TMI Blog2017 (8) TMI 1608X X X X Extracts X X X X X X X X Extracts X X X X ..... THAT:- In Commonwealth Trust (I) Ltd. [ 2004 (4) TMI 51 - KERALA HIGH COURT] found that both Section 40A(7) and Section 43B of the Act should be construed harmoniously. This Tribunal is of the considered opinion that when Section 40A(7)(b) of the Act provides a special allowance for provision for payment of Gratuity fund, the same has to be given preference. As held by Kerala High Court, a harmonious reading of Section 40A(7)(b) and Section 43B(b) of the Act never intended to take away the benefit conferred under Section 40A(7)(b) of the Act. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Sale of API division - slump sale or not? - HELD THAT:- The agreement for sale clearly says that it is a transfer of API division as going concern to Actavis. In the agreement, there was no mention about the values of individual assets - details of plant and machinery were not available on record. When the details of plant and machinery are not available on record, it is not known how the individual assets were valued as claimed by the assessee. Assessee also could not produce the depreciation sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tripathy, JCIT ORDER N.R.S. Ganesan, Both assessee and Revenue filed appeals for assessment year 2010-11 and Revenue has filed one more appeal for assessment year 2007-08. Since common issue arises for consideration in all these appeals, we heard these appeals together and disposing of the same by this common order. 2. Let s us first take Revenue s appeal in I.T.A. No.738/Mds/2010 for assessment year 2007-08. 3. The first ground of appeal is with regard to exclusion of freight and clearing charges from export turnover and total turnover. 4. We have heard both the Ld. Departmental Representative and the Ld.counsel for the assessee. 5. For the purpose of computing deduction under Section 10B of the Income-tax Act, 1961 (in short 'the Act'), the numerator and denominator should be of same figure. In other words, what was included in the export turnover shall also be included in total turnover. The CIT(Appeals) by placing reliance on the decision of this Bench of the Tribunal in ITO v. Sak Soft Limited (2009) 313 ITR 353, has directed the Assessing Officer to recompute the deduction under Section 10B of the Act by reducing the freight and clearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly allowed the claim of the assessee. 9. We have considered the rival submissions on either side and perused the relevant material available on record. The CIT(Appeals) by placing reliance on the judgment of Kerala High Court in Commonwealth Trust (I) Ltd. (supra), found that both Section 40A(7) and Section 43B of the Act should be construed harmoniously. This Tribunal is of the considered opinion that when Section 40A(7)(b) of the Act provides a special allowance for provision for payment of Gratuity fund, the same has to be given preference. As held by Kerala High Court, a harmonious reading of Section 40A(7)(b) and Section 43B(b) of the Act never intended to take away the benefit conferred under Section 40A(7)(b) of the Act. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. 10. The next issue arises for consideration is whether the sale of API division is slump sale or not. 11. Sh. Pathlavath Peerya, the Ld. Departmental Representative, submitted that the assessee has sold API division and claimed that it is not a slum sale. According to the Ld. D.R., API division was transferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the note and the agreement copies filed along with that note it is found that as claimed by the assessee it was not an individualized sale. In page number 2 Clause D and clause 2.1 in page number 8 of the agreement clearly tells that the division was sold as going concern . In the payment clause 3.1 in page 10 of the agreement also it is clearly mentioned that in consideration of the Seller transferring its division to the Purchaser, as a going concern the payment agreed upon is paid. As claimed by the assessee company the values are never assigned to individual asset wise in the agreement. Total amount of ₹ 54 Crores was paid as aggregate of, except the value of ₹ 3.00 Crores assigned to the net current assets. The Directors report also stated that the division is divested which means that the entire division is sold to Actavis. From this it is very clear that the sale is not an individual sale as claimed by the assessee company and it is very clearly falling under the Slump Sale definition given in section 2(42C) of the Act. 14. The assessee also could not produce the depreciation schedule for the individual machinery of the API division. The written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on either side and perused the relevant material available on record. We have carefully gone through the provisions of Section 115JB of the Act. Clause (ii) of Explanation 1 to Section 115JB(2) of the Act clearly says that the amount of income to which provisions of Section 10 of the Act other than clause (38) thereof shall be reduced if such amount is credited to the Profit Loss account. Therefore, the claim of the assessee that Section 10B of the Act is equal to Section 80HHC of the Act may not be correct. No similar clause as clause (ii) of Explanation to Section 115JB of the Act was brought to the notice of the Tribunal by the assessee. Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. Accordingly, the orders of the authorities below are set aside and the issue of deduction under Section 10B of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter afresh after considering clause (ii) of Explanation 1 to Section 115JB of the Act and thereafter decide the issue in accordance with law, after giving a reasonable opportunity to the assessee. 19. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer. 24. We have considered the rival submissions on either side and perused the relevant material available on record. From the order of the Assessing Officer it appears that the assessee has made investment to the extent of ₹ 4 Crores during the year under consideration and it appears no income was derived from investments. The assessee incurred interest expenditure to the extent of ₹ 5,90,33,863/-. Therefore, the Assessing Officer made disallowance by applying Rule 8D of the Income-tax Rules, 1962. The assessee now claims before this Tribunal that expenditure at the best be restricted to the extent of ₹ 15,08,370/- which is the exempted income earned. The Assessing Officer on one end observed that the assessee has not earned any exempted income. However, the assessee claims that disallowance may be restricted to exempted income to the extent of ₹ 15,08,370/-. Therefore, the facts are not brought on record. Hence, the matter needs to be reexamined by the Assessing Officer. Accordingly, the orders of authorities below are set aside and the disallowance made under Section 14A of the Act is remitted back to the file of the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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