TMI Blog2020 (7) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... ing it as a separate undertaking as discussed by the Ld.CIT(A) in para No.6.3 of the order. Since the assessee has sold the windmills along with assets and all the liabilities, it also falls in the definition of slump sale u/s 2(42C) of the Act. Though the assessee has not separately maintained the books of accounts, separate ledger accounts are maintained and claiming deduction u/s 80IA separately for the income generated from the individual units each year. As per the Profit Loss account, we observe that the assessee is computing profits separately, from wind mills and in a position to ascertain the income and expenditure separately for the windmills as well as for the assessee s business. As argued assessee, the Hon ble Andhra Pradesh High Curt in the case of CIT Vs. Abhirami Cotton Mills (P) Ltd. [ 1995 (7) TMI 14 - ANDHRA PRADESH HIGH COURT] held that non maintenance of separate books of accounts does not make the assessee disentitled for deduction u/s 80J(4). In the case of Ajanta (P) Ltd. [ 2016 (12) TMI 1557 - GUJARAT HIGH COURT] held that the deduction u/s 80IA cannot be denied solely on the ground that separate Profit Loss account and balance sheet are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther sale agreement was signed on 16.04.2012 in respect of the third wind mill viz. Suzlon (HT No.1186) which was sold to M/s Clover Energy Private Limited, 484, Kamaraj Road, Coimbatore 641015, for a sale consideration of ₹ 5,58,85,576/-. The AO considered the meaning of undertaking and slump sale as per statute and found that as per section 2(42C) of the Act, the slump sale is the transfer of one or more undertakings as a result of sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales. Undertaking is defined in Explanation 1 to Clause (19AA) of the Act which provides provisions relating to computation of capital gains from slump sale and Explanation 1 for net worth and Explanation 2 for computation of net worth. The AO also considered section 180 of Companies Act, 2013 for the purpose of meaning of undertaking and viewed that the assessee company could not explain as to why the assets i.e. windmills should not be treated as assets of the company, instead of separate undertaking as required under the provisions of slump sale. The AO further found that it has not furnished any balance sheet, profit and loss ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e windmills should not be treated as part of assets of the assessee company instead of separate undertakings, the assessee has explained before the AO that the capital gains under windmills required to be treated as slump sale since the same constitute a separate undertaking. However, the AO observed that the assessee has not maintained separate books of accounts for each windmill showing independent assets and the windmills sold during the year were not shown separately on the fixed assets schedule of the company for several years for the purpose of claiming depreciation. However, the assessee has submitted that though separate books of accounts were not maintained, the assets, liabilities in relation to windmills had been ascertained and transferred to the buyer along with wind turbines. He further explained that the power generated by the windmills is being sold to the Tamilnadu State Electricity Board and the receipts were shown separately from the undertaking. The Ld.DR argued that the assessee is not maintaining the separate books of accounts and shown the windmills as part of the block of assets of the company, hence, the same required to be treated as the assets of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was no separate Profit Loss account and the balance sheet. The Ld.Counsel further argued placing reliance on the decision of ITAT Pune Bench in ITA No.1479/Pun/2015 dated 20.12.2017 that each windmill is separate undertaking. The Ld.AR submitted that there is no error committed by the Ld.CIT(A), hence, requested to uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. 6. We have heard both the parties, perused material placed on record and gone through the orders of the lower authorities. In the instant case, the issue is whether the windmill constitutes separate undertaking or not. If the same is separate undertaking, the assessee is entitled for computing the sale consideration as slump sale u/s 2(42C) of the Act. The Ld.CIT(A) has discussed the issue in detail in para No.6.1 to 6.4 and gone through agreements and held that the sale of windmills is a separate undertaking and directed the AO to compute the long term capital gains under slump sale. For the sake of clarity we extract para No.6.1 to 6.4, 6.5 and 6.6 which reads as under : 6.1 Ground No. 2 and 3: slump sale u/s.50B: I have carefully considered the facts of the case, written sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. 6.3 Undertaking u/s.2(19AA) explanation of the Act: For the purposes of this clause, 'undertaking' shall include any part of an undertaking, or a unit or division of an undertaking or a business activity taken as a whole, but does not include individual assets or liabilities or any combination thereof not constituting a business activity. A cursory reading of the definition of undertaking reveals the following aspects/elements. It is an inclusive definition intended to include: a. Any Part of undertaking b. Any unit of undertaking c. A division of undertaking d. A business activity taken as a whole, however, e. It doe s not include individual assets or liabilities not constituting business activity. 6.4 A close reading of both the definitions reveal a common factor that any individual asset or liability does not constitute business activity is outside the purview of both the definitions. It means the disqualification of sale of asset to be treated under slump sale or undertaking is built within the provision itself. Having examined the definitions of 'slump sale' and 'undertaking' together I find it r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... independent asset. Whereas the appellant has been considering the asset as one of its business unit. Further the consideration received for all the 3 windmills was not assigned to any individual assets be it land, windmill or shed. In the absence of such finding, it is not fair to treat the transaction u/s.50. Further, there is no requirement under the act that the assets intended to be sold in slump sale should be together. The Assessing Officer's observation that the assets are located in different places has no bearing on the nature of transaction being slump sale. As much each windmill is a unit of undertaking covered under the definition of slump sale. In view of the above observation, the Assessing Officer is directed to treat the sale of windmill as a 'slump-sale' and the consideration received should be subjected to deduction against net-worth of undertaking. 6.6 Net-worth :ufs.50B(2) 'Net worth shall be the aggregate value of total assets of the undertaking or division as reduced by the value of liabilities of such undertaking or division as appearing in its books of account Section 50B is a special provision for computation of capital gains in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT Vs. Abhirami Cotton Mills (P) Ltd. (supra) held that non maintenance of separate books of accounts does not make the assessee disentitled for deduction u/s 80J(4) of the Act. Similarly, the Hon ble High Court of Gujarat in the case of Ajanta (P) Ltd. Vs. Deputy Commissioner of Income Tax (supra) held that the deduction u/s 80IA cannot be denied solely on the ground that separate Profit Loss account and balance sheet are not produced. The Coordinate Bench of ITAT, Pune in its order in the case of M/s Sargam Retails (P) Ltd. (supra) held that windmill is a separate undertaking. For the sake of clarity, we extract para No.14 of the order of the coordinate bench which reads as under : 14. Now, coming to the facts of the present case, the assessee had shown profits from its windmill at Satara and had worked out the deduction under section 80IA(4) of the Act in respect of said windmill at ₹ 2.42 crores. The assessee was entitled to claim the said deduction undertaking wise. The losses suffered from the other windmill established by the assessee in Karnataka and Gujarat were not to be set off against the profit of Satara windmill, on the proposition that each windmill wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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