TMI Blog2021 (6) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... in the cost of material consumed in the profit and loss account of the assessee there was no purchase of material at Roorkee Unit. So prima facie learned CIT(A) s finding is correct that no manufacturing activity has taken place and assessee has only shown opening raw material as consumed. We find that in the profit and loss account while closing stock of Roorkee unit shown as nil, opening stock for that year for raw material - how financial note reflects raw material consumed clearly shows an anomaly in the preparation of financial account. In our considered opinion this aspect needs examination at the level of Assessing Officer. We note that learned counsel has produced before us valuation report giving valuation of the items sold. This is additional evidence not produced before the authorities below. We note that this additional evidence in the shape of valuation report itself states that as the assessee s unit was established in a delayed manner and it was no longer eligible for incentives available there. The valuer himself states that there are no comparative sales instances. The said report while discussing fair market rate has clearly mentioned that we find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RCC building 32,58,305 compound wall 4,08,924 Total 3,46,60,395 In its return of income the assessee claimed the sale as slump sale and declared long term capital gain of ₹ 95,60,095/-. The assessee claimed that Section 50C of the Act is not applicable in the case of slump sale. In the course of the assessment proceedings, the Assessing Officer found that the unit was not carrying on any commercial activities or the production activities; that there were no significant assets or liabilities except immovable property consisting of land and building; that the assessee sold the entire unit (including land and building) at a price lower than the value of the land, building and the compound wall as determined by the Stamp Valuation Authority. The assessee wrote off deposit of ₹ 51,110/- and written back the Creditors of ₹ 14,54,594/-relating to Roorkee Unit. The Assessing Officer held that the sale was in substance sale of the land, the RCC building in the compound wall and not sale of any undertaking. Therefore, the Assessing Officer co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. In other words, an undertaking is more than just a factory. The essence of an undertaking is the ongoing organized activity rather than the factory where the activity takes place. In the instant case what was sold was definitely not an undertaking but a factory. As the AO has pointed out, there was no continuity of business. The appellant has contended that it had produced some sales bills before the AO and has contended that those sales prove that the unit was running and was an ongoing business concern. The claim is not correct. A few instances of sale cannot prove that production was going on; it is quite possible that the sale was made from stock of unsold finished goods. The appellant did not produce the P L account and the balance sheet of the Roorkee unit in support of its claim that the production activities were continuing when the unit was sold. The appellant has not been able to prove with supporting documents such as the list of employees at the time of the sale, the electricity bills, the details of purchases and sales during the year under consideration, details of inventory at the time of sale etc. to prove that production activities was going on when the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Security Charges 48,000 Loss 3,59,745 Travelling Conveyance 41,500 Printing Stationery 88,081 Total 3,83,745 Total 3,83,745 8. We note that this is note about the operations at Roorkee unit needs examination with relation to profit and loss account of the assessee. Here we note that in the cost of material consumed in the profit and loss account of the assessee there was no purchase of material at Roorkee Unit. So prima facie learned CIT(A) s finding is correct that no manufacturing activity has taken place and assessee has only shown opening raw material as consumed. Moreover, we find that in the profit and loss account while closing stock of Roorkee unit shown as nil, opening stock for that year for raw material at ₹ 98,897/-. In such circumstances, how financial note reflects raw material consumed at ₹ 24,000/- clearly shows an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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