Delhi High Court – Orders
Be Pharmaceuticals Private Limited vs Assistant Commissioner Of Income-Tax, … on 30 March, 2026
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
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BE PHARMACEUTICALS PRIVATE LIMITED .....Appellant
Through: Mr. Nageswar Rao and Mr. Parth,
Advs.
versus
ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 2(1),
NEW DELHI .....Respondent
Through: Mr. Indruj Singh Rai, SSC, Mr.
Sanjeev Menon and Mr. Rahul Singh,
JSCs and Mr. Gaurav Kumar, Adv.
CORAM:
HON'BLE MR. JUSTICE DINESH MEHTA
HON'BLE MR. JUSTICE VINOD KUMAR
ORDER
% 30.03.2026
1. By way of present appeals under Section 260A of the Income Tax
Act, 1961 (hereinafter referred to as ‘the Act of 1961’), the appellant has
challenged the order of the Income Tax Appellate Tribunal (ITAT), Delhi
Bench “F” (hereinafter referred to as ‘the Tribunal’) dated 28.10.2025.
2. Before adverting to the questions which are involved in these appeals,
we would like to record facts in a nutshell and the submissions that were
advanced by learned counsel for the parties with respect to the varied
questions proposed and elaborately argued.
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3. By way of a sale deed dated 25.02.2012 (which got registered on
29.02.2012), the appellant had purchased assets of the company known as
Kilitch Drugs India Limited (hereinafter referred to as ‘vendor’) having its
plant at Village Nihalgarh, Tehsil Paonta Sahib, District Sirmaur, Himachal
Pradesh for a total consideration of Rs.281,28,95,923/-. According to the
appellant, said consideration comprised of slump purchase of tangible assets
of the vendor for a consideration of Rs.137,19,82,389/- which included land
and building and remaining part being Rs.144,09,13,534/- was paid as
goodwill.
4. The basic question in the present appeals was, as to whether the
appellant is entitled to claim depreciation on goodwill and if yes, than on
what amount. The Commissioner of Income Tax (Appeals)-I, New Delhi
(hereinafter referred to as ‘CIT(A)’) vide order dated 17.07.2019 had
reckoned the component of goodwill as Rs.65.8 crores.
5. The Tribunal though in principle accepted appellant’s contention that
it was entitled for depreciation on goodwill, however remanded the matter
back to the Assessing Officer (AO), with following directions contained in
its order dated 28.10.2025 :-
“18. In our considered opinion, the provisions of
section 50C of the Act per se cannot be made
applicable in the instant case as assessee is only the
buyer of capital assets and not the seller. At best, the
provisions of section 56(2)(vii)(b) of the Act could be
made applicable, which is applicable in the hands of
the buyer. Hence the Learned AO applying the
provisions of section 50C of the Act by adopting the
circle rates for land and building acquired by the
assessee under slump sale is patently wrong in view
of the fact that acquisition of assets under slump salePage 2 of 10
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is governed by the provisions of section 50 B of the
Act. It is pertinent to note that provisions of section
50C creates a deeming fiction in the hands of the
seller that the value determined by the stamp
valuation authorities for the purpose of stamp duty
shall be deemed to be the full value of consideration
received by the seller if the value mentioned in the
registered sale deed is less than the value determined
by the stamp valuation authorities. The provisions of
section 50C of the Act as stated earlier is applicable
only to the seller, which creates a deeming fiction.
The additional ground raised by the assessee is
challenging the applicability of provisions of section
50C of the Act to the impugned transactions of the
assessee carried out through slump sale agreement.
We have already held that assessee being a buyer of
the assets under slump sale, the provisions of section
50C of the Act cannot be made applicable to it.
However, the provisions of section 56(2)(vii)(b) of the
Act shall be applicable, which apparently does not
contain any deeming fiction. Hence, the argument
advanced by the Learned AR before us that the
deeming fiction created by the statute had to be
interpreted very strictly and had to be applied only
for the section in which such deeming fiction is
created and the same cannot be extended to other
sections, meaning thereby – the deeming fiction
created in section 50C of the Act cannot be extended
to slump sale cases which are governed by provisions
of section 50B of the Act, is to be rejected. Once the
provisions of section 56(2)(vii)(b) of the Act are made
applicable, what is to be seen is if the value at which
assets were acquired by the assessee at a price lesser
than the value determined by the stamp valuation
authorities for the purpose of levy of stamp duty, then
the acquisition price of the assets shall be substituted
with the value determined by the stamp valuation
authorities for the purpose of stamp duty. ThePage 3 of 10
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differential amount shall be treated as inadequate
consideration and brought to tax under section
56(2)(vii)(b) of the Act. But it is pertinent to note that
the same provisions of section 56(2)(vii)(b) of the Act
contains a proviso which says that if there is any
dispute with regard to the value between the assessee
and the value determined by the stamp valuation
authorities, then the proper recourse to the revenue
would be to refer the valuation of the land and
buildings to the Learned Departmental Valuation
Officer and thereafter the valuation of assets need to
be governed by the mandate provided in section
50C(2) of the Act.
Admittedly, in the instant case, the Learned AO had
not resorted to refer the matter to Learned
Departmental Valuation Officer. Hence in the interest
of justice and fairplay, we deem it fit and appropriate
to restore this issue to the file of Learned AO with the
following directions:-
a) Learned AO had to refer the valuation of land and
buildings acquired by the assessee from Kilitch Drug
India Ltd under slump sale pursuant to Business
Transfer Agreement, to the Learned Departmental
Valuation Officer, to determine the fair market value
as on the date of acquisition;
b) The Learned Departmental Valuation Officer
should ensure that assessee is given due opportunity
of being heard before the valuation is finalised. For
this purpose, the Learned AO is directed to give
suitable directions to the Learned Departmental
Valuation Officer;
c) The assessee is entitled to file its objections, if any,
before the Learned Departmental Valuation Officer;
d) The Learned Departmental Valuation Officer shall
furnish the valuation report after duly taking into
account all the objections of the assessee ;
e) If the value so determined by the Learned
Departmental Valuation Officer is more than thePage 4 of 10
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value shown by the assessee towards land and
buildings, then the same (i.e. the value determined by
Learned Departmental Valuation Officer) shall be
adopted as the value attributable for land and
buildings.
f) Correspondingly, the Learned AO should attribute
the remaining portion of the value towards the
Goodwill in view of our decision hereinabove that
assessee had actually paid the purchase
consideration which includes a portion towards
Goodwill also and grant depreciation thereon.
18.1. We are making it very clear that the Learned
Departmental Valuation Officer shall not resort to
adoption of circle rates for the purpose of valuation
of land and buildings as the circle rates were not even
notified by the Himachal Pradesh Government for the
transactions carried out upto 31-3-2012.
18.2. With the abovementioned directions, we hold
that the issue of claim of depreciation on Goodwill is
restored to the Learned AO.”
6. On the previous date of hearing i.e. on 25.03.2026, learned counsel
for the parties argued thus:-
“1. During the course of submissions, Mr. Rao,
learned counsel for the appellant submitted that the
Assessing Officer (AO) has not only gone through the
sale deed but has even reproduced the relevant
extracts thereof and since the sale deed was very
much with him, it was for him to either refer the
matter to the Departmental Valuation Officer
(hereinafter referred to as ‘DVO’) or to take the
valuation as per his own wisdom.
2. He further argued that the Income Tax
Appellate Tribunal (hereinafter referred to as the
‘Tribunal’) has erred in resorting to the provision
(Section 56(2)(vii)(b)) of the Income Tax Act, 1961
(hereinafter referred to as the ‘Act of 1961’), which isPage 5 of 10
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applicable to individual Hindu Undivided Family,
whereas the appellant is a company for which the
provision of Section 56(2)(x) of the Act of 1961 which
came into effect from AY 2017-18 could have been
applicable but since such provision did not exist for
the relevant period (for AY 2012-13), the Tribunal
has misdirected itself.
3. Mr. Indruj Rai, learned senior standing
counsel for the respondents, on the other hand,
submitted that the reference of Section 56(2)(vii)(b)
made in paragraph 18 of the impugned order dated
28.10.2025 of the Tribunal is only for the purpose of
making reference to DVO and for issuing appropriate
directions to the Assessing Officer while sending the
matter back. He added that Section 56(2)(vii)(b) or
Section 56(2)(x) as the case may be has not been
ordered to be resorted to and there is no direction of
levying tax under that provision, which by itself is a
separate charging section.
4. During the course of submission, Mr. Rai,
learned senior standing counsel for the respondents
further submitted that as a matter of fact, the
purchase consideration shown in the sale deed in
question was Rs.110 crore, as against this, in the list
of assets and while claiming depreciation, the
appellant-assessee had shown the value of tangible
assets (subject land and building) at
Rs.40,50,57,400/-.”
7. Today, Mr. Nageswar Rao, learned counsel for the appellant argued
that the provision of Section 56(2)(vii)(b) of the Act of 1961 are/were only
applicable qua individuals and Hindu undivided family (HUF) and so far as
Section 56(2)(x) of the Act of 1961 is concerned, the same came into force
with effect from 01.04.2017 and therefore on the relevant date (01.04.2012),
the provision enabling reference to the Departmental Valuation Officer
Page 6 of 10
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(hereinafter referred to as ‘DVO’) did not exist and hence, the Tribunal
could not resort to Sections 56(2)(vii)(b) or 56(2)(x) of the Act of 1961.
8. To this submission, Mr. Rai, learned Senior Standing Counsel for the
respondents submitted that it was only an observation and no corresponding
direction was contained in paras No. 18 and 18.2. He contended that though
the tenor of the order may give rise to some confusion but the stand of the
Department is, that Sections 56(2)(vii)(b) or 56(2)(x) of the Act of 1961
shall not be used as charging sections and shall be resorted to for the
purpose of making reference to DVO and consequential claim of
depreciation.
9. Mr. Nageswar Rao, learned counsel for appellant interjected and
pointed out the following part of para 18 of the impugned order of the
Tribunal to contend that the Tribunal has given direction to tax the appellant
as per Section 56(2)(vii)(b) of the Act of 1961, which is reproduced
hereinfra: –
“The differential amount shall be treated as inadequate
consideration and brought to tax under section 56(2)(vii)(b)
of the Act. But it is pertinent to note that the same provisions
of section 56(2)(vii)(b) of the Act contains a proviso which
says that if there is any dispute with regard to the value
between the assessee and the value determined by the stamp
valuation authorities, then the proper recourse to the revenue
would be to refer the valuation of the land and buildings to
the Learned Departmental Valuation Officer and thereafter
the valuation of assets need to be governed by the mandate
provided in section 50C(2) of the Act. Admittedly, in thePage 7 of 10
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instant case, the Learned AO had not resorted to refer the
matter to Learned Departmental Valuation Officer.”
10. Mr. Rao vehemently argued that the Tribunal could not have resorted
to such provision even for the purpose of making the reference even if the
argument advance by Mr. Rai, learned Senior Standing Counsel for the
respondents.
11. Learned counsel for the appellant also argued that even if the Tribunal
was of the view that the value of the assets as taken by the AO is not correct,
the Tribunal could not have doubted the same and remanded the matter for
the purpose of valuation inasmuch as the same can be done only by Principal
Commissioner or Commissioner under Section 263 of the Act of 1961.
12. We are prima facie not much convinced with this argument because
the appellate proceedings are continuation of the assessment proceedings
and the Tribunal while exercising the appellate powers under Section 254 of
the Act of 1961. It can certainly issue direction to get valuation done, when
the same was a subject matter of dispute.
13. However with a view to lend support to his argument that the
reference to the DVO could not have been made, learned counsel make
alternative plea that since there was no provision, reference could not have
been made. He relied upon judgment of Hon’ble the Supreme Court in the
case of Smt. Amiya Bala Paul v. Commissioner of Income-Tax as
reported in [2003] 262 ITR 407 (SC).
14. Another ground which has been taken by the appellant in the present
case is in relation to the consideration of Rs.20 Crores for Non-Compete
Agreement, which the appellant had entered into with the vendor.
15. He submitted that the Tribunal had rejected appellant’s claim for
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depreciation on said Rs.20 crores relying upon a judgment of this Court
titled as Sharp Business System v. Commissioner of Income Tax-III
reported in [2026] 484 ITR 496 (Delhi) but it is noteworthy that appeal
against said judgment of the Delhi High Court, has been decided by Hon’ble
the Supreme Court vide judgment dated 19.12.2025 reported in [2026] 484
ITR 509 (SC) and said judgment of the Delhi High Court has been modified
by Hon’ble the Supreme Court by holding that an assessee should be held
entitled to claim the amount of Non-Compete Agreement as revenue-
expenditure.
16. Another ground or grievance, which the appellant has raised in these
appeals is, that the Tribunal has not considered the appellant’s ground of
appeal relating to interest on delayed payment of custom duty and sales tax.
17. With regard to ground relating to interest on delay payment of custom
duty and sales tax, we find that the Tribunal in his para no.19 of the
impugned order has held that such ground raised by the assessee regarding
disallowance of interest paid on late payment of custom duty does not
emanate from the order of lower authorities.
18. We are of the view that such finding recorded by the Tribunal is
purely a finding of fact based on the record available with the Tribunal and
the same does not call for any interference.
19. The appeal qua this ground and all other grounds fail, except for the
grounds qua which we are framing the questions as enumerated hereunder :-
(i) Whether in face of the fact that on 01.04.2012,
Section 56(2)(vii)(b) of the Act of 1961 did not exist,
the Tribunal was justified in remanding the matter for
the purpose of calculating de novo valuation of the
tangible assets while taking recourse to suchPage 9 of 10
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provision?
(ii) Whether reference to Departmental Valuation
Officer can be made in the face of judgment of
Hon’ble the Supreme Court in the case of Smt. Amiya
Bala Paul (supra)?
(iii) What consequential directions are required to
be given by this Court to the Tribunal or the
Assessing Officer consequent to judgment of Hon’ble
the Supreme Court in the case of Sharp Business
(supra) decided on 19.12.2025?
20. Admit.
21. Issue notice. Mr. Rai accepts notice.
22. Meanwhile the Assessing Office shall make reference as directed by
the Tribunal and pass the order in terms thereof. He shall however not take
any measure for recovery of the demand, if raised as a consequence of the
order of the Tribunal.
23. List this case on 28.08.2026.
DINESH MEHTA, J
VINOD KUMAR, J
MARCH 30, 2026/cd
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