TMI Blog2007 (4) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 41(2) of the Income-tax Act, in respect of profit of slump sale." 3. On the date of hearing, the revenue has raised the following additional grounds: "On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below: 1.Alternatively, the Ld. CIT(A) failed to appreciate the provisions of sections 45 to 50 of the Income-tax Act under which capital gain is chargeable even on slump sale as held by Hon ble Jurisdictional High Court in the case of Premier Automobiles Ltd. v. ITO [2003] 264 ITR 193 (Bom.). 2.The appellant prays that the order of learned CIT(A) on the above ground be set aside. The appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had returned the loss of Rs. 25.09 lakhs as long-term capital loss. The Assessing Officer has had brought to tax the income of the assessee from the transfer of the entire business as a going concern under section 41(2) as business income. The assessee carried the matter in appeal before learned CIT(A). It was contended before him that section 41(2) is applicable from 1-4-1998 only in the case of undertakings engaged in the generation and distribution of electricity or other form of power and in those cases also, section 41(2) is applicable only in respect of the assets acquired after 1-4-1997. A clear finding is given by the learned CIT(A) on page No. 6 of his order that the windmill power unit of the assessee company was very old and henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und in connection with applicability of section 41(2), learned counsel of the assessee supported the order of learned CIT(A). Regarding the additional ground in connection with taxing the income in the present case under the head "Capital gains", it is submitted that this issue stands concluded in the present case because, it was the claim of the assessee that Long Term Capital Loss should be allowed to be carried forward to the extent of Rs. 25.09 lakhs but the same was rejected by learned CIT(A) and the assessee is not in appeal and no C.O. is filed by the assessee. It is also submitted that this issue i.e. charging of Capital Gains in case of Slump sale prior to assessment year 2000-01 is covered in favour of the assessee by the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both sides. We find that this issue regarding applicability of provisions of section 41(2) in the present case is to be decided in favour of the assessee because this section is not applicable in the present case in view of the finding of learned CIT(A) that on no asset, the assessee company has availed the depreciation as per rule 5(1A) as provided in section 32(1)( i ). This finding of learned CIT(A) could not be controverted by learned DR of the revenue. Provisions of section 41(2) as reintroduced by Finance (No. 2) Act, 1998 w.r.e.f. 1-4-1998 are applicable only if depreciation is claimed by the assessee under clause ( i ) of sub-section (1) of section 32. In that situation also, the income is taxable under this section only to the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction was a slump sale. It is also observed by Their Lordships that while computing the capital gains, the Assessing Officer has to decide the cost of undertaking, its value under section 55, basis of allowing indexation and quantum thereof, and other parameters also as prescribed under the Act. It appears that section 50B was not brought to notice of Their Lordships in that case. In this context, we find that the Tribunal judgment rendered in the case of Coromandel Fertilisers Ltd. ( supra ) is very important because it is noted by the Tribunal in this case on page 443 of 90 ITD that it is held that section 45 is applicable in case of slump sale, it amounts to holding that both sections 45 and 50B are imposing charge on same in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of this fact, this objection of the learned CIT(A) is also not valid because capital gain is to be computed by considering business undertaking itself as an asset after allowing benefit of indexation. No other defect could be pointed out by the learned DR of the revenue in this working. In view of this factual position, there is no taxable long-term capital gain in the present case even if income is computed as per sections 45 to 50. Under these facts and circumstances, we are of the considered opinion, that there is no need in the present case to adjudicate this issue as to whether income in the present case is chargeable under sections 45 to 50 because as per the assessee, this issue stands concluded and for the sake of revenue, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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