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2014 (12) TMI 856 - HC - Income TaxDetermination of actual cost of asset – Reliance placed upon surveyor’s report - Whether the Tribunal was correct in placing reliance on surveyor’s report for the purpose of determining the actual cost of the asset acquired by the assessee from M/s Wimco Ltd. – Held that:- Obligations relating to NRDC royalty, warranties and gratuity were to be claimed as ‘business expenditure’ as and when incurred or accrued - the consideration paid was not bifurcated and divided into different heads, as it was a case of a purchase of a running business with all assets and liabilities - The agreement stipulates that the assessee would acquire the assets including the land allotted in district Rampur, buildings comprising coating shop, fabrication shop, DG set room etc., plant and equipments as per the details, stock-in-process, stock-in-trade, ram materials, contractual rights with customers and suppliers, receivables from trade or others and petty cash related to the business - the consideration paid of ₹ 6,03,21,910 was for a running and going concern and to acquire an undertaking - ₹ 6,03,21,910/- was not sub-divided or bifurcated under the said agreement under different heads - Value of the fixed assets, which were transferred and on which depreciation was earlier claimed by Wimco Ltd. and after acquisition by the assessee was not specified or so stated in the agreement itself – It was lump sum payment. What was purchased by the appellant asseessee was an undertaking there being slump sale and the entire business including assets and liabilities were transferred for a lump sum amount - There was no break-up or division of the said amount in the agreement itself - The amount paid would be the sale consideration paid after taking into account value of the plant, machinery, dead stock as well as work in progress, stock in trade etc., and intangible items like goodwill, manpower, values of different licences etc. - This cost paid would be for both depreciable and non-depreciable assets - difficulties do arise in computing the actual cost of the assets on which depreciation is to be allowed to the purchaser i.e. the appellant assessee. Assessee and the seller had evaluated the plant and machinery on the date of the sale - Therefore, the authorities and the Tribunal deemed it appropriate to rely upon the surveyor’s report for computing actual cost and we agree with the said conclusion. – thus, the order of the Tribunal is upheld – Decided against assessee.
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