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2022 (6) TMI 961 - HC - Income TaxSlump sale u/s 2(42C) - Scope of business transfer agreement - HELD THAT:- CIT (A) has minutely examined the business transfer agreement and noted that the unit was not sold as a going concern but the assets were sold as individual assets, the valuation has been done separately, the valuation of the land has been separately mentioned in the valuer’s report and that the assessee has not transferred the undertaking with all the assets and liabilities. Further, all financial assets available with the assessee up to the date of transaction, were not transferred but retained by the assessee. Further, the assessee had assumed all the liabilities including the statutory liabilities till the date of transfer and therefore, held that the transfer cannot be treated as a slump sale under Section 50E of the Act. The Tribunal re-examined the facts and found that the transferee has not taken over all the loans and liabilities. - Decided against revenue. Disallowance of Bad debts - debts were written off as trade debt - HELD THAT:- The business transfer agreement was examined and it was noted that as on the date of transfer the sundry debtors were not transferred to the joint venture company and therefore held that there is no reason to reject the claim of bad debts made by the assessee. The Tribunal affirmed the said order by taking note of the terms of the agreement between the parties and also the fact that the bad debts claimed by the assessee in the year under consideration were recovered in the subsequent assessment year 2006-07 and offered for taxation which fact could not be denied by the revenue. Thus, we find that the CIT (A) and the Tribunal rightly interpreted the factual position and granted relief to the assessee and there is no reason for us to interfere with the said orders. Accordingly, substantial questions of law are answered against the revenue. Compensation received from M/s. Batenfeld, UK - AO was of the view that the entire amount of compensation had reduced the cost of the machinery and therefore, denied relief to the assessee - HELD THAT:- Tribunal after considering the findings recorded by the CIT (A) examined the settlement which was executed between the assessee and the UK Company which show that the compensation was given on account of non-achievement of performance parameters. After noting the relevant clauses in the settlement agreement, the Tribunal held that the condition specified in Section 143 (1) of the Act for directing the actual cost from value of the machines were applicable to the compensation amount paid to the assessee. We find there is no error in the approach of the Tribunal or that of the CIT (A) for us to interfere. Accordingly, substantial questions of law are answered against the revenue. Belated payment of the employee’s contribution to Provident Fund Organisation - HELD THAT:- Tribunal granted relief to the assessee by following a decision of this Court in Vijay Shree Ltd [2011 (9) TMI 30 - CALCUTTA HIGH COURT] - However, we note that other appeals have been admitted on the said issue and are pending before this Court. In any event a need may not arise to decide the said issue because the tax effect on the said issue is only Rs. 50,289/- and therefore, the revenue cannot pursue the appeal on the said issue on the ground of low tax effect. Therefore, the substantial question of law No. 9 is left open as a tax effect on the said issue is only Rs. 50,289/-. - Decided against revenue.
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