COMMISSIONER OF INCOME TAX Vs. SALORA INTERNATIONAL LTD.

JUDGEMENT

(1.) The Revenue has preferred the present appeal under Section 260A of the Income Tax Act, 1961 (hereafter the ,,Act) assailing an order dated 2nd August, 2002 passed by the Income Tax Appellate Tribunal (hereafter the ,,Tribunal) in ITA No.1903/Del/2001. The aforesaid appeal (ITA No.1903/Del/2001) was preferred by the Assessee against an order dated 22nd February, 2001 passed by the Commissioner of Income Tax (Appeals) [CIT(A)] whereby the Assessees appeal against an assessment order dated 29th March, 2000 for AY 1997 -98 was rejected.

(2.) The controversy involved in the present appeal relates to computation of capital gains arising from transfer of an undertaking by the Assessee to a new company, M/s Matsushita Television & Audio India Ltd., in terms of a scheme of arrangement sanctioned by this Court, under Section 391 -394 of the Companies Act, 1956. Whilst the Assessee claims that it has incurred a short term capital loss of Rs.11,14,31,696/ - on the sale of the said undertaking, the Assessing Officer (hereafter ,,the AO) has assessed the said transaction as resulting in a short term capital gain of Rs.25,34,72,144/ -. The principal dispute revolves around the quantum of consideration for the sale of the said undertaking; according to the Assessee, the consideration is Rs. 32,48,00,000/ - but according to the AO, it is Rs.50,12,00,000/ -. Further, the Assessee has computed the capital loss by taking the cost of the assets as Rs.59,94,36,171/ - which according to the AO should have been Rs.41,09,32,331/ - being the Written Down Value (hereafter ,,WDV) of the assets. The Revenue has not pressed its challenge as to the cost of the assets for the purposes of calculation of capital gains. Therefore, the only issue surviving in this appeal is the dispute as to the quantum of consideration for the purposes of computation of capital gains on transfer of the undertaking in question.

(3.) The present appeal was admitted on 10th July, 2003 and the following questions of law were framed: