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TMI Blog2017 (3) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The assessee had raised the following grounds of appeal before us :- "1. That on facts and circumstances of the case and in law the Ld. CIT(A) has grossly erred in upholding the determination of Long Term Capital Gain at an amount of Rs. 3727532/-, arrived at in the manner prescribed Vis 50B, even after specifically emphasizing and concluding the inapplicability of the section 50B to the very nature of transfer, effected by the Appellant. That on the facts and circumstances of the case and in law the Ld. CIT(A) has grossly erred, in endorsing the adoption of Net Worth, arbitrarily determined at Rs. 1272468/-, as against the substantiated and accepted aggregate cost of acquisition and improvement, amounting to Rs. 5276000/-, as the cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re or during the appeal hearing." We find that the central issue revolving the aforesaid grounds is as to whether the ld CITA was justified in upholding the invocation of provisions of section 50B of the Act in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee is an individual who had previously entered into a partnership with one Shri Prodyut Kumar Das vide partnership deed executed on 17.2.2005. The assessee along with his co-partner sought to purchase a running cold storage plant jointly. The investment in the said cold storage plant styled as "Nutan Sarda Himghar" (Previously known as "M/s Sarda Himghar" at the time of purchase) had been made by the assessee and his co-partner jointly. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions from the partnership firm with effect from 30th April 2008 and the business of cold storage plant shall be carried on by the continuing partner and all its assets , credits, goodwill and benefits thereof shall prevail on the continuing partner. The retiring partner (i.e the assessee) agreed to take back his share of money, his share of investments and profits appearing in the books of the firm calculated as on 31.3.2008 within two months. It was also specified in the dissolution deed that the continuing partner shall use the property of the partnership and run the cold storage business after its dissolution as sole proprietor or in partnership taking third party as partner to run the business under the name and style of "M/s Sarda Him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt received on retirement of partnership firm Running the cold storage 50,00,000 Less: Investment in cold storage 52,76,000 Loss incurred thereon 2,76,000 4. The ld AO by taking into consideration the balance sheet of the assessee as on 31.3.2008 which contained investment in partnership firm M/s Sarda Himghar at Rs. 52,76,000/- on the asset side along with other assets and various personal liabilities reflected in the balance sheet, concluded that the assessee had made a slump sale and proceeded to compute capital gains u/s 50B of the Act. Since the Audit Certificate in Form 3CEA certifying the net worth figure as mandated in section 50B of the Act was not available, he computed the capital gains u/s 50B of the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm and whether the firm had offered to tax any amount consequent to its alleged dissolution u/s 45(4) of the Income Tax Act. Therefore, it is observed that eventhough the A.O. has considered the sale as slump sale which is not the correct approach considering that the appellant had only retired from the partnership firm and received his investments and profit therefrom, however the same are liable to be taxed as capital gains after reducing the cost of acquisition, therefore the action by the A.O. in taxing the transaction as LTCG in the hands of the appellant is held to be justified and upheld. Further in the absence of the relevant details, the estimate of net worth of the asset worked by the A.O. by reducing the proportionate liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO is not the correct approach, further proceeded to uphold the computation of Long Term Capital Gains (LTCG) after granting relief to the extent of Rs. 7,76,000/- alone. The facts stated herein remain undisputed and hence the same are not reiterated for the sake of brevity. We find that this is a case of simple retirement of the assessee from a partnership firm for which he received consideration of Rs. 50,00,000/- against his investment made thereon. It is not in dispute that he had invested Rs. 52,76,000/- in the firm. Hence the resultant capital loss of Rs. 2,76,000/- had to be disallowed in the memo of income by the assessee. The assessee had rightly treated the loss on sale of Rs. 2,76,000/- in his profit and loss account but had omi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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