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2016 (7) TMI 283 - MADRAS HIGH COURT

2016 (7) TMI 283 - MADRAS HIGH COURT - TMI - Sale of Wind Mill - slump sale - claim of exemption under TNVAT Act - it was stated that the petitioner has sold the Wind Mill during the year 2013-14 and not disclosed sale of Wind Mill in the Returns and paid the tax and the sale value of the Wind Mill was assessed and tax was proposed to be assessed at 5% on the said sale value. - Held that:- Assessing Officer has misdirected himself in not properly appreciating the scope of the documents produced .....

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the entire establishment has been transferred as such. If that be the case, the petitioner's contention ought to have been accepted. - Order quashed - Matter remanded back to AO - Decided in favor of assessee. - W.P.No.21511 of 2016 & W.M.P.No.18384 of 2016 - Dated:- 28-6-2016 - MR.JUSTICE T.S. SIVAGNANAM For the Petitioner : Mr.N. Prasad For the Respondent : Mr. Manokaran Sundaram Addl. Government Pleader O R D E R Heard Mr.N.Prasad, learned Counsel appearing for the petitioner and Mr.Manok .....

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n 15.06.2015, stating that the petitioner has produced Wind Electrical Energy, sold the same to Tamil Nadu Electricity Board and claimed exemption and on verification of Form WW along with the Trading Profit and Loss Account of the petitioner's business for the year 2013-14, certain discrepancies were found. Further, it was stated that the petitioner has sold the Wind Mill during the year 2013-14 and not disclosed sale of Wind Mill in the Returns and paid the tax and the sale value of the Wi .....

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r transfer of Wind Division to another Company by agreement dated 24.03.2014. On receipt of the said Agreement another notice was issued by the Assessing Officer on 07.12.2015, wherein the respondent has referred to the stand taken by the petitioner that sale of Wind Mill as 'Slump Sale' and after verifying eight copies of sale deeds produced, pointed out that the petitioner has not paid any Stamp Duty for the value of the Wind Mill and they have paid the amount towards Stamp Duty only f .....

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the Wind Mill. Inspite of having taken such a stand in their reply dated 28.01.2016, the respondent proceeded to reject the petitioner's contention holding that the dealers have not produced proof for disposal of the Wind Mill. 6.In my view, the Assessing Officer has misdirected himself in not properly appreciating the scope of the documents produced by the petitioner. The petitioner's case is that the sale of Wind Mill is a 'slump sale' based on the Business Transfer Agreement .....

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epted. 7.In VTX INDUSTRIES LTD., v. THE ASSISTANT COMMISSIONER (CT), POLLACHI [W.P.No.25953 of 2014 dt.27.10.2014], I had an occasion to consider the somewhat similar issue, as to whether the business has been sold as a Division or the business has been sold as a whole. At this stage, it would be beneficial to refer to the relevant portions of the order, which reads as follows: 4. An identical question came up for consideration before the Division Bench of this Court in which I was a party, in t .....

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n respect of the transfer of the Genset business, the light engineering component business and the agro engine business made by the petitioners to M/s.Greaves Limited under Business Transfer Agreement dated 15.12.1993 ? 2. Whether the Hon'ble Sales Tax Appellate Tribunal committed an error of law in applying the erroneous, legal test of requiring transfer of all businesses of an assessee as the only circumstance in which there could be exemption under Explanation 3 to Section 2(r) of the Tam .....

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dering the said question held as follows :- 14. We agree with the above submission of learned counsel appearing for the assessee. At the outset, the view of the Sales Tax Appellate Tribunal based on the decision reported in 7 STC 740 in the case of Tools and Machineries Ltd., Vs. State of Madras, clearly shows the incorrect approach to the case on hand which is distinguishable from the reported decision. A reading of the decision reported in 7 STC 740 (cited supra) shows that what was contemplat .....

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entirety. Thus, when the assessee continued to be in business and retained business in those units, the question of exclusion of turnover relating to stock in trade does not arise. 15. In contrast to this is the decision reported in 39 STC 325 (Deputy Commissioner CT, Coimbatore Vs. K.Behanan Thomas), we find the facts therein was that the assessee sold the branch at Ooty as a whole, consequent on which the Branch itself was closed thereafterwards. Thus, on the closure of a branch by sale thereo .....

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to be taxable under the Act. Thus, this Court held that the transaction in question would not fall within the scope of the Act at all, consequently, the sale proceeds would not form part of the turnover as defined under the Act. This Court further pointed out that when there was a transfer of the business as a whole or as a going concern, in both the cases, there would be transfers of certain materials. However, when it is a composite sale, the question of bifurcating certain turnover as related .....

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s. K.Behanan Thomas once again came up for consideration in the decision reported in 51 STC 278 in the case of Monsanto Chemicals of India Ltd., (P) Limited Vs. The State of Tamil Nadu, wherein, this Court pointed out that where under the agreement, the assessee sold to another company certain lines of business as a whole, the question of inclusion of the consideration into turnover of the assessee as incidental or ancillary to the carrying on business did not arise. This Court pointed out that .....

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s, on facts once again, this Court held that the assessee was eligible for exemption in respect of the turnover. 17. In the decision reported in 112 STC 01 in the case of Coromandal Fertilisers Limits Vs. State of A.P., the Full Bench of the Andhra Pradesh High Court considered a similar question and once again reiterated the law laid down by this Court in the decision reported in 39 STC 325 in the case of Deputy Commissioner (C.T.) Coimbatore Vs. K.Behanan Thomas. The case dealt with by the And .....

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tion of the business activity in relation to one line of manufacture, then the turnover pertaining to the said line of business could not be included in the turnover of the assessee. The petitioner has raised the above contention before the Assessing Officer, while submitting his reply to the notice dated 31.12.2013 and produced the copy of the decision. However, the Assessing Officer did not consider the same. Though the Assessing Officer did not consider the case of Eicher Motors Limited, reli .....

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