TMI Blog2002 (2) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... nit was sold for a net consideration of Rs. 4.40 crores. 4.3 The assessee filed its return of income showing loss of Rs. 7.23 crores, which included current year s loss of Rs. 2.20 crores and carry forward loss of Rs. 5.27 crores. From this loss, the income from other sources at Rs. 26.85 lakhs was reduced. The return was processed under s. 143(1)(a) of the Act, at a loss of Rs. 7,23,68,245. 4.4 Later on, a notice under s. 143 of the Act was issued to the assessee, in response to which the assessee filed the required details. 4.5 The AO made reference on 12th Feb., 1996, under s. 144A to Addl. CIT on the issue relating to capital gains on land and building as well as furniture and fixture on account of sale of Kashipur unit. 4.6 The Addl. CIT formulated certain issues and asked the assessee to make submissions with regard to certain points. 4.7 The assessee submitted that surplus on the sale of Kashipur unit was worked out at Rs. 6,85,03,149 and this amount was included in the P L a/c as receipt under the head "Other income" disclosed at Rs. 7,69,93,043. The assessee also explained the position with regard to other points including driage and interest on extra realization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kashipur Sugar Unit, cost of land and building and after reducing the investment allowance and reserve of central subsidy as well as reserve of school building. He worked out the figures at Rs. 20,40,30,139.98. 4.10 The assessee had shown liabilities at Rs. 13,55,27,000.35, the details of which are given on p. 10 of the assessment order, which do not require reproduction here. The AO also held that the increase in the liabilities by reserve from Central Subsidy of Rs. 25,50,000 and the reserve for doubtful debts of Rs. 2,90,112 was not permissible. Thus, he held that net worth on the sale of the unit will be included in the income at Rs. 3,57,55,945.63 4.11 The assessee preferred appeal before the learned CIT(A) against the order of the AO. The version of the assessee was that the total consideration of Rs. 4,40,00,000 paid by the buyer was dealt with in the accounts of the assessee in the ordinary commercial manner and for the purposes of income-tax, it was dealt according to the provisions of IT Act. The assessee, in particular, placed the working in relation to the current assets, loans and advances and investment as per books of account. It was the version of the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sale in Pilibhit -8,600 Sale, Kashipur factory as per MOU 6,00,000 -6,08,600 -1,09,792 Thus, the above amount of Rs. 1,09,792 was worked out short-term capital gain on this block". 4.14 Similar approach was adopted in respect of other blocks of building and plant and machinery. 4.15 So far as non-depreciable fixed assets are concerned, the assessee claimed that the sale consideration for land transferred was against Rs. 6,40,000 and since the fair market value of the portion of land transferred during the assessment year under consideration for the financial year 1981-82 was estimated at Rs. 1,28,000, by applying the index cost of acquisition at Rs. 2,50,440 and after deducting this amount from the sale consideration of Rs. 6,40,000, the long-term capital was to be worked out at Rs. 3,54,560. 4.16 Before the learned CIT(A), it was also submitted that what was credited to the P L a/c i.e., Rs. 6,85,03,050, was not only included the net consideration of Rs. 4.40 crores received on the transfer of Kashipur unit, but also various debit and credit balances between the Kashipur unit and head office i.e., Pili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifferent." 7. Out of the above grounds, the main ground appears to be ground No. 4, which challenges the approach of the learned CIT(A) in applying the principle laid down in CIT vs. Mugneeram Bangur Co. (1965) 57 ITR 299 (SC) and the Board s Circular No. 23-D(LXXVII-6) of 1965 to the facts of the case. 8. It may be pointed out that the contention of the assessee before the learned CIT(A) was that though a sum of Rs. 4.40 crores was the net consideration that was paid by the buyer to the assessee, but even this amount cannot be assessed as a lumpsum figure and the profit on sale of different block of assets must be computed in accordance with s. 50(1) and (2) r/w s. 43(6)(c) of the Act. It was also submitted on behalf of the assessee that the assessee had worked out the short-term capital gains as per s. 50(1) and (2) but the AO has not considered the same. 9. The learned CIT(A) agreed with the assessee that the net consideration received by it on account of sale of Kashipur unit was only Rs. 4.40 crores, but so far as the applicability of s. 50(1) and (2) is concerned, he rejected the plea of the assessee by observing as under : "There is, however, no force in the argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the facts of this case. 11. The learned counsel for the assessee emphatically contended that in view of the debit notes, price of each item, relating to the assets transferred to the purchaser was available and determinable and, therefore, decision of the Hon ble Supreme Court of India in the case of CIT vs. Artex Mfg. Co. (1997) 141 CTR (SC) 290 : (1997) 227 ITR 260 (SC) is applicable, wherein it has been held that difference between actual cost and written down value of assets was assessable as business income and surplus over such difference was assessable as capital gains. Elaborating his point, the learned counsel for the assessee submitted that on the basis of the facts and material available during the assessment proceedings, particular price was attributable to particular items and, thus the decision of CIT vs. Mugneeram Bangur Co. was not applicable. 12. The other plea of the learned counsel for the assessee, in the alternative, was that if the ratio laid down in the case of CIT vs. Artex Mfg Co. was not applicable, then as the cost of acquisition of entry Kashipur unit as a whole was not ascertainable, no capital gain can be levied. 13. In this regard, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made specific reference to paras 1, 5, 8 and 13 of the MOU and after reading these paragraphs of the MOU, he construed the MOU as a document of transfer of the Kashipur unit as a whole. He also pointed out that in the MOU, the mode of payment was also set out and the purchaser was to be put in possession in pursuance of this MOU. According to him, the purchaser was not made owner of the individual assets, because individual assets were not transferred to it. About the letter dt. 22nd March, 1993, appearing on p. 63 of the paper book containing details of bills/debit notes dt. 5th Nov., 1992, and 4th March, 1993, appearing at pp. 64 to 67 of the paper book, the submission of the learned senior Departmental Representative was that these documents cannot be treated to be bilateral in nature, because the assessee has prepared these documents subsequently and are self-serving documents. In this regard learned senior Departmental Representative also pointed out that the letter dt. 22nd March, 1993, was prepared after four or five months of the sale transaction and are on account of after thought on the part of the assessee. 16. About the scheme of provisions included under the head "C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 (Ker) (v) CIT vs. Sarabhai Management Corpn. Ltd. (1992) 103 CTR (Guj) 218 : (1992) 196 ITR 436 (Guj) 19. We have carefully considered the facts and circumstances relating to this matter, the entire material including the case laws, to which our attention was invited by the learned representatives of the parties and their submissions. 20. In order to decide the real issue involved in ground No. 4 as reproduced above, it is to be ascertained as to whether the unit of the assessee was transferred as a going concern and as a whole in a lumpsum sale or the unit was transferred with its assets and liabilities and other components. For a proper decision on the above issue, a close analysis of the MOU and the related documents pertaining to the transaction of transfer of the unit as well as the stand of the assessee before the AO is very necessary. On perusal of the MOU following facts are found: (1) The assessee-company i.e., L.H. Sugar Factories Ltd. decided to transfer a sugar mill at Kashipur, which was referred to in the MOU as "Sugar Mill". (2) The object for transferring the sugar mill was to get discharged from various liabilities and to inject the sale proceeds of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he MOU is also reproduced, which is as under: "8. The plant and machinery, vehicles, furniture and fittings will be transferred by raising invoices thereof at the earliest and land, building, tubewell and cane roads will be transferred either through a conveyance deed or by duly executed perpetual lease giving all the rights to transfer, mortgage, creating charge, sub-division, changing use thereof, leasing further leasing etc. without any prior permission from L.H. Sugar Factories Ltd. All other movable assets, inventory of stock of sugar, sugar in process, molasses stores, bagasse, debtors, advances etc. alongwith liabilities towards State Bank of India for advances against stock and other current liabilities are being transferred today alongwith signing of this MOU." (8) It was also agreed that both the parties shall execute all acts, deeds, assurances and things as may be necessary for carrying out the terms of this memorandum of understanding. 21. Thus, it is clear that individual items and assets to be transferred along with the unit were specified and for their proper transfer further acts and deeds in the form of invoices and conveyance were to be executed in complian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chinery, furniture and fittings, vehicles, etc. was also given. In the other annexure available at pp. 67 to 69, the value of weigh scale, beam scale, fibrisers with turbine, cane unloaders and other smaller items was also specifically given. The total of bill/debit note dt. 5th Nov., 1992, was also worked out. 24. A perusal of these documents related and connected with the transfer of Kashipur unit shows that they were prepared to explain the working of the consideration price of Rs. 4.40 crores. 25. In this regard, specific reference may again be made to the contents of the letter dt. 22nd March, 1993, and debit notes dt. 5th Nov., 1992, and 4th March, 1993, which are available at pp. 63 to 71 of the paper book. It may be pointed out that the debit note dt. 5th Nov., 1992, is of the same date on which the MOU was executed. In this bill/debit note, the assessee has specifically mentioned the cost of stores, spares and other current assets. The total cost of current assets worked out through this debit note is at Rs. 2,89,01,826. Further break up of these current assets have also been worked out on the next page which contains Annexure B and Annexure C . The date of this deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Even the subsequent deeds or conveyances are merely consequential documents which were prepared and executed to give effect to the first deed i.e., MOU dt. 5th Nov., 1992, through which the transaction of transfer of the Sugar Mill at Kashipur unit took place. As mentioned in para 7 of MOU, the possession of the Sugar Mill was to be given to the second party on signing of the MOU and as mentioned in para 8 of this deed, parties were to execute deeds and to do other things necessary for carrying out the terms of the MOU. 27. In the case of Jayantilal Bhogilal Desai vs. CIT (1981) 22 CTR (Guj) 186 : (1980) 130 ITR 655 (Guj), the assessee firm which was carrying on the business of manufacture and selling pencils in Ahmedabad city, sold its machinery, goodwill, stock, furniture etc. and all the business to a firm for a sum of Rs. 4,61,111 on 30th June, 1966. On 1st July, 1966, a sale deed in respect of movable properties was executed. In this deed, it was mentioned that the price of stock, stores and ready goods was settled by mutual agreement on 30th June, 1966. The possession of the goods was handed over to the purchaser on that date. A further deed dt. 14th Dec., 1966, was exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the documents referred to only one transaction between the assessee and the purchasers that took place by the end of June, 1966. Therefore, it cannot be said that by the later document, some new transaction was sought to be entered into between the assessee and the erstwhile purchasers. The second document merely gave more details regarding consideration of various items which were sold by the assessee to the purchasers in the past, that is, by the end of June, 1966. Under these circumstances, it is not possible to accept the submission of Mr. Divatia that the second document is to be read independently of the first and both cannot be read together. We find that both these documents are part and parcel of the same transaction and they have to be read together. The second document is in fact merely explanatory of the first and is complementary to it. When both these documents are read together, it clearly emerges that the assessee sold the machineries, tools, goodwill and stock, etc. on 30th June, 1966, and both these deeds read together merely recorded the terms of the said sale which took place on 30th June, 1966." If we consider the nature of the documents relating to the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,000 50,000 13,52,36,978 13,52,36,978 On the basis of this balance sheet, excess of assets of Kashipur unit over the liabilities was shown by the assessee at Rs. 4,40,00,000 29. The assessee had filed computation of income with the return and gave details of assets including land and building, furniture and fixture, transfer to the purchase. In doing so, the WDV of different blocks of assets were also given. This computation is available at pp. 82 to 84 of the paper book. A perusal of the assessment order also goes to show that the AO had also considered these details given by the assessee. The AO has reproduced the details of fixed assets, current assets, and liabilities etc. in the assessment order itself. 30. An examination of the material furnished by the assessee during the assessment proceedings to the AO including the balance sheet and computation chart, as mentioned above, will go to show that the assessee had furnished the details of assets and the cost or value attributable to different assets so transferred with the unit. It further shows that the entire information relating to the written down val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: "Whether, on the facts and circumstances of the case, by the sale of whole business concern, it could be held that there was taxable profit in the sum of Rs. 2,50,000? 33. The Hon ble High Court held that there was no profit in the transaction by which the entire stock-in-trade and the business of the firm was transferred to the limited liability company. On further appeal, the Hon ble Supreme Court observed as under: "It seems to us that in the case of concern carrying on the business of buying land, developing it and then selling it, it is easy to distinguish a realization sale from an ordinary sale, and it is very difficult to attribute part of the slump price to the cost of land sold in the realization sale. The mere fact that in the schedule the price of land is stated does not lead to the conclusion that part of the slump price in necessarily attributable to the land sold. There is no evidence that any attempt was made to evaluate the land on the date of sale. As the vendors were transferring the concern to a company, constituted by the vendors themselves, no effort would ordinarily have been made to evaluate the land as on the date of sale. What was put in the sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re shown at Rs. 41,73,973, out of which machinery and dead stocks was taken at Rs. 15,27,296, the liabilities were shown at Rs. 30,23,573 and the balance amount of Rs. 11,50,000 was shown as the purchase consideration. The question arose about the taxability of income under s. 41(2) on the surplus amount. The ITO held that the tax was payable under s. 41(2) on the surplus amount on the income of Rs. 12,56,020. The AAC, on the other hand, held that the surplus was assessable under the head "capital gains" and not under the head "Business". On appeal, the Tribunal formulated three questions for its consideration, out of which following are relevant to the controversy before us: (i) Whether surplus is taxable at all? (ii) If the surplus is found to be taxable, whether it should be tax under s. 41(2) or under the head "Capital gains" ? 36. The first question was rejected by the Tribunal on the basis of the decision of Hon ble Supreme Court of India in the case of Pandit Laxmi Kant Jha vs. CIT (1970) 75 ITR 790 (SC). On the second question, the Tribunal held that the surplus was taxable under s. 41(2) of the IT Act, 1961. At the instance of the assessee, the Tribunal referred six ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1922 Act (s. 41(2) of the Act). It was also held that in the facts of that case, the Hon ble Court found that it was very difficult to attribute part of the slump price to the cost of land shown in the realization sale, as there was no evidence that any attempt was made to evaluate the land on the date of the sale. 40. So far as the facts of Artex s case are concerned, the Hon ble Supreme Court held that in this case, it was admitted case of the assessee before the ITO that the plant and machinery and dead stock had been revalued by Har Govinddas Girdharilal at the time of the agreement for the sale and the amount of Rs. 11,50,400 was fixed after taking into account the value of the plant, machinery and dead stock at Rs. 15,87,296 as per valuation by Har Govinddas Girdharilal. According to the Hon ble Court, this shows that at the time of execution of agreement on 31st March, 1966, the value of the plant, machinery and dead stock that were transferred was Rs. 15,87,296. The Hon ble Court further observed as under: "Shri Ganesh, learned counsel appearing for the assessee, has submitted that in the present case the value of the plant, machinery and dead stock is not mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Prakashan Ltd. (1992) 196 ITR 438 (Bom) is concerned, in that case, two branches of the assessee, a publishing house, were sold with their assets and liabilities to two different co-operative societies. After following decision of Hon ble Supreme Court in the case of CIT vs. Mugneeram Bangur Co. and the decision of Allahabad High Court in the case of Rai Bahadur Laxmandas Mohanlal Sons vs. CIT (1964) 54 ITR 315 (All) the Hon ble Court held that since even the branches of publishing house can have different goodwill, which depends upon a host of factors such as popularity, performance, circulation, peculiarities of the region, etc. and further since the liabilities were adjusted against the assets, it was held that it was transfer of a going concern. The Hon ble Court also held that the decision of the Hon ble Gujarat High Court in the case of Jayantilal Bhogilal Desai vs. CIT pertained to different backdrop and was not applicable. It may be pointed out that in the case of Narkeshari Prakashan Ltd., the decision of Hon ble Supreme Court of India in the case of Artex (which came subsequently) could not be considered, in which case, the Hon ble Supreme Court has clarified the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of CIT vs. Mugneeram Bangur Co. and Board s Circular No. 23-D/(LXXVII-6) of 1965 was applicable. We, therefore, reverse the findings of learned CIT(A) on this point. 45. There is another aspect of the matter. It may be pointed out that so far as the transactions of slump sale are concerned, these were not specifically covered under s. 48 and that appears to be the reason for introduction of s. 50B w.e.f. 1st April, 2000. Sec. 59B as indicated in its heading is a special provision for computation of capital gains in case of slump sale . This provisions are being reproduced as under: "Sec. 50B(1) Any profits or gains arising from the slump sale effected in the previous year shall be chargeable to income-tax as capital gains arising from the transfer of long-term capital assets and shall be deemed to be the income of the previous year in which the transfer took place: Provided any profits or gains arising from the transfer under the slump sale of any capital asset being one or more undertakings owned and held by an assessee for not more than thirty-six months immediately preceding the date of its transfer shall be deemed to be the capital gains arising from the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) What is the remedy that the Act has provided? (iv) What is the reason for the remedy? 48. If we examine the provisions contained under s. 50B and s. 2(42C) reproduced above, we will come to the conclusion that the earlier law or the existing law did not provide clear remedy relating to transactions of slump sales, which has now been provided by introducing specific provisions under s. 2(42B) and s. 50B reproduced above. The contention of the learned senior Departmental Representative that s. 50B is merely declaratory or clarificatory in nature is not acceptable in view of the fact that if the law was already there, there should have been no necessity to introduce a new provision. 49. It may also be pointed out that s. 50B, which has become effective from 1st April, 2000, provides remedy and covers the cases of slump sale. However, this provision has not been made operative retrospectively and, therefore, it cannot apply to asst. yr. 1993-94, which is the assessment year before us. 50. In view of the above, we are of the considered opinion that the transaction of transfer in the present case was not the case of "slump sale" of a unit as a whole or that of business as a goi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 50 as amended w.e.f. 1st April, 1988. These provisions are as under: "50. Special provision for computation of capital gains in case of depreciable assets. Notwithstanding anything contained in cl. (42A) of s. 2, where the capital asset is an asset forming part of a block of assets in respect of which depreciation has been allowed under this Act or under the Indian IT Act, 1922 (11 of 1922), the provisions of ss. 48 and 49 shall be subject to the following modifications: (1) Where the full value of the consideration received or accruing as a result of the transfer of the asset together with the full value of such consideration received or accruing as a result of the transfer of any other capital asset falling within the block of the assets during the previous year, exceeds the aggregate of the following amounts, namely: (i) expenditure incurred wholly and exclusively in connection with such transfer or transfers: (ii) the written down value of the block of assets at the beginning of the previous year; and (iii) the actual cost of any asset falling within the block of assets acquired during the previous year. such excess shall be deemed to be the capital gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the second place, it is a special provision for depreciable assets. Sec. 55, on the other hand, is only a definition section. 56. The Hon ble Kerala High Court in the case of CIT vs. V.V. George held that s. 48(1)(a) speaks of ways of computation of capital gains and the first aspect is the process of computation, by deduction from the full value of consideration so received two items, namely, expenditure incurred wholly and exclusively in connection with the transfer and the cost of acquisition thereto. 57. It may be pointed out that intention of inserting s. 50 was to modify s. 48 and s. 49 to a certain extent, namely, the definition of "Short-term capital assets" as given in s. 2(42A) is to be disregarded meaning thereby that if any capital gain arises on transfer of depreciable assets, the capital gains instead of being computed under ss. 48(1) and (2) is to be computed under s. 50. Thus, approach will support the logic that in case of capital gain arising out of transfer of depreciable assets, the option available under s. 55(2) cannot be exercised because s. 55(2) does not apply to s. 50 and cannot prevail over it. 58. In the case of India Jute Co. Ltd. vs. CIT, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al provision must necessarily operate in such a case so as to render the option under s. 55(2) unavailable and also to equate the cost of acquisition in such a case with the written down value as defined in cl. (6) of s. 43." 60. In the case of Commonwealth Trust Ltd. vs. CIT (1997) 142 CTR (SC) 214 : (1997) 228 ITR 1 (SC), the Hon ble Supreme Court of India uphold the views of Gujarat, Allahabad, Calcutta High Courts and of the Kerala High Court in the cases mentioned above by observing as under: "Viewed from this angle, s. 50(1) has no dependence on the provisions of s. 55(2). There is no mention of "fair market value" in s. 50(1) and besides that the adjustments stated there are with reference to the written down value only which has nothing to do with the fair market value. We conclude, therefore, that in the present case where the capital asset is depreciable and the assessee has availed of deduction on account of depreciation the cost of acquisition shall have to be determined in terms of the provisions of s. 50 r/w s. 48. All the High Courts including Bombay High Court are of the view that s. 50(2) does not apply to any capital asset other than that which has been acquir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets. 63. In view of the provisions contained under s. 50 r/w s. 32(2) and s. 43(6)(c), the written down value of the depreciable asset is to be worked out in the following manner: "The written down value of any asset in relation to the asst. yr. 1989-90, and any subsequent assessment year shall be worked out as under in accordance with the newly inserted s. 43(6)(c) in the following manner: (i) The written down value of the block of assets in the immediately preceding previous year, shall be reduced by the depreciation actually allowed in respect of the block of assets in relation of the said preceding previous year. (ii) The sum arrived at, as above, shall be increased by the actual cost of any asset falling within that block which is acquired by the assessee during the previous year. (iii) The sum so arrived at shall be reduced by the sale proceeds and other amounts receivable by the assessee in regard to any asset falling within that block which is sold, discarded, demolished or destroyed during that previous year. Under the new system, the written down value of any block of assets may be reduced to nil for any of the following reasons: (A) The moneys receivable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins accordingly. Ground No. 2: 67. Through ground No. 2, the assessee has pleaded that the learned CIT(A) was not justified in treating the amount of Rs. 4,40,00,000 as long-term capital gain without deducting the cost of acquisition of the Kashipur sugar unit. In support of this ground, the submission of the learned counsel for the assessee was that in view of the mode of computation laid down in s. 48 of the Act, the income chargeable under the head "Capital gains" is to be computed by deducting from the value of consideration the cost of acquisition of the asset and the cost of improvement made thereto. 68. The learned CIT(A) held that the whole Kashipur unit was sold as a going concern for lump sum amount of Rs. 4,40,00,000 and directed the AO to treat this amount of short-term capital gain arising out of transfer of Kashipur unit. 69. The approach, in our view, is not legally justifiable. As pointed out above, s. 45 of the Act provides the charge of capital gains. Mode of computation and deduction is provided in s. 48 under s. 48(1)(a), the income chargeable under the head "Capital gains" is to be computed by deducting from the full value of consideration received or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hased long back and was in process of its growth several factors contributed during several past years, no cost of acquisition and improvements can be determined and, therefore, in view of these decisions, no capital gains should be levied. 73. We have considered this argument also. In the case of Srinivasa Setty, the Hon ble Supreme Court of India has made following observations: "All transactions encompassed by s. 45 must fall under the governance of its computation provisions. A transaction to which those provisions cannot be applied must be regarded as never intended by s. 45 to be the subject of the charge. What is contemplated by s. 48(ii) is an asset in the acquisition of which it is possible to envisage a cost; it must be an asset which possesses the inherent quality of being available on the expenditure of money to a person seeking to acquire it. None of the provisions pertaining to the head "Capital gains" suggests that they include an asset in the acquisition of which no cost at all can be conceived. When goodwill generated in a new business is sold and the consideration brought to tax, what is charged is the capital value of the asset and not any profit or gain. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in view of our findings in relation to ground Nos. 3 and 4, we have found that cost of assets transferred by the assessee was attributed and was attributable and, therefore, there cannot be any difficulty in working out the cost of depreciable assets, which can be done in the present case by applying the provisions of s. 48 r/w s. 55 and s. 50 of the Act. 76. Thus, we are unable to accept the alternative plea of the assessee, which is rejected by us, but the main plea taken in ground No. 2 is accepted. Ground No. 2 is, therefore, allowed in favour of the assessee. Ground No.: 1 77. This ground runs as under: "The learned officers below erred in law and on facts in considering and including in the income of the previous year the surplus on transfer of portion of land and buildings of Kashipur sugar unit (sold) as long-term capital gain even though they were aware that the sale deed and registration of said portion was made in the financial year 1995-96 and fell in asst. yr. 1996-97." 78. The assessee transferred its land by two separate registered sale deed dt. 29th Jan., 1994 and 20th Feb., 1996. The claim of the assessee before the AO was that so far as the sale consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the report of the registered valuer. The AO also did not dispute it, nor made reference to the valuation officer, in view of the specific provisions contained under s. 56B. We have to consider this issue in the light of the relevant provisions of law. So far as long-term capital assets are concerned, the capital gain is to be worked out in view of the provisions contained under s. 48 r/w s. 55 of the IT Act, 1961, as mentioned above. The cost of acquisiton of the land transferred by the assessee is to be first worked out and for this purpose, in view of the provisions contained under ss. 55 and 48 of the Act, the fair maket value of the land as on 1st April, 1981, has to be first determined. Assessee has shown the fair market value at 1,28,000 as on 1st April, 1981, but it is not ascertainable as to what is the basis for showing this fair market value. In our view, this issue has not been properly consideed and decided by the AO in the light of relevant provisions as mentioned above. The learned CIT(A) has also not considered this issue. Hence, in the interest of justice, we consider it proper to restore this issue to the file of the AO for deciding the same afresh in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned CIT(A) has also supported the view taken by the AO by assigning the same reasons. 85. Before us, the learned counsel for the assessee submitted that the leanred CIT(A) did not take into consideration the statement in para 6 of the statement of the fact filed alongwith the appeal. He also invited our attention to p. 99 of the paper book, which contains the statement regarding driage. A perusal of the statement appearing at p. 99 of the paper book shows that in asst. yr. 1991-92, the claim of the assessee for driage was 0.35 per cent. In that year, the total cane crushed was 37,79,132 qtls. and driage was claimed at 18,279 qtls. The assessee has given separate details of Kashipur unit and Pilibhit unit, so far as percentage of driage in various years is concerned. However, from this chart, it is not clear, as to whether the claim of the assessee was accepted in ealier years by the IT Department so far as Kashipur unit is concerned and if so, on what ground. Since the Departmental authorities have not considered the comparative figures relating to this claim as submitted through the chart apearing on p. 99 of the paper book and further since the learned AO as well as learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debited; thus, doubly disallowing same item." 93. It was submitted before us that the assessee did not claim the amount of Rs. 74,991 in its P L a/c, but claimed the same in computation of income. In this regard, our attention was invited to p. 82 of the paper book. It was also submitted that since the amount was not deducted, there was no occasion for the AO to make the addition of Rs. 74,991 and, thus, the action of the AO tentamounts to double disallowance of the same amount. The learned CIT(A) has not considered this issue also. 94. After going through the relevant material and after considering the submissions of the learned counsel for the assessee, we consider it proper to restore this issue also to the AO for deciding the same afresh after verifying the facts from the relevant record and as per law. In case the double deduction has been made, then the proper relief should be given to the assessee. Hence, this ground is also allowed for statistical purposes. ITA No. 1694/All/1996: Asst. yr. 1993-94 Department s Appeal: Ground No. 1: 95. In view of our findings recorded while deciding ground Nos. 2, 3 and 4 in the appeal of the assessee (ITA No. 1706/All/1996), we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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