| The Tax Publishers2020 TaxPub(DT) 3008 (Mad-HC) INCOME TAX ACT, 1961
Section 50B
Where assessee-company sold one of its divisions and placed various materials showing that individual assets were separately valued, though not specified in the agreement for sale, the CIT(A) was justified in holding that the sale effected by the assessee would not constitute 'slump sale' as per section 2(42C) and hence, provisions of section 50B would not be applicable.
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Capital gains - Slump sale - Assessee-company sold one of its divisions - Separate values assigned for individual assets
Assessee-company sold one of its divisions and provided break-up of sale consideration received as per assets. AO alleged that the sale was entered as a going concern and it would fall within the definition of 'slump sale'. Further, the AO alleged that there was no mention of the individual values in the agreement entered into by the assessee. Accordingly, he held that the sale should be treated as 'slump sale' and profits arising out of such sale should be treated as 'Capital Gains' under section 50B. Further, CIT(A) held the sale effected by the assessee would not constitute 'slump sale' as per section 2(42C) and hence, provisions of section 50B would not be applicable. However, Tribunal held that the said sale was slump sale as there was no separate value given for the individual assets in the agreement. Held: CIT (A) not only analyzed the conditions contained in agreement, but also referred to the sale bills. After considering those documents, he rendered a factual finding that the assessee assigned separate values for immovables consisting of land and building and movables consisting of furniture and fixtures, plant and machinery, etc., and therefore, concluded that the consideration for transfer could not be called as a lump sum consideration and hence provisions of section 50B would not be applicable. Further, though the individual value was not contained in the agreement, but the same was mentioned in various materials produced by the assessee. However, the Tribunal ignored the documents produced by the assessee and continued to reiterate the stand that there was no separate value given for the individual assets in the agreement. Further, the Revenue never disputed the facts recorded by the CIT (A) showing that the individual assets were separately valued, though not specified in the agreement for sale. Accordingly, the order passed by the Tribunal was set aside and the order passed by the CIT(A) was restored.
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2007-08
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