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2017 (3) TMI 682 - AT - Income TaxInvocation of provisions of section 50B - slump sale - Held that:- CIT-A having categorically concluded that the adoption of slump sale provisions us/ 50B of the Act by the ld AO is not the correct approach, further proceeded to uphold the computation of Long Term Capital Gains (LTCG) after granting relief to the extent of ₹ 7,76,000/- alone. The facts stated herein remain undisputed and hence the same are not reiterated for the sake of brevity. We find that this is a case of simple retirement of the assessee from a partnership firm for which he received consideration of ₹ 50,00,000/- against his investment made thereon. It is not in dispute that he had invested ₹ 52,76,000/- in the firm. Hence the resultant capital loss of ₹ 2,76,000/- had to be disallowed in the memo of income by the assessee. The assessee had rightly treated the loss on sale of ₹ 2,76,000/- in his profit and loss account but had omitted to disallow the same in the memo of income. This is the only mistake committed by the assessee in our considered opinion. We find that the lower authorities had completely misdirected themselves by erroneously applying the provisions of section 50B of the Act by taking into account proportionate liabilities (which are not related to the cold storage plant) and ignoring the fact that those liabilities are still reflected in the balance sheet as on 31.3.2009. Accordingly, we direct the ld AO to disallow ₹ 2,76,000/- being capital loss in the assessment and reframe the same accordingly. Accordingly, the grounds raised by the assessee are partly allowed.
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