TMI Blog2015 (2) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... used for the purpose of business of the assessee, (c) should have written down value and actual cost, and (d) there should be excess which does not exceed the difference between the actual cost and the written down value which shall be chargeable to tax as income of the business of the previous year in which monies payable for such building, machinery, plant or furniture became due. Therefore, for each asset which is sold the Assessing Officer must have with him the actual cost, WDV and the sale consideration. In absence of the same, Section 41(2) of the Act cannot be applied. Also to take note of the fact that Supreme Court itself has in similar fact situation in the case of CIT vs. Electric Control Gear Mfg. Co. (1997 (7) TMI 8 - SUPREME Court) distinguished its own decision in Artex Manufacturing Company [1997 (7) TMI 7 - SUPREME Court] by holding that there was nothing to indicate that the price attributable to the assets like machinery, plant or building out of the total consideration amount and merely because depreciation had been allowed, it could not be said that the balance was the excess amount between the price and the written down value. Thus considering the above su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gain was long term capital gain and the assessee is liable to pay tax on capital gains accordingly. The CIT(A) confirmed the addition of motor car expense made by the Assessing Officer. 2.2. Being aggrieved and dissatisfied with the order of the CIT(A), the assessee again filed an appeal before the Tribunal. The Tribunal upheld the order of the CIT(A) and held that the appellant was liable to long term capital gains. Hence this appeal is filed at the instance of the assessee. 3. While admitting these appeals, the Court had formulated the following substantial questions of law:- 1. Whether on the facts and in the circumstances of the case, the Tribunal has substantially erred in law in holding that the excess on sale of the business undertaking realized on sale of fixed asset is liable to be taxed as gains 2. Whether on the facts and in circumstances of the case, the has substantially erred in law in appreciating that as cost of the undertaking was incapable of determined, the computation of gain was impossible and, therefore, tax was leviable on the alleged surplus ? 3. Whether on the facts and in circumstances of the case, the has substantially erred in law in ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er has not accepted the said request of the assessee. 4.3. Mr. Soparkar, learned senior advocate for the appellant-assessee has submitted that the Tribunal has passed its order on the basis of the decision of the Apex Court in the case of Commissioner of Income v. Artex Manufacturing Co. reported in 227 ITR 260. 4.4. Learned senior advocate for the appellant-assessee has relied upon the following decisions in support of his contentions:- (i) In the case PNB Finance Ltd. v. Commissioner of Income Tax-I, New Delhi, reported in 307 ITR 75 (SC). (ii) In the case of Commissioner of Income Tax v. Garden Silk Weaving Factory, reported in [2005] 279 ITR 136. (iii) In the case of Assessing Commissioner of Income Tax v. Patel Specific Family Trust, reported in [2011] 330 ITR 297 (Gujarat) 4.5. By making such submissions, learned senior advocate for the appellant-assessee has urged that this Court may allow the present appeal and answer the questions raised in this appeal in favour of the assessee and against the revenue. 5. Mr. Bhatt, learned senior advocate for the respondent-revenue has strongly relied on the decision of the Apex Court in the case of Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to raise the points of law even before the Appellate Tribunal. 4. The decision in question is that the power of the Tribunal under Section 254 of the Income Tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the Assessing Officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the Civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income Tax Appellate Tribunal under Section 254 of the Income Tax Act, 1961. There shall be no order as to costs. 5.2. Thereafter, Mr. Bhatt, learned senior advocate for the respondent-revenue relied upon the decision of this Court in the case of Commissioner of Income Tax Shahibaug Enterpreneurs Pvt. Ltd. reported in [2001] 251 ITR 433, wherein it is held that in CIT v. Artex Manufacturing Co. [1997] 227 ITR 260, the apex Court has held that even if in the agreement there is no reference to the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the full value of the consideration received or accruing as a result of the transfer of the capital asset into the same foreign currency as was initially utilised in the purchase of the shares or debentures, and the capital gains so computed in such foreign currency shall be reconverted into Indian currency, so, however, that the aforesaid manner of computation of capital gains shall be applicable in respect of capital gains accruing or arising from every reinvestment thereafter in, and sale of, shares in, or debentures of, an Indian company : Provided further that where long-term capital gain arises from the transfer of a long-term capital asset, other than capital gain arising to a non-resident from the transfer of shares in, or debentures of, an Indian company referred to in the first proviso, the provisions of clause (ii) shall have effect as if for the words cost of acquisition and cost of any improvement , the words indexed cost of acquisition and indexed cost of any improvement had respectively been substituted : Provided also that nothing contained in the second proviso shall apply to the long-term capital gain arising from the transfer of a long-term capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisition of the block of assets shall be the written down value of the block of assets at the beginning of the previous year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the previous year and the income received or accruing as a result of such transfer or transfers shall be deemed to be the capital gains arising from the transfer of short-term capital assets. 5.5. By making aforesaid submissions, learned advocate for the respondent-revenue has submitted that this Court may dismiss this appeal and confirm the impugned order of the Tribunal. 6. We have heard learned senior advocates appearing for both the parties and perused the material on record. We have also minutely perused the decisions relied upon by the learned senior advocates appearing for both the parties. The question Nos. 1 and 2 are required to be answered together as they are inter-connected. It appears that the Tribunal had passed its order on basis of the decision of the Commissioner of Income v. Artex Manufacturing Co. reported in [1997] 227 ITR 260. However, in view of the subsequent decision of the Apex Court in the case of PNB Finance Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions cannot apply, such a case would not fall within Section 45. In the present case, the Banking Undertaking, inter alia, included intangible assets like, goodwill, tenancy rights, man power and value of banking licence. On facts, we find that item-wise earmarking was not possible. On facts, we find that the compensation (sale consideration) of ₹ 10.20 cr. was not allocable item-wise as was the case in Artex Manufacturing Co. (supra). 7. The aforesaid two questions also came for interpretation in the of Garden Silk Factory (supra). Wherein in paragraph Nos. 4, 7, 8 and 10 of the said decision, the Court had held as under:-a 4 Mr.Tanvish U.Bhatt, learned Standing Counsel appearing on behalf of the applicant revenue assailed the order of the Tribunal primarily on the ground that the Assessing Officer had taken the details which are available on record to compute the balancing charge under section 41(2) of the Act and the Tribunal had wrongly read the agreements between the assessee firm and the limited company to hold that there was transfer of the entire business as a going concern. Alternatively, relying on the decision of Apex Court in the case of CIT Vs. Artex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be chargeable to tax as income of the business of the previous year in which monies payable for such building, machinery, plant or furniture became due. Therefore, for each asset which is sold the Assessing Officer must have with him the actual cost, WDV and the sale consideration. In absence of the same, Section 41(2) of the Act cannot be applied. In a case like the present one where the entire business is sold as a going concern with all assets and liabilities it is apparent that the provision cannot be invoked unless and until the aforesaid information is available with the Assessing Authority. It is in this context that the ratio of the Apex Court's decision in case of CIT Vs. Artex Manufacturing Company (supra) has to be appreciated and applied when it is observed that provision of Section 41(2) of the Act can be applied on the basis of the information that may be available with the Assessing Officer. 10 Before parting it is necessary to take note of the fact that Supreme Court itself has in similar fact situation in the case of CIT vs. Electric Control Gear Mfg. Co. (1997) 227 ITR 278 distinguished its own decision in Artex Manufacturing Company by holding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
