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2016 (5) TMI 264 - AT - Income TaxTaxing of capital gains u/s.50B r.w.s.2(42C) - transfer of the BOPP films undertaking to Xpro India Ltd. (XIL) - Held that:- We had gone through the terms of BTA, which clearly provides that sale of undertaking as a going concern for a lump sum consideration of ₹ 14 crores. With regard to the contention of ld. AR that individual values has been ascribed to net current asset, we found that the AO has reproduced the individual items of assets/liabilities in para 3.6 and has held that most of the items have been taken over by the buyer at the book value with minor and negligible difference. Further the net current assets by nature are such that its value change from day-to-day, and, therefore, its exact value on the date of actual transfer cannot be determined at the time of entering into contract, which is usually much earlier than the date of conveyance. We found that even assignment of individual value to net current asset was only for the purpose of ascertaining the change in the value of such assets in the intervening period i.e. the date of agreement and the date of conveyance. The conclusion drawn by the AO and CIT(A) are as per material on record, therefore, did not require any interference on our part. Accordingly, we uphold the addition made by the AO u/s.50B on account of gain arising from transfer of BOPP Films Undertaking. Computation of deduction u/s.80HHC - reducing 90% of receipt on account of sundry receipts including sale of empty bags, cartons, octroi/BPT/insurance premium and excise/sales-tax refunds from the business profits as contemplated in explanation (baa) to section 80HHC while calculating the deduction under section 80HHC - Held that:- Similar issue was dealt with by the Tribunal in assessee’s own case in the assessment year 1998-99 and restored the matter to the file of the Assessing Officer with the directions n the light of the following principles: (1) Net income, which is assessable under section 28 of the Income Tax Act, will not be eligible for inclusion ill the profits of the business for computing the relief under section 80HHe. Therefore, items like dividend income, profit on sale of investments, etc., which are not assessable under section 28, will have to be excluded while computing the profits of the business for computing the relief under section 80HHC. (2) Any receipt, which has no element of export turnover, should be treated as independent income ill terms of the judgment of the Hon'ble Supreme Court in the case of Hero Exports (2007 (11) TMI 13 - Supreme Court of India ) and therefore 90% thereof should be excluded from the profits of the business. (3) The issue as to whether 90% if gross receipts or 90% of net receipts with reference to incomes falling under Explanation (baa)(1) should be considered. (4) Sales tax and excise duty would not form part of the total turnover in terms of the judgment of the Hon 'ble Supreme Court in the case of CIT vs. Lakshmi Machine Works, reported in(2007 (4) TMI 202 - SUPREME Court ).
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