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Witmer Enterprises Pvt. Ltd. Versus The Assistant Commissioner (CT) , Butterfly Gandhimathi Appliances Ltd., The Assistant Commissioner (CT)

2016 (8) TMI 335 - MADRAS HIGH COURT

Assessment order verification of records sale of stock - slump sale Held that: - sale of the entire stock-in-trade as such could not be treated as sale of business in entirety. 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 writ petition allowed matter remanded back opportunity of being heard provided to petitioner. - W.P.No.5540 of 2015, M.P.No.1 of 2015 - Dated .....

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the year 2012-2013 on several grounds and also on the ground that the assessment had been finalized without affording an opportunity of personal hearing. The place of business of the petitioner was inspected by the Enforcement Officers on 11.03.2014 and it was stated that on verification of the records it was noticed that the petitioner has sold the project to M/s.Butterfly Gandhimathi Appliances Private Limited on 21.06.2012 during the year 2012-12. The balance sheet for the relevant year was .....

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eet and it is clear from the balance sheet that for the year 2012-2013 the main source of their income is only building rental on lease and this aspect has not been verified and considered before issuing the pre-assessment notice. Further, the petitioner's specific stand was that they have disposed of immovable properties together with movable assets as a whole to M/s. Butterfly Gandhimathi Appliances Private Limited. The petitioner also placed reliance on the decision of this Court in the c .....

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e properties which falls within the definition of sale as found in Section 2(33) of the TNVAT Act, 2006. Therefore, they have to pay tax at 14.5%. 3. The petitioner's case is that the entire property along with all the movables were sold as a whole and it is a slump sale. Further, the petitioner's contention is that the first respondent has conveniently omitted to note the sale of land and building which was also shown in the very balance sheet of the petitioner for the year 2012-2013 an .....

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of 2014 dated 27.10.2014) and at this stage, it would be relevant to refer the operative portion 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 the case of Eicher Motors Limited Vs. The State of Tamil Nadu represented by the Assistant Commissioner (CT), Tax Case (Revision) No.49/13. In the said tax case, the following 3 questions of law were framed for consideration:- " 1.Whether in .....

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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 Tamil Nadu General Sales Tax Act, 1959 ? 3.Whether the Hon'ble Sales Tax Appellate Tribunal committed an error of law in emphasizing on the retention of a small part of the assets in the course of business succession, while failing to apply the c .....

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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 contemplated in the decision reported in 7 STC 740 in the case of Tools and Machineries Ltd., Vs. State of Madras was sale of entire stock in trade and the assessee continued to be in business and retained certain assets of the business. In that context the d .....

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ty 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 thereof as a running concern, this Court held that the sale proceeds in question could not be taken as a part of the turnover, consequently, the question of denying the exemption to the assessee did not arise. This Court pointed out that the sale of stock .....

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ointed 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 to the goods sold for the purposes of assessability did not arise. Pointing out to the distinction arising in the case reported in (1977) 39 S.T.C. 317 in the case of State of Tamil Nadu Vs Thermo Electrics, this Court pointed out that where the as .....

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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 a person may carry on several lines of business and each line of business would be a unit of business by itself; if there is a sale of that unit of the business as a whole, then the assessee would not be liable to be taxed either on the general princ .....

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