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by Ld. CIT(A) as made by the AO on account of depreciation on goodwill and also upholding the merger method for accounting the amalgamation and net asset value method instead of discounted cash flow method to compute the goodwill by the AO.

3. The facts in brief are that the assessee filed e-return of income on 30.11.2016 declaring a total loss of Rs.14,05,93,564/- under the normal provisions and Rs.8,11,17,325/- as book loss under section 115JB of the Act. The case of the assessee was selected for scrutiny and statutory notices were duly issued and served upon the assessee. The assessee is a private limited company of Keva Group of Companies. M/s. S.H. Kelkar & Co. Ltd. (hereinafter referred to as SHK) is a 100% holding company of the assessee and also listed on National Stock Exchange of India. Thus the assessee is a 100% subsidiary of a listed company and also a company in which public are substantially interested. During the year under consideration another 100% subsidiary company belonging to Keva Group was amalgamated with the assessee company after obtaining approval of Hon'ble Bombay High Court on the scheme of amalgamation. Prior to amalgamation, the name of the assessee was M/S KV Arochem Pvt. Ltd. which was changed to M/s. Keva Frangrances Pvt. Ltd. post amalgamation. In other words the Keva Fragrances Pvt. Ltd. was amalgamated with the assessee M/s. KV Arochem Pvt. Ltd. and after amalgamation the name of the company was changed to M/S Keva Frangrances Pvt. Ltd. from M/S KV Arochem Pvt. Ltd. The assessee company followed the purchase method of accounting the amalgamation entries in its books of the assessee which has resulted in the creation of goodwill of Rs.251,18,95,120/- which M/s. Keva Fragrances P. Ltd. & ors.

4.3.45 C) Nullification of goodwill and disallowance of depreciation by revising the valuation of KFG as a going concern: The AO rejected the DCF method of valuation and adopted Net Asset Value method for the valuing the net worth of the amalgamating company. Since the value of the amalgamating company as per NAV method was equal to the book value, there was no question of generation of any goodwill.

4.3.46 The valuation of the amalgamating company KFG was carried out by using Discounted Cash Flow method by employing the services of a private agency by name Kaveri Venkatraman and Associates, which submitted it's report on 04.02.2016. It is seen that the AO has scrutinised the process of valuation and has questioned the validity and integrity of the process of valuation, after examining the concerned valuer on oath and examining the data used by the valuer for the purpose M/s. Keva Fragrances P. Ltd. & ors.

4.3.48 I do not find it necessary to compare the projections of the value with the actual results while evaluating the soundness of the process of valuation. The valuation deserves to be rejected in light of the discussion in the earlier paragraphs. Reliance is placed on the decision of ITAT, Delhi in the case of Agro Portfolio (P.) Ltd. vs. Income Tax Officer, Ward 1 (4), New Delhi, in which it was held that Assessing Officer was justified in rejecting DCF method and adopting Net Asset Value method, because the valuation as per DCF method was carried out depending on data supplied by assessee and no evidence was produced for verifying correctness of data supplied by assessee. I agree with the decision of the AO, to use the Net Asset Value method as per which the value or net worth of the amalgamating company KFG comes to Rs. 130,21,00,000/-. The goodwill generated in such situation would be Nil.

M/s. Keva Fragrances P. Ltd. & ors.

4.3.49 In view of the discussions in the foregoing paragraphs, the ground no B is dismissed."

5. The Ld. A.R. submitted before us that the order of Ld. CIT(A) upholding the order AO on the disallowance of goodwill, merger method of accounting and net asset value method for valuation is completely wrong and against the provisions of the Act. The Ld. A.R. submitted that the assessee accounted for the goodwill in the books of accounts by following purchase method and consequently accounted for the goodwill of Rs.251.50 crores in the books of account as the total valuation for amalgamation fixed as per the valuation report was Rs.381.72 crore whereas the net book value of the assets as per books of accounts was Rs.130.21 crore and accordingly the assessee claimed the depreciation on the said amount of goodwill pursuant to the provisions of section 32 of the Act. The Ld. A.R. submitted that even the claim of depreciation on goodwill was in consonance with ratio laid by the Hon'ble Supreme Court in the case of CIT vs. Smifs Securities Ltd. 2012-TIOL-53-SC-IT and therefore the rejection of claim of the assessee by the authorities below is obviously against the provisions of the Act. The Ld. A.R. submitted that the decision of the Hon'ble Supreme Court squarely cover the issue of depreciation on goodwill resulting from amalgamation between two entities which has also been followed and held in favour of the assessee in the following decisions: