TMI Blog2016 (4) TMI 1131X X X X Extracts X X X X X X X X Extracts X X X X ..... of subsidy nor it was in the nature of the reimbursement. We further find that it was not even compensation for the recouping the damage caused to the plant and machinery. None of the conditions specified in Sec. 143(1) of the Act for deducting the actual cost from value of the machines were applicable to the compensation. Therefore we are inclined not to reduce the actual cost of the plant and machinery by the amount of compensation - Decided in favour of assessee Allowance of claim of assessee’s bad debt - Held that:- As find from the order of learned CIT(A) we find that the bad debts claimed by the assessee in the year under consideration were recovered in the subsequent AY 2006-07 and offered for taxation. The ld. DR could not bring anything on record contrary to the finding of the learned CIT(A). Therefore, in our opinion, that the debtors shown by the assessee were the genuine. - Decided in favour of assessee Disallowance u/s 43B for delay in deposit of PF and ESI contributions - Held that:- As from the assessment order we find that all the payment of employees contribution were made before the due date of filing of Income Tax Return as specified u/s.139(1) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee sold its said division to M/s Terxpro Films Pvt. Ltd.,(TFPL for short) in terms of agreement dated 8th of September 2004. The relevant extract of the agreement are reproduced as under :- Clause 1.8 of the agreement defined business as follows:- Business shall mean the business of XPRO of manufacturing and selling BOPP Films carried on at and through Biax Division Unit I, including Approvals, Immovable assets, Movable Assets, Employees, contracts, Intellectual Property Rights and Property Information. Accounts and Funds, Systems, Know-how, Goodwill, Business Records and every related, associate or incidental activity of Biax Division Unit II and all other rights of XPRO in Biax Division Unit II along with benefits and goodwill of the Business, which are existing and which XPRO may acquire in future upto the Closing Date, but excluding all loans and liabilities of XPRO with respect to Biax Division Unit II. It is clarified that intellectual property rights and property information, know-how and market details relating to packaging and non capacitor grades of BOPP film would not form part of this definition. Clause 3.2 of the agreement specified the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company shall, if so requested b XPRO in writing, directly pay the said amount of ₹ 130,000,000 or such lesser amount as indicated by XPRO in the request, on XPRO s behalf to UTI. This amount shall be payable on Closing Date in accordance with the provisions of Clause 7 hereof and such payment shall be deemed to be payment made by the Company to XPRO towards part purchase Price. For the sake of clarity and removal of doubt the Value of current assets referred to in this clause shall mean at actual cost. For avoidance of doubt, it is clarified that the Purchase Price stated in this Article forms the full and final consideration to be paid or parted from the Company to XPRO under this Agreement for the Business and for all subsequent deeds, instruments, contracts or actions that have or may have to be executed, performed or taken by and between the Parties and/or any Third party in order to give complete effect and force to this Agreement or any of the obligations contained herein. No further consideration shall be paid and/or be payable by the Company. The Purchase Price shall, at all times, be the payment for the whole of the Business even though any individual asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of Hon'ble ITAT, Kolkata and ITAT, Cochin, it is held that in the case of appellant there was no slump sale of undertaking but the itemized sale of assets and therefore, the provisions of Sec. 50B are not applicable in the appellant case. The AO is directed to compute the income of the appellant accordingly without invoking provisions of Sec. 50B of the Act. The ground no. 1 to 4 are allowed. Being aggrieved by this order of Ld. CIT(A) Revenue is appeal before us. Shri D.S.Damle, Ld. Authorized Representative appearing on behalf of assessee and Shri Radhey Shyam, Ld. Departmental Representative appearing on behalf of Revenue. 4. We have heard rival submissions and perused the materials available on record. The Ld. AR has filed a paper book which is running pages 1 to 255. The learned AR before us submitted that in substance and in reality the assessee has made a sale of fixed assets and the specified current assets in favour of to Trexpro for the consideration as mutually agreed. The transaction was duly recorded in the books of accounts as sale of fixed assets and specified current assets. The accounts of the assessee were duly audited by the qualified chartere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing , it is clear that the provision of Sec/ 50B of the Act will be attracted when an undertaking is transferred for lump sum consideration without values being assigned to the individual assets and liabilities in such sales. In the instant case the transferee has taken over all fixed assets, specified current assets and not taken over all the loan and liabilities. Therefore in our considered view the transaction of sale of the fixed and current assets is out of the purview of slump sale as specified under section 50B of the Act. We are also putting our reliance in the case of DCIT v. Tongani Tea Co. Ltd., (2015) 63 taxmnn.com 149 (Kol Trib.) The head note reads as under : Section 2(42C), read with Section 50B, of the Income-tax Act, 1961 Capital gains Slump sale (Meaning of) Assessment year 2000-01 Assessee-company carried on business of growing and manufacture of tea It owned two tea gardens During relevant year, assessee sold one tea estate for a total value of ₹ 18 crores Assessing Officer noted that assessee company sold its entire tea estate as a going concern basis He thus opined that it was a case of slump sale Accordingly, Assessing Officer added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee-company to make good the price of machine which has been paid by assessee to M/s Batenfeld. The compensation received by assessee is towards mitigating the cost of the machine which has been supplied to assessee and same is a capital receipt but it has to be reduced from the cost of the machine as it has been specifically provided and compensated to assessee. After considering the same, AO recomputed the depreciation @ 25%. 7. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who after careful consideration held that AO was not justified in holding that entire amount of compensation of ₹ 3,52,06,915/- would go to reduce the cost of acquisition of the machinery which include waiver of 10% of invoice value of the machinery. Ld. CIT(A) found force in the submission of assessee that compensation was paid by M/s Battenfeld for failure to meet its capital commitment and for failure to demonstrate the predetermined performance parameters and assessee could not get desired quantity and quality of finished products. Accordingly the Ld. CIT(A) deleted the addition by observing as under:- 11.4 In the case of appellant it has received the compensation/liquidated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it needs to be reduced from the value of the machine. However we find from the settlement deed with the UK Company that compensation was given as the performance parameters were not achieved. The settlement deed is placed on page number 193 of the paper book. The relevant extract of the settlement deed is reproduced below :- THIS DEED WITNESSETH 1.1 Without accepting the CONTENTION OF XPRO THAT THEE IS ANY DEFECT IN THE Co-extrusion Film Manufacturing Equipment supplied by BATTENFELD to XPRO under the Contract, but in light of the fact that the performance parameters could not be demonstrated, BATTENFELD shall pay a sum of 450,000,000 (Euro four hundred and fifty thousand) to XPRO. From the above, it is clear that the compensation was awarded for not meeting the performance parameters. The compensation was not computed with the reference to the cost of the said machines. The compensation paid was neither in form of discount nor against the price nor it was in the nature of subsidy nor it was in the nature of the reimbursement. We further find that it was not even compensation for the recouping the damage caused to the plant and machinery. None of the conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly written off in the books of account in the year under consideration. The appellant has also demonstrated that as per the Business Transfer Agreement, the sundry debtors, as on the date of transfer, were not transferred to the joint venture company. Under the circumstances, I am of the opinion that there is no reason to reject the claim of bad debts made by the appellant when the conditions u/s. 36(1)(vii) read with Sec. 36(2) of the Act are satisfied. Moreover, the appellant was able to recover the debt written off in the subsequent yea and offered it as income for A.Y 2006-07. In view of above it is held that the AO was not justified in disallowing the claim of bad debts. The AO is directed to allow appellant s claim. The ground nos. 8 and 9 are allowed. Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. The ld. DR relied in the decision of AO and on the other hand the ld. AR relied on the decision of the learned CIT(A). 12. We have heard rival contentions and perused the materials available on record. From the aforesaid discussion we find that the AO during the course of assessment proceedings apprehended that the bad debts claimed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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