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2018 (7) TMI 1611 - AT - Income TaxSlump sale - entire sale consideration was taken as income of the impugned assessment year - Held that:- Release of the amount lying in the escrow account is subject to issue of a letter from seller and purchaser to the escrow agent. No doubt, release of the escrow amount, is dependent on satisfaction of various responsibilities undertaken by the assessee in relation to the slump sale. However, in our opinion, this by itself would not be a reason to hold that consideration for the slump sale was not ₹ 18,31,00,000/-. Consideration is clearly mentioned in the slump sale agreement as ₹ 18,31,00,000/-. Segregating such consideration to two parts, one part payable in the relevant previous year and other part payable in the next year could not be in our opinion to a reason to say that capital gains arose only with reference to first part, even though release of the second part was subject to the seller abiding by certain conditions of the slump sale agreement. What is chargeable to tax is profits or gains arising from the slump sale. Profits or gains arising from a slump sale can be correctly computed only if the total consideration arising to an assessee on account of sale is reckoned. There is no provision which allows the assessee to segregate the consideration as per slump sale agreement in accordance with the year of receipt. - Decided against assessee Allowance of expenditure restricted - Held that:- Admittedly, assessee had transferred its business on 06.04.2011 in a slump sale. Even if we accept that it was necessary for the assessee to incur some expenditure for maintaining its corporate status, we cannot understand why assessee incurred manufacturing expenses. The table reproduced by us clearly indicate that assessee incurred manufacturing expenses of ₹ 2,84,847/-. At the best, assessee would be eligible for 6/365 of the manufacturing expenditure of ₹ 2,84,847/-, since it transferred its business on 06.04.2011. This works out to ₹ 4,683/-. However, assessee’s claim with regard to employee benefits, finance costs and administrative and other expenses ought not have been disallowed since these were necessary to maintain its corporate status. Therefore out of the total claim of ₹ 10,41,749/-, we direct the ld. Assessing Officer to allow ₹ 7,61,585/-. Balance of the disallowance is sustained. Ground of the assessee is partly allowed.
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