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2015 (2) TMI 204 - HC - Income TaxCapital gain tax - Excess on sale of the business undertaking realized on sale of fixed asset - whether be taxed as gains? - whether as cost of the undertaking was incapable of determined, the computation of gain was impossible and, therefore, tax was leviable on the alleged surplus ? - Held that:- Section 45 charges the profits or gains arising from the transfer of a capital asset to income-tax. In other words, it charges surplus which arises on the transfer of a capital asset in terms of appreciation of capital value of that asset. The "asset" must be one which falls within the contemplation of Section 45. It is further held that, the charging section and the computation provisions together constitute an integrated Code and when in a case the computation provisions cannot apply, such a case would not fall within Section 45. On a plain reading of Section 41(2) of the Act it becomes clear that for the purpose of invoking the said section it is necessary that each individual asset, be it a building or plant or machinery, has to be (a) owned by the assessee, (b) used for the purpose of business of the assessee, (c) should have written down value and actual cost, and (d) there should be excess which does not exceed the difference between the actual cost and the written down value which shall be chargeable to tax as income of the business of the previous year in which monies payable for such building, machinery, plant or furniture became due. Therefore, for each asset which is sold the Assessing Officer must have with him the actual cost, WDV and the sale consideration. In absence of the same, Section 41(2) of the Act cannot be applied. Also to take note of the fact that Supreme Court itself has in similar fact situation in the case of CIT vs. Electric Control Gear Mfg. Co. (1997 (7) TMI 8 - SUPREME Court) distinguished its own decision in Artex Manufacturing Company [1997 (7) TMI 7 - SUPREME Court] by holding that there was nothing to indicate that the price attributable to the assets like machinery, plant or building out of the total consideration amount and merely because depreciation had been allowed, it could not be said that the balance was the excess amount between the price and the written down value."Thus considering the above subsequent principle laid down in the case of PNB Finance Ltd (2008 (11) TMI 7 - SUPREME COURT) and Garden Silk Weaving Factory (2005 (6) TMI 32 - GUJARAT High Court ), we are of the considered opinion that the questions posed in this appeal are required to be answered in favour of the assessee. Charge of interest under Section 243B and 243C does not arise for the purpose of capital gain. Therefore, the same is also required to be answered in favour of the assessee
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