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ITO 6 (1) (3) , Mumbai Versus Blue Foods P. Ltd.

2017 (6) TMI 80 - ITAT MUMBAI

Slump sale - Long Term Capital Gain computation in accordance with the provisions of Section 50B - Held that:- Since the issue has been decided in favour of the assessee by the learned CIT(A) and learned Counsel of the assessee is fairly agreeing before us that there has been a mistake on the part of the assessee in submitting the computations before the Assessing Officer, interest of justice requires that all the issues raised in this appeal need to be remitted to the file of the Assessing Offi .....

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L MEMBER For The Assessee : Shri. Jayesh Dedia For The Revenue : Shri. Kailash Kanojiya ORDER PER: SHAMIM YAHYA This appeal by the revenue is directed against order of Ld. CIT-A dated 21.12.2012 and pertains to assessment year 2009-10. 2. The grounds of appeal read as under: 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of negative net worth of Rs.(- ) 10,00,54,507 /- to the long term capital gain." 2. "On the facts and circumst .....

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while calculating the net worth of the assessee company without appreciating the fact that this liability need to be considered for arriving at the correct net worth. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition on contingent liabilities related to customs duty of ₹ 43,22,499/- while calculating the net worth of the assessee company without appreciating the fact that this liability need to be considered for arriving at the correct .....

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o PAN India Food Solutions Pvt. Ltd. for a lump-sum consideration of ₹ 10,00,00,000/-. The sale, as stated is a lump-sum sale within the meaning of Section 2(42C) of the Income Tax Act as all the assets and liabilities relating to the restaurant business have been transferred to PAN India Food Solutions Pvt. Ltd. Since it was a slump sale agreement, for a lump-sum consideration, the appellant computed its tax liability i.e. Long Term Capital Gain in accordance with the provisions of Sectio .....

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pect of those cases, where the negative net worth is on account of accumulated losses in the undertaking. In the case of accumulated losses in an undertaking, no extra benefit, over and above the sale consideration, would be derived by the transferor on account of the slump sale of the undertaking. It is only in those cases, where the transferee party takes over all the liabilities and assets in a case of slump sal1 and the liabilities are in excess of assets that the transferor is going to get .....

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mortgaged property, the issue in dispute was computation of capital gain; whether on the basis of full sale value or net sale value (i.e. after deducting the assessee's liability to the Excise Department). Thus the facts in the case of Attili N. Rao (supra) are also different from the facts in the case of the appellant. Hence, it is also evident that the issue referred to the Special Bench is of no relevance in the case of the appellant. Section 50B mentions that the net worth of the undert .....

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ot going to get any benefit over and above the sale consideration in this case. In such a case, therefore, in terms of section 50B, the cost for the purpose of computation of capital gain could not be a negative figure. Hence, in my view the appellant has rightly adopted the net worth (or the cost) of the undertaking as nil for the purposes of section 50B of the Act. Furthermore, the issue can also be looked into from the point of view of the purchaser. If the negative net worth is also consider .....

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the appellant especially in view of the fact that the appellant has not gained anything over and above the sale consideration because the negative net worth is on account of accumulated losses. Therefore, in my view, the appellant company has rightly treated the net worth of the undertaking as Nil and accordingly computed the capital gain at ₹ 10 crores i.e. the full value of consideration received under the slump sale agreement. The AO's view that transfer of excess liabilities over .....

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