9911796707
TMI Blog2020 (7) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... s year relevant to the assessment year, the AO found that the assessee has sold three windmills located at S.F.No.127, Mukkudujallipatty village, S.F.No.265/3 & 262/1A, Raghalbavi village, Coimbatore, Tamilnadu and S.F.No.540, Levingipuram village, Tirunelveli, Tamilnadu. The assessee declared this transaction as slump sale of 3 windmills viz., Suzlon (HT No.1186), Vestas-I (HT No.782), Vestas-2 (HT No.1283) and offered the sum of Rs. 20,93,56,370/- as long term capital gains on the slump sale as per the provisions of sec.50B of the Income Tax Act, 1961 (in short 'Act'). In doing so, the assessee has treated these 3 windmills as a single unit and as a separate "undertaking". On verification of the sale agreements, AO observed that 2 windmills viz. Vestas-1 (HT No.782) & Vestas-2 (HT No.1283) were sold to M/s Lotus Clean Power Venture Private Limited, 484, Kamaraj Road, Coimbatore - 641015, for a sale consideration of Rs. 18,50,87,332/-. Subsequently, another 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 Rs. 5,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against net worth of undertaking. 3.1. With regard to section 50B(2) the Ld.CIT(A) observed that section 50B is a special provision for computation of capital gains in case of slump sale. There is no requirement to consider the other provisions of section 48 and 49 as required in the case of normal capital gains. Hence, observed that there is no need to consider indexed cost of acquisition or improvement in the slump sale. Thus, held that the long term capital gains is the difference between lump sum consideration and net worth of undertaking. Accordingly, directed the AO to compute the long term capital gains under slump sale. 4. Against which the revenue filed appeal before the Tribunal. During the appeal hearing, taking our attention to para No.5 of the assessment order, the Ld.DR argued that the assessee has sold the 3 windmills located in three different places during the year under consideration. For an enquiry from the AO, why the 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 consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g deduction u/s 80IA on the income of the windmill as a separate business which is also allowed by the AO from the A.Y.2009-10 onwards as observed by the Ld.CIT(A). When the Income Tax Act defines a separate undertaking, there is no need to go to the definition of Companies Act, therefore, argued that the Ld.CIT(A) has rightly allowed the windmill as a separate undertaking and no interference is called for. Further, the Ld.AR relied on the decision of Commissioner of Income Tax Vs. Abhirami Cotton Mills (P) Ltd. (1996) 87 taxmann 152 (Andhra Pradesh) and argued that non maintenance of separate books of accounts is not a ground for rejection of deduction u/s 80J of the Act. Placing reliance on the decision of Hon'ble Gujarat High Court in the case of Ajanta (P) Ltd. Vs. Deputy Commissioner of Income Tax (2017) 77 taxmann.com 227 (Gujarat), the Ld.Counsel argued that deduction u/s 80- IA could not be denied solely on the ground that there 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout values being assigned to the individual assets and liabilities in such sales. A cursory reading of the definition reveals the following aspects : 1. There must be a transfer of asset 2. That transfer is of one or more undertakings. 3. Such transfer is for a 'lump sum' consideration. 4. That consideration is not assigned to any individual assets and liabilities of the undertaking. It is clear from the definition that the slump sale is an exhaustive one which does not give scope for inclusion of any other element other than the meaning assigned. It is also clear from the definition that any individual asset or liability of the undertaking is excluded from the purview of the slump sale. It is further clear that the definition of slump sale refers to transfer of one or more undertakings. Therefore it is equally relevant to examine the definition of undertaking u/s. 2(19AA) explanation 1 of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laiming depreciation. In my opinion the asset being part of block of assets and depreciation claims are not independent factors to deny benefit under slump sale., The depreciation any way is allowable to such assets: be it they are part of block of assets of the appellant company or part of assets of undertaking. Regarding separate books of accounts for the unit, the appellant had demonstrated with separate ledger account belonging to the windmill operation. There is no requirement of separate books for claiming relief u/s.80IA as held by AP High court in the case of Abhirami Cotton Mills (1996)134CTP1123(AP). The real test for considering any sale of asset as non slump sale would be any independent asset or liability not forming part of business operations. In the instant case the Assessing Officer has not demonstrated that the wind mill is an 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 requirem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the conditions for treating it as a separate undertaking as discussed by the Ld.CIT(A) in para No.6.3 of the order. Similarly, 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 by the Ld.Counsel of the assessee, the Hon'ble Andhra Pradesh High Curt in the case of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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