1.   THE COMMISSIONER OF INCOME TAX DELHI – XI, NEW DELHI Vs. SHRI PUNEET SABHARWAL 2/6080, DEV NAGAR, NEW DELHI  ITA No.758 of 2005, Decision Delivered On: 03rd December 2010, High Court of Delhi 

1. Whether the Assessing Officer was right in referring the question of fair market value of the property sold by the assessee, to the District Valuation Officer in terms of Section 55A of the Income Tax Act, 1961 ("Act")? alternatively, was the Assessing Officer in terms of Section 48 read with Section 45 (5) of the Act bound to accept the value stated in the registered sale deed?. 

It does not arise for consideration. As per the question formulated, the property was sold by the assessee whereas, in the instant case, the properties in question were purchased by the assessee and were not sold by him. Even if we treat the same as typographical mistake, we are of the view that it would not be necessary to decide this question in view of the answer that we propose to give to question no.2.  

2. Whether the Income Tax Appellate Tribunal was right in holding that notwithstanding the report of the DVO, the Revenue had to prove that the assessee had in fact received extra consideration over and above the declared value of the sale?

As far as the question no.2 is concerned, as already indicated above, the Assessing Officer solely relied upon the report of the DVO. Apart from this, there was admittedly no evidence or material in his possession to come to the conclusion that the assessee had paid extra consideration over and above what was stated in the sale deed. The primary burden of proof to prove understatement or concealment of income is on the Revenue and it is only when such burden is discharged that it would be permissible to reply upon the valuation given by the DVO. It was also held that the opinion of the Valuation Officer, per se, was not an information and could not be relied upon without the books of accounts being rejected which had not been done in that case.

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2.   COMMISSIONER OF INCOME TAX – IV  Vs. HINDUSTAN COCA COLA BEVERAGES PVT. LTD.  ITA Nos.1391/2010, 1394/2010 & 1396/2010 Judgment Reserved on: 28th September, 2010 & Judgment Pronounced on: 14th January, 2011, High Court of Delhi 

(1) Whether learned ITAT erred in holding that exercise of Revisionary Jurisdiction under Section 263 of the Income Tax Act, 1961 was invalid? 

(2) Whether learned ITAT erred in setting aside the order of the CIT under Section 263 ignoring the fact that the goodwill generated in a business cannot be described as an “asset” so as to be entitled to depreciation under Section 32 and, therefore the depreciation on goodwill was not admissible?” 

It is worth noting that the meaning of business or commercial rights of similar nature has to be understood in the backdrop of Section 32(1)(ii) of the Act. Commercial rights are such rights which are obtained for effectively carrying on the business and commerce, and commerce, as is understood, is a wider term which encompasses in its fold many a facet. Studied in this background, any right which is obtained for carrying on the business with effectiveness is likely to fall or come within the sweep of meaning of intangible asset.

The dictionary clause clearly stipulates that business or commercial rights should be of similar nature as know-how, patents, copyrights, trademarks, licences, franchises, etc. and all these assets which are not manufactured or produced overnight but are brought into existence by experience and reputation. They gain significance in the commercial world as they represent a particular benefit or advantage or reputation built over a certain span of time and the customers associate with such assets. Goodwill, when appositely understood, does convey a positive reputation built by a person / company / business concern over a period of time.

Regard being had to the wider expansion of the definition after the amendment of Section 32 by the Finance Act (2) 1998 and the auditor‟s report and the explanation offered before the assessing officer, we are of the considered opinion that the tribunal is justified in holding that if two viewswere possible and when the assessing officer had accepted one view which is a plausible one, it was not appropriate on the part of the Commissioner to exercise his power under Section 263 solely on the ground that in the books of accounts it was mentioned as "goodwill" and nothing else.

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