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2022 (9) TMI 703 - AT - Income TaxSale of Plant and machinery within short span of acquisition - Revenue treated the same as Scrap - denying adjustment of cost of acquisition against the consideration received on sale of these assets as claimed by the assessee - whether the assets which were acquired by the assessee on the acquisition of MIL were of any value or not? - HELD THAT:- Being old does not necessarily imply that it is scrap. And an asset qualifies as scrap when it is of no use to the assessee and incapable of fetching any value commensurate with its character. It is basically waste material - Surely the director has at no point stated that the machinery was of no use to the assessee at all and of no value also as machinery. Also the mere fact that the assets were sold within two months of acquiring them also is not relevant, we hold, for deciding its character as scrap .The asset may have been disposed for any reason as being surplus and not required by the assessee - Therefore this fact of the asset being sold within a very short period of acquiring is not relevant for determining its character as scrap. Further it is not that all machine was disposed off by the assessee which would have been the case if it were merely scrap. Assessee has sufficiently demonstrated the assets as not being scrap but of value. It has been pointed out that the acquisition of these assets alongwith the plant of MIL was negotiated by the assessee eight years back in 2003 but due to delay in getting sanction from BIFR by almost five years and the subsequent act of Board of both the companies being empowered for entering into the agreement, pushed off the actual acquisition of the business of MIL by the assessee by eight years and the same could be acquired in the impugned year only. The business acquisition agreement mentions plant and machinery being acquired by the assessee alongwith other assets . These facts are not disputed by the Revenue. If these machineries acquired by the assessee from MIL were of no use and were only scrap there was no reason to mention them as part of assets being acquired in terms of the agreement. Scrap surely could not have fetched such high proportion of amount out of total value of assets acquired. Further the assesses valuation of these assets is backed by a valuation report of a valuer. The Revenue has not pointed any infirmity in this report . The Revenue therefore could not have brushed aside and ignored this report on its own whims and fancies Appeal of the assessee are allowed.
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