COMMISSIONER OF INCOME TAX Vs. MAHABALESWARA ENTERPRISES

JUDGEMENT

(1.) These two appeals are arising out of the order passed by the Income Tax Appellate Tribunal, Bangalore Bench 'B' holding the sale in question is a slump sale and therefore, the Assessing Officer is to compute capital gain by treating the sale as slump sale and provisions of Section 50 is not attracted. Aggrieved by the same, the Revenue is in appeals. The assessee-firm sold its Hotel Pentagon and land appurtenant thereto under a sale deed dated 24.7.1995 for a sum of Rs. 4 crore. In the said deed, the separate price for each of the asset like building, plant and machinery, furniture and fittings and land had not been given. The assessee at the time of filing the return of income obtained a certificate from a registered valuer regarding the cost of each asset i.e. building, plant and machinery, furniture and fittings. From the cost price of these assets, the valuer has reduced the depreciation at the rate of 10 to 15% depending upon the asset and worked out the written down value (w.d.v.) from the total sale consideration of Rs. 4 crore to arrive at the sale price of land.

(2.) The Assessing Authority did not accept the said w.d.v. The Assessing Authority also did not accept the case of the assessee that the sale consideration received by the assessee over and above the market value of assets is towards goodwill trade name or other self-generating assets. He proceeded to estimate the market price of the land sold at Rs. 40,000/- per cent taking into account the appreciation in value of land during the period of 10 years. However, it is also worked out the sale consideration of other assets such as building, plant and machinery and furniture and fittings. Thus he raised a demand for Rs. 4,43,680/- Aggrieved by the said order, the Assessee preferred an appeal. The Appellate Authority partly allowed the appeal and partly granted the relief and directed the Assessing Authority to allow set off in respect of the brought forward unabsorbed business loss for various assessment years in accordance with law. Aggrieved by the said order, both the Revenue as well as the Assessee preferred appeals to the Tribunal. The Tribunal held that Undertaking sold is an asset. It is a case of slump sale. Therefore, the Assessing Officer has to compute capital gain by treating the sale as slump sale and the appeal filed by the Revenue came to be dismissed as it has become infructuous. Aggrieved by the said order, these two appeals are filed by the Revenue.

(3.) The learned counsel appearing for the Revenue, assailing the impugned order contended that the Assessee did not contend about the slump sale before the Assessing Authority as well as before the First Appellate Authority. It was only before the Tribunal, such a case was made out. The Tribunal relying on its earlier judgment and without properly appreciating the contents of the sale deed and other materials on record has recorded a finding that the sale in question is a slump sale, which is erroneous and therefore, he submits that the order requires to be set aside.