TMI Blog1992 (3) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... n 263 of the Income-tax Act, 1961. 2. ITA No. 231/Ahd./1989 In this departmental appeal the following two grounds have been raised : " (1) The learned Dy. CIT (Appeals) has erred in law and on facts in deleting the capital gains of Rs. 1,57,988. (2) The learned Dy. CIT (Appeals) has also erred in law and on facts in deleting the unpaid sales-tax of Rs. 52,600. " 3. As regards ground No. 2 the facts are that the assessee was following mercantile system of accounting and maintained separate sales-tax account in which sales-tax collected was credited and sales-tax paid to the Government was debited and the balance was taken to the balance sheet and not to P L A/c. There was a credit balance of Rs. 52,600 which represented unpaid sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in Industrial area, Odhav, Ahmedabad for Rs. 3,25,000 consisting of land, office building, factory, machineries and certain movables, from Ahmedabad Silicate Utpadak Sahakari Mandali Ltd. which was a co-operative society under liquidation and which acted through its liquidator in the said transaction. The vendor co-operative society had been sustaining loss and for that reason it had gone in liquidation and was required to sell the said factory. The said factory was run by the assessee in accounting years relevant to assessment years 1982-83 1983-84 but the assessee also sustained loss. The assessee then sold the said factory along with raw materials and unfinished products for Rs. 9,11,151 to M/s. Saraswati Chemical Industries in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. Co. v. CIT [1981] 131 ITR 559 (Guj.). According to him, these decisions laid down that when there was a slump sale, no capital gains could be assessed. The department is now in appeal before the Tribunal, and above mentioned ground No. 1 has been raised. 7. It was submitted on behalf of the department that the amount of Rs. 1,57,980 represented capital gains and had been rightly brought to tax by the ITO. It was submitted that decisions on which the Dy. CIT (Appeals) had relied, pertained to balancing charge under section 41(2) and were not applicable when the question to be considered was that of capital gains and not balancing charge. It was pointed out on behalf of the department that in some of those decisions it has been expressly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of the clauses it has been expressly mentioned that Rs. 5,11,151 out of sale consideration of Rs. 9,11,151 represented the price of the property that has been earlier purchased by the assessee from the society in liquidation and had been sold to the purchaser ---- M/s. Saraswati Chemical industries. It is not clear from the document as to how this figure was arrived at. The learned counsel for the assessee has stated that figure in that clause should have been Rs. 9,11,151. This cannot be accepted. In the context of the recital in that clause, the figure could not have been Rs. 9,11,151. Nothing more need be stated in that connection. It is mentioned in the agreement that the society in liquidation had received the purchase price of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GIDC and which is mentioned in the computation by the assessee has not been doubted by the ITO and was certainly deductible. The balance would come to Rs. 4,55,597 from which cost of acquisition of Rs. 3,25,000 was deductible for as certaining capital gains. The capital gains thus came to Rs. 1,30,597. The surplus has been worked out by the assessee at Rs. 1,57,980 and the assessee has claimed that it represented value of goodwill. The submission of the assessee that this amount represented value of goodwill cannot be accepted. This is because the society in liquidation from whom the assessee had purchased, was sustaining loss when that society was owner of the factory and the assessee also sustained loss after the assessee became owner th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition cannot be conceived in respect of assets which are subject-matter of transfer that the principle laid down by the Supreme Court in the case of B.C. Srinivasa Setty would be applicable. The decision in the case of Artex Mfg. Co. on which the assessee has relied, is an authority for the proposition that when the entire business of the undertaking is sold together with its assets and liabilities for a slump price, and when price is not fixed item-wise of the assets comprised in the business, provisions regarding balancing charge under section 41(2) would not be attracted. This decision is not an authority for the proposition that in the case of slump sale, provisions regarding capital gains would not be attracted. In fact, it is made cle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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