PCIT revises AO's order citing trade receivable transfer during amalgamation: ITAT rules PCIT misconceived on facts [Read Order]
The tribunal also observed that the PCIT’s assumption that these receivables should have been included in goodwill was factually incorrect.
![PCIT revises AOs order citing trade receivable transfer during amalgamation: ITAT rules PCIT misconceived on facts [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/03/Amalgamation.jpg "PCIT revises AOs order citing trade receivable transfer during amalgamation: ITAT rules PCIT misconceived on facts [Read Order]")
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) quashed the Principal Commissioner of Income Tax (PCIT)’s order passed under Section 263 of the Income Tax Act, 1961. Rochem Separation Systems India Pvt. Ltd. (assessee) filed an Income Tax Return (ITR) declaring Rs. 2,36,22,600 as total income. The assessee company underwent an amalgamation with Concord Blue Technology Pvt....
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) quashed the Principal Commissioner of Income Tax (PCIT)’s order passed under Section 263 of the Income Tax Act, 1961.
Rochem Separation Systems India Pvt. Ltd. (assessee) filed an Income Tax Return (ITR) declaring Rs. 2,36,22,600 as total income. The assessee company underwent an amalgamation with Concord Blue Technology Pvt. Ltd. (CBTPL), as per the scheme approved by the National Company Law Tribunal (NCLT), Mumbai. The merger involved the transfer of only the Industrial Solid Waste Division of CBTPL, while the Municipal Solid Waste Division remained separate.
The Assessing Officer (AO) during the assessment for Assessment Year (AY) 2018-19, scrutinized the assessee’s claim of depreciation on goodwill amounting to ₹3.87 crores, which was a result of the amalgamation. The AO sought documentary evidence to justify the depreciation claim.
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The assessee submitted a detailed response to the AO query. The assessee submitted several documentary evidence related to the merger of the company. The AO accepted the claim and completed the assessment under Section 143(3).
The Principal Commissioner of Income Tax (PCIT) invoked section 263 of the Income Tax Act and observed that the trade receivables of ₹9.46 crores were not considered while determining the goodwill amount.
Therefore, the PCIT held that the assessment order was erroneous and prejudicial to the Revenue set aside by the AO’s order, and directed a fresh examination of the goodwill computation. Aggrieved by the order of PCIT, the assessee filed an appeal before ITAT
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The two-member Bench comprising Shri Saktijit Dey (Vice President) and Shri Girish Agrawal (Accountant Member) observed that the trade receivables in question belonged to CBTPL’s Municipal Solid Waste Division, which was not transferred to the assessee as per the NCLT-approved scheme.
The tribunal also observed that the PCIT’s assumption that these receivables should have been included in goodwill was factually incorrect.
The tribunal further observed that the AO had conducted a detailed inquiry and considered all relevant facts, the assessment order was neither erroneous nor prejudicial to the Revenue.
Based on these findings, the ITAT set aside the PCIT’s order, reinstating the original assessment order. The Tribunal explained that simple disagreement with the AO’s view does not warrant invoking Section 263 unless the assessment order is clearly erroneous and harmful to revenue.
To Read the full text of the Order CLICK HERE
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