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2016 (1) TMI 375 - HC - Income TaxComputation of Slump sale - ITAT held that for computing the net worth under Section 50B, Section 43(6)(c)(i)(C) is not applicable in case of slump sale of the undertaking includes the entire block of assets - whether the entire block of assets was sold, the written down value of the block of assets as existing must be taken at the aggregate value of the total assets? - Held that:- The ITAT had accepted the Assessee’s contention that in case the entire block of assets was sold, the written down value of the block of assets as existing must be taken at the aggregate value of the total assets. We are unable to concur with the said view. First and foremost, for the reason that there is no provision which mandates adopting this method of computation, the machinery provisions provided in Section 50B of the Act exhaustively provide for determining the cost of acquisition of the undertaking or division sold by way of a slump sale. If one examines the three clauses of Explanation 2 to Section 50B of the Act, the same exhaust all categories of assets. Insofar as depreciable asset is concerned, clause (a) provides an extensive mechanism to compute its value. The working of clause (a) also does not yield results which are absurd or unreasonable so as to warrant looking for other aids to statutory interpretation for ascertaining the true legislative intent. In the circumstances, the language of clause (a) of explanation 2 to Section 50B must be given its plain and literal meaning. It could hardly be disputed that the plain language of sub-clause (b) of Clause C contemplates reduction from the actual cost of assets of the depreciation “that would have been allowable to the Assessee for any assessment year commencing on or after 1st day of April, 1988 as if the asset was the only asset in the relevant block of assets”. In view of the plain language, there is no scope to read the provisions of sub-clause (b) of Clause C to permit deduction of depreciation actually allowed and not as “would have been allowable”. There is little merit in Mr Singh’s contention as the entire basis of reducing the value of the block of assets in the current assessment year is premised on the basis that depreciation was allowable to the Assessee for the year ended 31st March, 2000. In our view, Mr Vohra is perhaps right that had the Assessee claimed the depreciation on the block of assets for the year ended 31st March, 2000, it could have carried forward the same for setting it off against the short term capital gains arising out of the sale of the business. However, the fact is that the Assessee had not claimed the depreciation for the year ended 31st March, 2000 and as rightly pointed out by Mr Vohra, deduction on allowance of depreciation is available to an Assessee at its option and the Assessee cannot be compelled to claim the same. Since, in the facts of the present case, whether wittingly or unwittingly, the Assessee has not claimed the depreciation for the year ended 31st March, 2000, it is unable to mitigate its tax liability. Whilst, we may sympathise with the Assessee, it is not possible to grant any relief to the Assessee. We are unable to accept the interpretation of Clause (a) of Explanation 2 to Section 50B as canvassed on behalf of the Assessee. - Decided in favour of revenue
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