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M/s. Kum Industries Versus The Addl. Commissioner of Income Tax

2016 (6) TMI 968 - ITAT PUNE

Disallowance of loss claimed by the assessee on sale of assets - sale of assets was partly made to one of the sister concerns i.e. concern in which one of the partners had more than 33% share - business shut down - Held that:- There are two aspects to the claim of loss by the assessee on sale of its assets. First of all, all these assets were used in chemical industry carried on by the assessee and had its wear and tear. Where the plant has been closed down by the assessee, the whole plant & mac .....

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e absence of any evidence found to the contrary that the sale value shown by the assessee in its books of account was understated and not correct. The said sale value cannot be disturbed. - Further, the assessee has sold the total plant & machinery and while computing income / loss under section 50 of the Act, since each asset under the head plant & machinery forms part of block of assets, the WDV of the whole block is to be considered for computing short term capital loss in the hands of a .....

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i Sunil Pathak For the Respondent : Shri Anil Chaware ORDER Per Sushma Chowla, JM This appeal filed by the assessee is against the order of CIT(A)-V, Pune, dated 23.04.2014 relating to assessment year 2007-08 against order passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. The assessee has raised the following grounds of appeal:- 1] The learned CIT(A) erred in confirming the disallowance of short term capital loss of ₹ 8,03,896/- on sale of assets on the ground .....

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le computing the income of the assessee. 4] The learned CIT(A) erred in not appreciating that. a. The assessee had recorded the actual selling price of the assets sold in its books and accordingly, had computed the short term capital loss and hence, there was no reason to disallow the same in the absence of any evidence that the assessee had actually received any higher consideration on sale of assets. b. Simply because, the assessee had not obtained valuation report did not mean that the loss c .....

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year under consideration, the assessee had declared income from business and also income from capital gains on sale of various assets. During the course of assessment proceedings, the Assessing Officer noted that the assessee had sold its plant & machinery to its sister concern. However, no valuation of assets was done by the assessee before selling the same. As per the Assessing Officer, the assessee had sold out the assets to its sister concern at a throw away price. Further, the Assessin .....

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of assets were sold to the concerns, where one of the partners was having 33% share. Where the assessee had failed to submit copy of assets valued by the Registered Valuer so as to arrive the market price of the assessee, the CIT(A) upheld the action of Assessing Officer in disallowing loss of ₹ 8,03,896/-. 6. The assessee is in appeal against the order of CIT(A). 7. The learned Authorized Representative for the assessee pointed out that the assessee was manufacturer of chemicals and the a .....

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market value should have been taken. The learned Authorized Representative for the assessee pointed out that under the provisions of the Act, a presumption could be to the cost of acquisition but no presumption can be drawn against the sale value of assets. 8. The learned Departmental Representative for the Revenue on the other hand, placed reliance on the order of CIT(A). 9. We have heard the rival contentions and perused the record. The assessee was carrying on the business of manufacturing of .....

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d others. The Assessing Officer in the absence of details observed that the assets were sold to the sister concerns and other persons on throw away price and therefore, he disallowed the short term capital loss of ₹ 8,03,896/-, which action of the Assessing Officer has been upheld by the CIT(A). 10. There are two aspects to the claim of loss by the assessee on sale of its assets. First of all, all these assets were used in chemical industry carried on by the assessee and had its wear and t .....

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