27 are allowed

ITA 269/ASR/2007[1998-99]Status: DisposedITAT Delhi24 Jan 2022AY 1998-99

Bench: Shri R.K. Panda & Shri Sudhanshu Srivastava

For Appellant: Shri C.S. Aggarwal, SrFor Respondent: Shri S.D. Kapila, Spl

Section 139(9)Section 147Section 148

that the following are important facts: a) That Jyoti (P) Ltd. was incorporated on 22.1.1969 b)That on 31.3.1981, Jyoti (P) Ltd. was a going concern and was far from being consideration for liquidation. 36 ITA.Nos.263/Asr/2003, 267 to 269/Asr/2007 & C.O.Nos.43 to 45/Asr/2007 Shri M.K. Ajatshatru, Jammu & Others ... method or any other method prescribed in a statute can be applied for determining FMV of a shares in private company which is a going concern as on valuation date. The „Breakup method‟ can be applied only if the company is in the process of liquidation, or, if the conditions